Connections
That Matter
2018 Millicom
Integrated Report
OUR PURPOSE: To build the digital
highways that connect people, improve lives,
and develop our communities.
Connections That Matter
Purpose-Driven Connectivity
Millicom drives business success through connections that matter. Connections that open doors to knowledge. Connections that help indi-
viduals become part of the digital economy and businesses realize financial opportunities that would otherwise go untapped. Connections
that contribute to increased productivity in the markets and communities where we operate.
We are in this business for the long haul, not simply for short-term gain. As we create vital digital highways and connectivity, we lead
responsibly to foster an environment where our employees, customers, and communities can prosper and reach their full potential. We
strongly believe that we can harness innovation to create a brighter future in our markets. Our digital highways can help our communities
overcome obstacles to access the digital world and technological breakthroughs. When our customers and the communities in the coun-
tries we serve are able to address these challenges successfully, we all benefit.
For information on our business
strategy, please see pages 9–15.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceFinancialsGovernanceAppendix Our third integrated Annual Report combines our corporate responsibility and financial reports to provide
all our stakeholders with a clear and comprehensive overview of our business and activities in 2018. It
conveys our business strategy, our commitment to contribute to the positive social and economic growth
of the communities we serve through our products and services, and our responsible business practices
and leadership throughout our operations. Our reporting also aligns with our commitment to transparency,
and reflects the interests of key stakeholders, with whom we engaged closely in 2018.
Note: Our Latin America (Latam) segment includes our Honduras and Guatemala joint ventures as if they
were fully consolidated, as this reflects the way our management reviews and uses internally reported
information to make decisions about operating matters, and also to provide increased transparency to
investors on those operations.
What’s Inside This Report
92 Directors’ Financial and Operating Report
93 Management responsibility statement
Financial statements
95 Consolidated financial statements
102 Notes to the consolidated financial
statements
190 Independent auditor’s report
195 Disclaimers
Appendix: Corporate responsibility
198 Wrapping up a great five years
199 Our performance
201 Privacy and freedom of expression
202 Child rights and online protection
202 Acting with integrity:
anti-corruption compliance
204 Reducing our environmental footprint
205 Diversity
205 Taking care of our people
206 Responsible supply chain management
206 Social investment
207 Independent limited assurance report
Overview
02 Our brands and services
03 Market overview
04 Chairman’s message
06 Chief Executive Officer’s message
08 Our year in numbers
Strategy
09 Our business strategy
16 Corporate responsibility strategy
22 Enterprise risk management
26 Living our Purpose spotlight
Performance
31 Responsible leadership in action
38 Our people
46 Corporate responsibility fundamentals
50 Our financial performance
Governance
58 Chairman’s report
59 Corporate governance framework
60 Shareholders and shareholders’ meeting
62 Board of Directors and Board committees
65 Board profile – skills and experience
68 Board program
71 Board committees
I. Audit Committee
71
II. Compliance and Business
75
Conduct Committee
III. Compensation Committee:
Remuneration Report
77
84 Millicom CEO and Executive Team
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceFinancialsGovernanceAppendix Our Brands and Services
Through our Tigo and Tigo Business™ brands, we provide
a wide range of digital services, including high-speed
data, cable TV, voice and SMS, Mobile Financial Services,
and business solutions.
CUSTOMERS USING THE 4G NETWORKS WE PROVIDE IN ALL OUR MOBILE MARKETS
MOBILE B2C CUSTOMERS IN OUR LATAM AND AFRICA SEGMENTS
48 million
10+ million
11 million
4+ million
Tigo Sports
Tigo Music
HOMES PASSED IN OUR LATAM SEGMENT
CUSTOMER RELATIONSHIPS AND COUNTING
Tigo Money
Tigo ONE tv
Mi Tigo
Tigo Shop
Tigo Sports
Tigo Music
Tigo Money
Tigo Business
Tigo Sports
Tigo Music
Tigo Money
Tigo ONE tv
Mi Tigo
Tigo Shop
Tigo ONE tv
Mi Tigo
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
Tigo Shop
Tigo Business
Tigo Business
OverviewStrategyPerformanceFinancialsGovernanceAppendix GUATEMALA
HONDURAS
NICARAGUA
EL SALVADOR
COSTA RICA
PANAMA
CHAD
COLOMBIA
TANZANIA
BOLIVIA
PARAGUAY
Market Overview and
Opportunities for Growth
For millions of customers and thousands of employees, the Tigo brand symbolizes everything
we stand for as a company. We’re proud of how highly respected the Tigo name has become
locally and globally, and how our presence represents opportunities for employment and
socio-economic growth in our markets.
Latin America (Latam) is one of the fastest developing regions in the world, giving us
remarkable growth potential and the ability to participate and accelerate that development
by connecting people with high-speed, high-quality communications.
Our main focus in the region is on high-speed internet. We see pent up demand here due to
lower 4G and broadband internet penetration than in more developed markets. We have
dedicated ourselves to bridging that gap by connecting more than 3 million new 4G mobile
users and adding more than 1 million homes to our HFC network over the past year. We have
also pursued merger and acquisition opportunities when they fit our strategy. We added the
largest cable operator in Panama to our family in December 2018, and we entered discussions
with Telefónica S.A. to acquire its mobile operations in Panama, Costa Rica and Nicaragua,
announcing an agreement in February 2019, with regulatory approvals pending in order to
complete this transaction.
As we expanded our footprint in Latam, we also wanted to accurately define how Millicom’s
core business positively contributes to economic growth in our markets. In the link below, we
proudly share findings from a Socio-Economic Impact Report commissioned by Millicom and
carried out by Copenhagen Economics, one of Europe’s leading economic consultancies.
Economic Impact
https://www.millicom.com/media-center/socio-
economic-impact-report/
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
LATAM
Bolivia
Mobile and Cable
#1 in Pay TV
Colombia
Mobile and Cable
Costa Rica
Cable
#1 in Pay TV
El Salvador
Mobile and Cable
#1 in Mobile and Pay TV
Guatemala
Mobile and Cable
#1 in Mobile and Pay TV
Honduras
Mobile and Cable
#1 in Mobile and Cable
Nicaragua
Cable
Panama
Acquisition of Cable Onda
#1 in Cable
Paraguay
Mobile and Cable
#1 in Mobile and Cable
AFRICA
Chad
Mobile
#1 in Mobile
Tanzania
Mobile
OverviewStrategyPerformanceFinancialsGovernanceAppendix Strategy
Former Chairman’s Message
Transformation and growth. Those two words define
Millicom’s trajectory in 2018.
2018 was a watershed year for Millicom. The company returned to solid top line growth as
the strategy of monetizing mobile data, building our cable network, preparing for
convergence, and growing B2B continued yielding positive results.
Details of the effective execution of these four key strategic building blocks are contained
in the strategy section on pages 9 to 15 of this report.
We accelerated the build and deployment of high-speed data networks in Central and
South America, and acquired Cable Onda in Panama during the last quarter of 2018.
We continued to focus on customer service and experience which included the
implementation during the year of Net Promoter Score (NPS) as a key performance
indicator measuring each customer touch point and segment.
Working in emerging markets influences our approach to business growth. In these
developing economies and societies we must integrate our business strategy and corporate
responsibility efforts to create shared value and promote sustainable development for all
our stakeholders. Details of our corporate responsibility plan and stakeholder engagement
are included in pages 16 to 21 of this report.
We can’t accomplish all our goals without the dedication and skills of our people. During
the year, we continued nurturing our strong company culture, which our people refer to as
“Sangre Tigo”.
Millicom understands the need to remain vigilant in the area of governance, compliance
and business ethics. We believe Millicom and our Tigo brands should, and can, lead the
way in these areas in all our markets. The Governance section of this report (pages 57 to
93) sets out Millicom’s framework, approach and commitment to strong corporate
governance. During 2018, we strengthened our Anti-Bribery Anti-Corruption policies and
resources and enhanced our Anti-Money Laundering tools, systems, processes, and training
to allow Millicom to more rapidly assess potential problems. We also incorporated
compliance factors into executive incentive programs and developed a three-year strategic
plan to enhance our Information Security programs.
Leadership for our company drives its success. On behalf of the Board of Directors, I would
like to thank Mauricio Ramos, our CEO, and his executive team for their dedication and
drive, and for inspiring every colleague to make The Digital Lifestyle™ a reality for millions
of customers in ways that benefit all our stakeholders.
As I step out of my role as Board Chair in early 2019 and pass the mantle to José Antonio
Ríos García, I am confident Millicom’s leadership will continue to position the business to
create shareholder value, rewarding employment opportunities, and prosperity for the
communities where we operate.
For information on our
business model, please see
pages 9–15.
Tom Boardman
Former Chairman of the Board of Directors
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceFinancialsGovernanceAppendix “ I remain impressed by the dedication of
our employees, and the clear and
ethical purpose evident in the strategic
and operating decisions the company
makes every day.”
Chairman’s Message
Since joining the Board in May 2017, I have witnessed firsthand the strong,
steady leadership of Tom Boardman, as well as the great strides Millicom
has made in executing its strategy. On behalf of the Board, I thank Tom for
all he has done to advance the company’s vision, mission and purpose.
In January 2019, Tom passed the baton of Millicom’s Chairmanship to me.
Given the company’s increased focus on Latin America, I look forward to
drawing on my own experience both in the telecommunications sector and
in the region, to help Millicom’s team as they strive to advance the
company’s purpose and create value for shareholders.
Having already visited several of Millicom’s operations, I remain impressed
by the dedication of our employees, and the clear and ethical purpose
evident in the strategic and operating decisions the company makes every
day. Our robust business strategy and corporate responsibility framework
have laid a solid foundation for even greater success moving forward. I
welcome the opportunity to serve as the company’s Chairman and look
forward to doing my part to ensure continued success and growth for all
our stakeholders.
Thank you.
José Antonio Ríos García
Chairman of the Board of Directors
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceFinancialsGovernanceAppendix Chief Executive Officer’s
Message
I’m very pleased to share this year’s integrated report,
because it highlights the most important and exciting ways
Millicom manifested its purpose in 2018. That purpose
remains clear: We build the digital highways that connect
people, improve lives, and develop our communities.
We believe our core products and services make a positive impact on the lives of people in
the countries we serve. By creating the infrastructure for digital communications and
economies, we directly influence the development and advancement of these countries
and the quality of life of our customers. We simply do not want anyone to be left behind,
and our success as a company depends on that.
And 2018 was very successful on many fronts. We exceeded our goal to cover 10 million
homes with our cable network, and we also hit our target of 10 million 4G customers. We
were equally successful at delivering our service revenue and EBITDA growth targets, and
we generated more than enough cash flow to continue to fund our network investments
and to pay an attractive dividend to our shareholders. Consistent with our strategic plan,
we also made great strides to increase our focus on Latin America, and we capped the year
by completing our U.S. listing, allowing our shares to begin trading on the Nasdaq Stock
Exchange in January 2019.
This strong performance can only occur by first having a clear understanding of the
overarching factors critical to our success. Our business model must adopt and integrate
rapid technological innovations to make these advancements both affordable and accessible
in our markets.
We also understand that as a market leader, we have an obligation to ensure the
technology we provide is being used responsibly and has the best possible outcome for the
communities we serve. That is why we continue to promote initiatives that protect children
online, promote digital literacy among vulnerable populations, and support privacy,
freedom of expression and gender equality. This includes our renewed commitment to the
United Nations Global Compact.
With that as our backdrop, we see Millicom as an essential bridge between investors who
want to invest capital in developing economies and the individuals and businesses who will
benefit from that capital. 2018 proved to be a year that overwhelmingly demonstrates how
that bridge provides benefits in both directions.
I am delighted to highlight some of the most significant accomplishments Millicom made
toward living our purpose and advancing our mission in 2018.
Mauricio Ramos
Chief Executive Officer
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceFinancialsGovernanceAppendix 2018 Highlights
» Strategic Success: The strategy we introduced in 2015 and have continued to refine ever
since keeps working. We delivered a successful year both operationally and financially.
We closed 2018 ahead of our target of 10 million homes passed, while adding more than
400,000 new HFC customer relationships. We also increased the number of our 4G
smartphone data customers by more than 3 million, which means that more than 10 million
customers now enjoy our 4G networks available in all of our eight mobile markets. Our
financial performance returned to steady growth. Millicom’s revenue, EBITDA and returns
on capital in 2018 improved on an organic basis, in contrast with the mixed performance
in the broader telecommunications sector.
» Acquisition of Cable Onda in Panama: Taking advantage
of our healthy free cash flow generation and our
strong balance sheet in 2018, we made our largest
acquisition since 2014, entering a new country with
a fast-growing economy.
» U.S. Listing: As a result of our recent listing on the
Nasdaq Stock Market in the U.S., our shares now
trade in the most developed market in the world
under the ticker TIGO.
Cable Onda
https://www.youtube.com/
watch?v=ZhNqenbymlE
NASDAQ
https://www.youtube.com/watch?v=-
SRJ8BBuvPk&feature=youtu.be
» Updated Corporate Responsibility (CR) Framework: In 2018, we took an in-depth look at
ways we could better focus our CR activities to reflect emerging issues, the topics our
stakeholders care most about, and the challenges we are uniquely positioned to solve.
» Corporate Culture and Talent Development: We paid special attention to maintaining and
enhancing our strong company culture and took the time to better map and develop our
talent. Our dedication to our people has been recognized. For the second consecutive year
we were among the top 25 employers in Latin America across industries, and received
“Great Place To Work” awards in many of the countries where we operate.
We are truly excited about our accomplishments in 2018 and optimistic about our future. The
long-term plan we have shared with the Board of Directors reflects our view that there is enormous
potential for growth over the next five years. I am confident that we have the right team in place to
deliver on our promises and to continue to earn the trust of all our stakeholders.
Thank you for joining us on this journey.
CEO Mauricio Ramos during the
public announcement of
Millicom’s acquisition of Cable
Onda in Panama
Millicom begins trading on the Nasdaq Stock
Market in the U.S. under ticker symbol TIGO
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OverviewStrategyPerformanceFinancialsGovernanceAppendix Financial & Operational Indicators
Equity free cash flow*
(US$m)
Return on invested capital*
(%)
6
2
3
$
6
0
3
$
+6.6%
Year-over-year
change
.
1
3
1
1
4
1
$
.
2
8
2 1
6
1
.
2016
2017 2018
2016
2017 2018
+47.2%
Year-over-year
growth
4G smartphone
data users
(m)
.
5
0
1
2
7
.
4
3
.
HFC Revenue
generating units
(m)
2
6
.
.
4
4
.
7
3
+20.9%
Year-over-year
growth**
2016
2017 2018
2016
2017 2018
Corporate Responsibility Indicators
Employees who have
acknowledged the Code
of Conduct
91%
Connected schools
1,300+
Strategic suppliers
who signed the Code
of Conduct
89%
Connected women (participants in digital inclusion
training programs)
117,000
* Equity free cash flow and Return on invested capital are non-IFRS measures. Please refer to page 196 for descrip-
tion of non-IFRS measures
**Year-over-year growth excludes contribution from the Panama acquisition.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceFinancialsGovernanceAppendix Overview
Strategy
Performance
Governance
Financials
Appendix
Our Business Strategy:
The Engine That Drives
Our Purpose
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
Overview
Strategy
Performance
Our Business Strategy:
The Engine That Drives
Our Purpose
In 2018, a relentless focus on our business model for growth resulted in
robust financial and social returns. The following carefully crafted strategies,
executed with discipline, have helped us build a world-class organization that
benefits shareholders and brings value to emerging markets and societies.
Monetize Mobile Data
Build Cable
Prepare for Convergence
Accelerate B2B
Go Digital
Provide Best
Customer
Experience
Monetize Data
A sound mobile data monetization strategy will continue to translate incre-
mental growth into additional revenues through:
» Expansion of our 4G/LTE network;
» Transition to a postpaid subscription model; and
» Products and services that stimulate data usage.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Build Cable
Cable now represents 36 percent of our Latam service
revenue with demand for high-speed data from both the
business sector and individual customers driving
continued revenue growth. To meet this demand, we are:
» Accelerating the expansion of our hybrid fiber-coaxial
(HFC) network;
» Targeting acquisitions that complement our organic
build out, such as Panama’s Cable Onda, which increases
our cable exposure and significantly enhances our B2B
capabilities; and
» Adding content and services to drive further growth in
Average Revenue Per User (ARPU).
Prepare for Convergence
As we evolve from being a traditional mobile operator to a
more comprehensive service provider, we are expanding our
ability to offer convergent services that include both mobile
and cable services to customers of all sizes. The deployment
of IT solutions to efficiently market and support convergent
solutions will help us:
» Differentiate ourselves in the marketplace;
» Generate new revenue streams;
» Increase customer satisfaction and loyalty;
» Reduce customer churn and costs; and
» Prepare for future network deployments such as 5G.
In 2018, we continued
to roll out our cable network,
exceeding our goal of
reaching 10 million homes.
We also added more than
400,000 new HFC customer
relationships.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Accelerate B2B
Since launching in 2012, Tigo Business has enjoyed
exceptional growth among its three primary audiences:
multinational corporations, large local companies, and
small and medium size businesses (SMBs). To accelerate this
growth, we have made B2B fundamental to our strategy by:
» Differentiating the Tigo Business brand through excellent
service and frontline execution and
» Selectively evolving our portfolio into Information and
Communications Technology (ICT)-managed services.
Go Digital
Increased digitization of our processes and operations
in 2018 drove efficiencies that benefit the company and
customers alike. This transformation will continue as we:
» Provide superior digital journeys for our customers that will
ensure we become or remain the operator of choice;
» Create new tools and an enhanced operational model so
our teams can do their work more efficiently; and
» Offer next generation user-experience platforms that
seamlessly integrate content across linear and on-demand
channels. By the end of 2018, one such platform, Tigo
ONEtv, was already present in half of our Latam markets.
“ Business customers
rely on Tigo’s unique
ring network for high
quality and secure
services across the
region.”
Santiago Londoño
Vice President, B2B Latam
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OverviewStrategyPerformanceGovernanceFinancialsAppendix “ We mapped out
our customer
journey to digitize
all touch points
and offer a digital-
first experience.”
Miguel Garay
Vice President, Customer Experience
Best Customer Experience
At Millicom, living our purpose means much more than just offering a wide
variety of products and services. It means knowing our customers and
employing a truly customer-centric mindset that provides the products and
services they want while taking care of their needs efficiently and effectively.
We place our customers at the center of everything we do, and our purpose
at the heart of every product and service we offer.
We care deeply about the journey each customer takes with our products
and services. As we offer our customers more services and solutions and
transition from a prepaid transactional to a postpaid subscription model,
building long-term customer relationships becomes even more essential.
Competition for subscribers has increased, and we need to carefully consider
our choices of products and services, and the development and delivery of
those services to ensure they fit with our business objectives.
To understand our customers holistically, we have introduced standardized
experience metrics across all markets to monitor customer engagement,
local and regional trends, and consumption patterns. This helps us deliver
a consistently positive experience for all, regardless of their levels of
engagement. Customers can also share and receive feedback significantly
faster and more easily with us.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Our Customer Experience
Strategy in Action in 2018
How well do we meet our customers’ needs? Are
we keeping our promises to them? Is the entire
process as fast and easy as it could be? As a
company, we strive to answer these and other
questions by addressing the entire customer
experience journey.
To prioritize customer care, in 2018 we:
» Created and implemented a regional playbook in each country that lays out
our internal commitments and external promises to customers;
» Rolled out a new platform to manage E-care transactions, which increased
to 80 percent the number of transactions we respond to within a specified
timeframe; and
» Implemented Net Promoter Score (NPS) as a key performance indicator,
measuring each customer touchpoint and segment via transactional NPS, as well
as relational NPS.
The standardization of metrics in all markets is designed to provide an ideal and
unified experience across the region.
Through NPS evaluations, we have found that our customers are more satisfied
as a result of these changes, and we have also improved our bottom line: We
reduced our overall customer care costs by 9.5 percent from 2017.
Starting in 2018, NPS has been included in the global compensation metrics
for our Millicom and Tigo leadership, as well as market-level directors and
managers. This decision to join NPS with the company’s financial indicators
demonstrates our dedication to place our customers at the center of everything
we do.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix With state-of-the-art studios
in most countries, today Tigo
Sports is the leading sports
broadcaster in Paraguay,
Guatemala, Colombia, Costa
Rica, Bolivia, and El Salvador.
Tigo Sports and the 2018 FIFA
World Cup Russia™
» Addition of more than 900,000 active users during
the World Cup
Sports, Content and Mobility:
Tigo Sports
We are witnessing new consumer habits and growing expectations on the
part of customers, where availability, opportunity and quality top the list of
entertainment priorities.
In the case of Tigo, our response is to focus not only on building networks,
but also on the generation and distribution of quality content through Tigo
Sports and Tigo ONEtv.
When Tigo Sports first aired in 2014, it marked a defining moment for
Millicom, as a broadcaster and content provider in Latin America. The
channel is now available in each of our mobile markets in Latin America
allowing subscribers to follow the latest headlines 24/7, and match
coverage live and on-demand across an all-sports programing schedule
that includes: soccer, rugby, futsal, handball, tennis, tabletennis, polo,
athletics, mixed martial arts, and fitness.
The 2018 FIFA World Cup Russia™ created the perfect convergence of
mobility, content, and sports. The growing mobile penetration in Latin
America, as well as the adoption of smart mobile devices, provided users in
the region with a digital, mobile and interactive experience for the first
» 72.5 million minutes of live programming
time. We took this opportunity to offer our customers a new experience, to
» Average of 55 sessions per user during the month of
live the passion of the 2018 FIFA World Cup Russia™ from their smartphone
June of our Tigo Sports App and Web
and tablet, through our exclusive Tigo Sports App. We also launched the
channel Tigo Sports+ in Paraguay to expand our transmission channels
during the World Cup. In addition to having exclusive rights for the
transmission of various matches country by country, the broadcasts were
100 percent HD.
Tigo Sports Russia 2018
https://youtu.be/FVYoHgLrHzU
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OverviewStrategyPerformanceGovernanceFinancialsAppendix The Essential Connection:
Corporate Responsibility
and Strategic Success
An integrated approach to external affairs and stakeholder
engagement
Working in emerging markets influences our approach to business growth. However, achieving
this requires a multi-pronged approach with all stakeholders, including policy-makers, regulators,
multilateral organizations, and NGOs. In these developing economies and societies, the
integration of our business strategy and corporate responsibility efforts is required to create
shared value and promote sustainable development for all our stakeholders.
To ensure all efforts are unified and point toward our ultimate purpose, our external affairs
team oversees regulatory affairs, government relations, corporate responsibility, and corporate
communications. This structure provides a holistic approach to risk management, stakeholder
engagement, and communications, and enhances integrated analysis and strategic decision-
making.
We believe progress is inseparable from the adoption of digital tools. Digital technology has the
power to transform lives, helping people move out of poverty and into the mainstream economy,
enhancing quality of life through improved access to health, education, financial services, and
employment. As we continue to build digital highways, we promote the adoption of these rapidly
developing digital tools that can impact every aspect of life and which allow individuals and
communities in the countries where we operate to enjoy their full potential.
The opportunities for our business to grow depend on stable and well-functioning governance
systems in the countries where we operate, a growing customer base that can afford our products
and services, a committed and talented workforce, and our ability to demonstrate environmental
and social responsibility. Our commitment and approach to corporate responsibility empower,
protect and enhance the capabilities of our customers, our staff, and our suppliers, and create
sustainable value. In essence, doing business the right way, “future-proofs” our business and
provides opportunities for growth.
“
Our CR program helps us ‘walk the
talk’ by directly addressing the wider
impacts our business operations have on
society. It guides our efforts to support
socio-economic progress in the markets
we serve with technological expertise.
It informs our actions to protect those
who may become vulnerable by using
our services. And it helps us identify
the best ways to solve larger societal
issues wherever and whenever we can.
Together, these efforts help us maintain
our license to operate and build trust
with key partners.
”
Rachel Samrén
EVP, Chief External Affairs Officer
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quodit occulla cipiet. Minvel eumquia dolore nus. Ariatas sectend igentib.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Materiality Assessment and
Stakeholder Engagement
For years, we have worked with a variety of local and international
partners, such as the GSMA, UNICEF and the Global Network
Initiative (GNI) multistakeholder initiative to acquire a deeper
knowledge of the challenges we face and how best to tackle them
in our markets. Since 2012, we have also conducted biennial
materiality assessments that engage broader groups of
stakeholders.
In 2018, in preparation for developing an updated Five-Year Corporate Responsibility Plan, we engaged
even more in-depth and broadly with all our key stakeholder groups to better understand their concerns
and priorities and ensure our CR strategy and reporting remain relevant and responsive to newly
emerging topics in our industry.
Customers
Investors
Stakeholders
Communities
Employees
As an integral part of our work, Business for
Social Responsibility (BSR), a global nonprofit
consultancy organization, conducted a
comprehensive materiality assessment which
comprised over 25 internal interviewees,
including our senior and middle management
across multiple business functions and
markets, a wide range of stakeholders
covering our shareholders, communities,
customers, and employees, and BSR’s vast
network and deep expertise in corporate
responsibility. The Materiality Assessment
confirmed that we were on the right track
with the key issues that we have covered
since 2014. BSR’s research also identified
opportunities to accelerate the impact digital
highways have on the economic and social
value created by Millicom’s core purpose,
and to leverage Millicom’s core assets: our
employees and our strong reputation in
communities.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix “ Sustainability is not
something you do on
the side. In the long
run, it is the only way
you create wealth for
shareholders.”
Kinnevik AB
Responsible
Leadership in Action
CR
Fundamentals
Empowering
Women
Ethics
Environment
Purpose:
Build Digital Highways
that connect people,
improve lives
and develop
communities
Inclusion
Supply
Chain
Protecting
Children
Human
Rights
Connecting
Communities
Our Updated CR Framework
With fresh and thorough input from our extensive stakeholder engagement process, we
updated our Corporate Responsibility (CR) framework to show the strong connection between
our core business purpose, the essential elements of our CR work and our commitments to
protect children online, empower women, and connect communities.
With our purpose at its center, our framework has two core elements: 1) Corporate
Responsibility Fundamentals, and 2) Responsible Leadership in Action.
CR Fundamentals
Corporate Responsibility Fundamentals groups the areas that are a prerequisite for the
health of our business and the societies in which we operate. To position ourselves in
a fast-paced and competitive digital world, we must handle our everyday interactions
with high integrity and ethics and zero tolerance for any form of corruption. We must
also carefully consider our actions in the physical world and continue to do business with
suppliers that have strong environmental and human rights standards and practices; build
more environmentally friendly, efficient and resilient digital highways; become and remain
the employer of choice; and build an organization where people feel empowered and
encouraged to be the best version of themselves. Initiatives in these areas help us use the
resources we depend on wisely and responsibly and, through our influence across the value
chain, create a positive ripple effect throughout our markets.
18
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Responsible Leadership
in Action
Responsible Leadership in Action identifies the areas that differentiate Tigo
in our markets. The expansion of our networks and the adoption of a digital
lifestyle in emerging markets, significantly supports access to education,
work, and health. Through our flagship programs for children, women,
and communities, we tap into our specific knowledge, resources, and core
business activities, putting them in the service of shaping digital spaces that
allow people to connect and prosper.
Why these three pillars? Because by addressing each with distinct
approaches and carefully crafted initiatives and partnerships, their
combined impacts offer potential synergies for prosperity and social
resilience. For example, we seek to help as many children as we can to
safely explore, learn, and grow through digital tools. We take concrete
steps to educate children, parents, teachers, and caregivers on the risks and
opportunities of digital technology, and we strive to protect their rights
throughout our value chain. We train women and girls on digital literacy
and entrepreneurship to empower and enable them to take advantage of
the digital world. Finally, because we believe connected communities are
stronger communities, we help them prosper by building digital highways,
providing digital education and equipping them with access to technology.
Topics in each category will align with the United Nations Sustainable
Development Goals (UN SDGs), and are embedded throughout our whole
organization. Our CR team works closely with other departments to support
them in the successful execution of the strategy. To learn more about
governance of CR at Millicom, see pages 89 - 90 of the Governance section of
this report.
“ You would not build a
school without doors.
By the same token,
we work so that the
digital spaces we make
accessible are also safe
for new generations of
digital citizens.
”
Mauricio Ramos
Chief Executive Officer
19
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix CR Goals and Five-Year Plan
Our updated five-year corporate responsibility plan lays out the company’s goals and benchmarks
for 2019 - 2023. Our employees, customers, and investors increasingly show interest in how we add
environmental, social, and economic value for all stakeholders. Our new plan helps us address their
expectations. We also know our CR activities unlock business opportunities, such as the untapped
potential for cost savings, efficiencies, enhanced network resilience and customer solutions, while
reducing our energy consumption and carbon footprint. Our flagship programs designed to empower
women, protect children and connect communities, promote the access and use of digital services in a
safe, productive, and life-enhancing manner.
Summary CR Five-Year Plan: 2019 - 2023
CR Fundamentals
Ethics
Environment
» Build a strong corporate culture that seeks
» Enhance standardization of data management
compliance excellency; an ethics business
and reporting of baselines and targets to
culture, where employees at all levels are
achieve cost savings and the reduction of our
committed to doing what is right, upholding
carbon footprint.
the company’s values and standards.
» Environmental impact assessments of all
» Have a Compliance & Ethics Program that is
operations executed by 2021, including issue
central to the business strategy, effectively
prioritization and remediation plans.
embedded in the business processes and
procedures, and focusing on the actual impact
the company’s program has in the countries
it operates in, on our employees, customers,
stakeholders and communities.
» Increase and measure waste revenue streams,
and reuse and recycling of consumer devices.
» Develop and implement a comprehensive
strategy for climate change mitigation and
resilience for Tigo operations and customers.
» All operations are recognized by local
authorities and/or international organizations
Inclusion
in their fight against corruption.
Supply Chain
» Enhance due diligence processes by including
sustainable procurement criteria for
strategic suppliers. Extend related training to
procurement team.
» Train all suppliers with Group spend of more
than US$1million by 2023, and measure their
progress on corrective action plans through a
sustainable procurement platform and audits.
» Build an inclusive work environment that is
representative of our workforce, the markets
where we operate, and the customers we serve.
» Promote a culture of inclusion through policies,
procedures, and regular training, and activities
that foster employee collaboration.
» Enhance employee wellness and growth
through policies, programs, and practices
designed to fulfill their aspirations for
professional and personal development.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Advancing Human Rights
» Continue our efforts in preventing access to
» Consolidate and enhance human rights policies
and practices covering privacy, freedom of
expression, supply chain, and vulnerable groups
to meet United Nations Guiding Principles on
online child sexual abuse material through
our networks by continuous implementation
of blocking mechanisms region-wide, and
advancing industry initiatives.
Business and Human Rights standards.
Empowering Women
» Develop and deploy a Human Rights Impact
Assessment (HRIA) toolkit for all Latam
markets by 2019.
» Roll out human rights training in all Latam
markets by 2020.
» Conduct assessments in Latam markets on
socio-economic conditions and technological
capabilities of women and girls who are the
beneficiaries of our programs to measure
benefits achieved through trainings.
» Protect customer rights to privacy and freedom
» Continue our programs to reduce the gender
of expression in accordance with Global
gap in the use of mobile technology.
Network Initiative’s (GNI) principles and obtain
positive assessments of policies and practices.
Responsible
Leadership in Action
Protecting Child Rights
» Continue our Child Online Protection education
program to reach more children, adolescents,
parents, teachers, and caregivers.
» Expand Child Online Protection training for our
employee volunteer program by creating online
training platform in all our operations.
» Conduct research programs in each market
on the use of technology by children and
adolescents to tailor content and adapt child
online protection training based on results
and insights.
» Implement regional strategy to advance
digital literacy with educational programs on
basic and advanced digital knowledge and
entrepreneurial skills.
Connecting Communities
» Measure impacts of connectivity in
communities targeted by our programs to
assess improvements in socio-economic
conditions of beneficiaries, and optimize
program content and resource allocation.
» Continue bringing internet connections to
schools and public institutions in vulnerable
communities throughout Latin America,
through collaborative partnerships with local
government and NGOs.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Enterprise Risk Management
Our Enterprise Risk Management (ERM) program remains a critical part of our business
strategy. We have carefully aligned our approach to balancing risk with reward with our
business objectives to protect our stakeholders and deliver sustainable value.
Risk Landscape and Appetite
As an international mobile and cable services company operating in emerging markets
across Latin America and Africa, identifying and managing risk plays a significant role
in our decision-making process. Our markets expose us to an inherently higher degree,
and potentially different sets of risks than similar companies operating in larger, more
established and mature economies.
In addition to risks associated with our geographical footprint, rapid change in mobile
telephony and cable technology can have a significant impact on the demand for our
services, and our ability to generate sufficient returns on the investments we make.
As a consequence of these factors, we have a higher risk appetite than many of our peers in
the telecommunications and cable industry, and a wider risk profile than many international
businesses. We accept the risks inherent in our businesses and markets to the extent that
opportunities for sufficient returns exist and on our ability to adopt appropriate systems and
controls to manage those risks.
22
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Risk Management Framework
and Approach
We approach risk management consistently across the entire business, identifying and
managing risks strategically at the Board and Senior Management levels and through in-
depth processes and at transaction level by key business unit leaders and staff in our operating
countries. We embed risk management processes in our operations both geographically (by
country) and functionally (by business area), developing and implementing action plans that
seek to balance risks with returns, within pre-determined risk appetite levels.
The pyramid below illustrates Millicom’s Enterprise Risk Management (ERM) framework.
» Strategy
and risk appetite
» Policy, roles, and
responsibilities
» Effectiveness of risk
management
» Risk identification
» Assessment and measurement of
current and target risk levels
» Prioritization
» Risk treatment and mitigating actions/
contingency planning
» Monitoring, escalation, and reporting
» Training and awareness
» Behavior, performance, and reward
» Assurance
Governance and oversight
Process
Culture and compliance
We classify key risks into six broad categories:
» Strategic
» Financial and competition
» Operations and execution
» Political and regulatory
» Governance, compliance, and reputational
» People and culture
23
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Evolution of risk
in 2018
In 2018 Millicom continued to experience a degree
of regulatory and macro-economic uncertainty in
many of the countries in our footprint. The ongoing
shift in our business profile to Latin America,
including the addition of Cable Onda in Panama,
further increased our exposure to the region.
However, while many countries in Latin America
experienced economic, political or currency
volatility in 2018, our key operating countries
remained relatively stable.
Our senior leadership team remained unchanged
during 2018, a key enabler in executing on our
strategy and driving both short-term and longer-
term initiatives, including those on leadership,
culture and succession planning.
In preparation for our U.S. share listing, we refined
the way in which risks are identified, measured
and assessed, introducing a more consistent
methodology and processes that strengthens
our resilience and reduces uncertainty. Our risk
and internal control programs are aligned in our
Sarbanes-Oxley implementation plan.
While we manage and monitor many more
Information and network access security, including
risks within the Millicom risk universe, we have
protection of customer data and cyber security
highlighted here the areas of risk that were a key
in general, continue to increase in importance
focus for Millicom in 2018.
for all consumer-based businesses. We continued
to invest in this area (detailed on page 91 in the
Governance section) in 2018.
24
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Risk
Mitigation strategy
Competition and Customer Experience: Competition
for subscribers has increased in post-paid higher ARPU
customers, with quality of service, innovation and
converged offerings as key differentiating factors.
Our evolution from a prepaid to a subscription based business continues to stabilize
and enhance the quality of our customer base. See page 14 for information on how
we have invested in processes to improve customer experience and gain insights.
Financial and Macro-Economic: Unfavorable macro-
economic conditions may reduce customer ARPU and
impact our financial results and cash flows.
We carefully analyze the timing and amounts of cash flows required to service our
debt while balancing operational cash flow needs, and we repatriate cash as quickly
as possible.
Political and Regulatory: Lack of transparency and
predictability in regulation, and regulatory and tax rul-
ings can lead to associated penalties and reputational
damage, as well as operational change requirements.
Indirect taxation and regulatory pressure through tar-
iffs, taxes and service penalties continued to increase in
2018, a trend that we expect to continue in the future.
We monitor elections in the countries where we operate and review potential
changes in regulations on an ongoing basis. We implement efficiency programs
in all aspects of our business to offset the impact of newly introduced or expected
changes in taxes and regulations. A number of countries in our footprint held
planned government elections during 2018. To date, the outcome of these elections
has not had a noticeable impact on our businesses.
Technical Transformation and Convergence: Failure to
set up business structures and models that facilitate
efficient and effective operations could negatively
impact competitive positions, and business value.
Millicom has evolved from a traditional mobile operator to a provider of a comprehen-
sive range of services through fixed line, mobile, satellite, and MFS platforms. To learn
more about our business strategy and goals to prepare for convergence see pages
9 - 15.
Portfolio Management: The acquisition or retention of
businesses either poorly aligned to strategy, or which
are overpriced, risk bringing lower than required return
on investment, and inefficient allocation of capital and
resource.
We carefully consider opportunities to acquire, merge, or divest businesses in light
of market dynamics, portfolio balance, and long-term value creation. We have been
managing this risk, in part by selling some operations in Africa and expanding our
footprint in Latin America through the purchase of Cable Onda in Panama.
Networks and Infrastructure Resilience: Disruptions to
service, or compromised ability to restore services to
customers in acceptable time frames, can cause loss
of revenue, increase expenses, and have a negative
impact on customer experience.
Cyber Security and Data Protection: Information secu-
rity and data protection increasingly place a burden of
compliance and responsibility on companies like ours
who retain, handle, and process sensitive customer
data.
Our network resilience controls and mitigating activities include network redundancy,
as well as business continuity management plans which are tested on a regular basis.
We have processes in place to regularly assess threats and vulnerabilities to security
breaches. Learn more on page 30 about the initiatives we implemented in 2018 to
improve protection of critical systems, and ensure compliance with relevant data
protection rules.
Spectrum and Licenses: The availability of licenses
and spectrum is limited, closely regulated, and often
expensive. Not obtaining these from regulators or third
parties at a price we deem to be commercially accept-
able, or at all, remains a risk.
We often negotiate renewals/retention in the initial allocation contracts and we care-
fully consider opportunities to acquire new spectrum based on spectrum quality, fit
with network needs, and customer demand. During 2018, we successfully obtained
and renewed the spectrum we need to continue to operate our businesses, including
acquiring new spectrum in El Salvador and Paraguay.
People, Workplace and Well-being: Our geographical
footprint sometimes exposes employees to situations
which may threaten their personal security.
We manage the health, safety, and well-being of staff based on international stand-
ards, industry best practice, and advice and support from local authorities. To learn
more about our approach to employee health, safety, and security see page 44.
Compliance and Ethics: A lack of accountability and
discipline in ensuring sufficient anti-bribery, anti-
corruption, and anti-money laundering procedures
and controls could result in potential penalties, fines,
reputational damage, and operational restrictions.
Through clear policies, training and monitoring activities, we ensure that all our
staff remain aware of the risks to them as individuals and to the company and
know how to act if faced with risk in these areas. See pages 75 - 76 for more infor-
mation on our anti-money laundering, anti-corruption and other business ethics
action items in 2018.
25
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Living Our
Purpose
Spotlight
Interview with
Marcelo Cataldo
General Manager of Colombia Operations
Q: What role does Colombia play in Millicom’s regional strategy and
growth plans?
A: Colombia already represents 30 percent of revenue for Millicom in Latam
region. Despite strong competition for our services in the country, we see a
large upside opportunity to capture market share.
Q: What are your goals for Tigo in Colombia?
A: Connect every Colombian. By successfully executing our core business
strategy, we are poised for even greater growth by:
» Increasing 4G penetration from its current 30 percent and capitalize on
the country’s significant innovation appetite.
» Raising residential internet penetration from its current level near
40 percent.
» Transitioning customers from prepaid transactional (currently at around
80 percent) to a recurring subscription model.
Q: How do you see these business objectives connecting to Millicom’s
purpose and corporate responsibility initiatives?
A: By increasing our overall penetration of internet users, we will give
each Colombian an important tool to access the world. Building digital
highways also advances the socioeconomic development of Colombia,
bringing the latest innovations to our democracy and fast-growing
economy. We’re proud of how our 2018 achievements have contributed
to Colombians’ quality of life.
26
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Significant
Accomplishments
in Colombia in 2018
» Provided data transmission services for three major elections, including
the Presidential election, which helped 19 million Colombians vote across
1,000 different cities. TigoUne received a letter of congratulations from
the Colombian government for delivering results in fewer than three hours.
» Served as technology partner for the Central American Olympic Games.
» Launched Tigo ONEtv, an integrated linear and nonlinear TV choice that
has so far garnered 20,000 customers, and is gaining momentum.
» First to introduce unlimited mobile data plans.
» Achieved 50 percent occupancy in our new datacenter in less than a year.
Q: Issues around transparency, corruption, and inappropriate use of
the internet are sometimes raised as red flags by the investment
community and other stakeholders when doing business in Latin
American countries like Colombia. How do you respond to these?
A: I am proud that Millicom holds itself to the highest standards of
accountability and transparency and is a model for other companies
working in the region. We have taken a leadership role in protecting
children’s rights, freedom of expression, and anti-corruption issues. In
2018, our Colombia operation:
» Ranked as one of the top five companies in Colombia in an assessment
conducted by the Global Transparency Survey (GTS).
» Ranked as one of 24 most transparent companies in Colombia and
the only telecommunications company to receive a certificate from
Colombia’s Secretary of Transparency.
» Conducted TigoUne research in partnership with Universidad EAFIT in
Medellin to assess the risks and opportunities in the use of information
and communications technology by children in their day-to-day lives (see
pages 34 - 35 for more).
» Launched Contigo Conectados in Spanish (
https://contigoconectados.
com/) using TigoUne research. This new CR campaign focuses on
education, cyberbullying, excessive internet use, safety, social capital and
participation, health, and the digital gap through proactive mediation,
social innovation, and enhancing digital competencies.
Q: What’s ahead for Millicom’s Colombia operations?
A: We’re excited about the opportunity to carry on Millicom’s mission to
provide the best, most secure digital highways. We want to be the first
choice for customers in all our markets. Looking ahead to 2019 in Colombia,
we want to connect ten new cities for the fixed business, increase our ability
to reach more individuals in rural areas, and grow our 4G footprint.
27
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Living Our
Purpose
Spotlight
Santiago Londoño, Vice President B2B
shares updates on Tigo Business
Q: What did 2018 hold for the Tigo Business brand?
first phase of moving to a cluster working model, in which all
A: By helping thousands of businesses transform and grow with our
applications can be hosted and replicated across the region within
secure, high-speed business broadband services, we continued our
evolution to become the strongest player in the region, solidifying
our positioning as the #1 brand in five out of the eight countries
we operate in. In 2018, we strengthened the brand’s ability to
serve multinational companies, large local businesses and small
and medium-sized businesses (SMBs) through three notable
initiatives: a fiber ring that connects Latam countries, network
resilience and several exciting SMB initiatives.
Tier III datacenters, integrated through the expansive South
American ring network. This in turn helps us achieve business
continuity management plans to help minimize any disruption or
compromised ability to restore services in acceptable timeframes.
Q: Can you share some of the 2018 Tigo Business initiatives that
helped SMBs succeed?
A: In 2018, we rolled out our first SMB convergent offer in Bolivia.
For a fixed monthly price, customers there can take advantage
Q: How has the new fiber ring benefited all Latam countries,
of “Soluciones a tu Medida” by purchasing a service package
including our new customers in Panama?
based on individual needs. This package includes internet, HFC,
A: Expanded in November 2018, our fiber ring which connects 12
countries from Mexico to Argentina provides a high-performance
infrastructure that allows us to offer a single, connected network.
This expansive, integrated network resulted in increased
availability, greater transport capacity between countries, unified
regional support, and network resilience to natural disasters and
emergencies. With this new capability, Millicom can now widen
mobile, and cloud solutions. With year-over-year growth of ten
percent, the SMB segment represents an exceptional opportunity
for Tigo Business to expand. It also supports our social purpose
to help communities and economies prosper. Increasingly,
commercial success depends on being connected, offering online
distribution and sales channels, enabling web-based customer
communications and service, and operating business-critical
its communications services, datacenter, cloud, and co-location
functions in the cloud.
to companies wanting to connect their offices or branches
throughout the region.
Q: Why and how have you prioritized network resilience?
Coffee Cup, El Salvador
https://youtu.be/N1kro5OKTME
A: Tigo Business customers need reliable, consistent connectivity
because their livelihoods depend on uninterrupted access to the
tools and services they need to succeed. In 2018, we began the
Business Forum, Guatemala
https://www.youtube.com/
watch?v=eJLJnkWbkwE
28
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Responsible
Leadership in Action
CR
Fundamentals
Empowering
Women
Ethics
Environment
Purpose:
Build Digital Highways
that connect people,
improve lives
and develop
communities
Inclusion
Supply
Chain
Protecting
Children
Human
Rights
Connecting
Communities
Living Our
Purpose
Spotlight
Respecting Human Rights and
building a Culture of Privacy
At Millicom, part of building digital highways for our customers includes retaining, handling
and processing sensitive data. As companies like ours face increasing levels of scrutiny and
regulation around information security and data protection, we are focused on building a
culture of privacy both internally at Millicom and in our markets.
Internally, we have created a cross-functional task force to make sure these initiatives
are being applied throughout the company. In 2018, we created a
Global Privacy Policy
and worked on compliance with the General Data Protection Regulation (GDPR) in the EU.
The launch of the policy was followed by a company-wide Privacy Day Awareness Campaign
stressing the policy’s key elements and the importance of strong privacy practices. The
policy implementation includes the designation of privacy champions in each business
function at corporate and operational level, the implementation of our Privacy Management
Tool to manage personal data processing activities and reporting, and mandatory online
trainings for new hires and on an annual basis for the entire organization.
This past year, we also built on our global Human Rights Impact Assessment (HRIA)
conducted in 2017 and developed operation-level HRIAs. We did this by partnering with
Business for Social Responsibility to customize and improve the tools used to assess human
rights issues related to our business. In 2019, we will deploy an HR impact assessment
toolkit in all our markets, and enhance employee training on human rights and the use of
these tools.
We also participate in the Global Network Initiative (GNI), a collaborative network of NGOs,
businesses, and academics who adopt a set of principles which are designed to promote
privacy and freedom of expression when faced with government pressure to hand over user
data, remove content, or restrict communications. Every two years, the GNI conducts an
external assessment of company policies and practices to determine whether the company
is making a good faith effort to meet those GNI principles. Our first assessment was
conducted in Q4 2018. We will disclose the results from the assessment within six months of
its completion.
We recently revised our Policy for Law Enforcement Assistance and Major Events and
adopted a new Governance Process for Human Rights Risks Related to Freedom of
Expression and Privacy to strengthen our assessment of such risks and our commitment to
protect our customers’ rights. You can also review our Law Enforcement Disclosure Report here.
In 2018, Millicom also accepted an invitation to serve on the Freedom Online Coalition
(FOC) Advisory Network, comprised of governments that have committed to work together
to support internet freedom and protect fundamental human rights – free expression,
association, assembly, and privacy online – worldwide.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Living Our
Purpose
Spotlight
A Commitment to
Data Security for our Customers
We take data security seriously and know our customers do too. Our processes for network and IT systems
development include regular assessments of threats and vulnerabilities to security breaches, as well as the
deployment of resources to mitigate those risks. The following key initiatives kicked off in 2018:
» Formalized the Global Information Security Office (GISO): The office assumed responsibility for strategy,
tactics, and oversight of all information security efforts within the broader Millicom environment.
» Developed a Global Security Operations Center: With 24/7 monitoring and analysis, the center
consolidates and centralizes all local security operations management into a single, all-encompassing
global information security operations center. Initial locations were rolled out in 2018, and we will
complete deployment in late 2019.
» Created a Global Vulnerability Management Program: To provide better insight into the technical security
risks of the company, this program identifies and tracks risks and vulnerabilities within all operations. We
initiated the program in 2018 and expect full rollout by the end of Q3 2019.
» Developed a Global Identity and Access Management Program: Millicom initiated steps to centralize all
business and critical access provisioning to more effectively manage user access, especially with respect to
U.S. regulatory requirements. Phase One will address all regulatory requirements by the end of Q3 2019,
with remaining deployment running through mid-2020.
For additional details about our approach to data security, see page 91 in the Governance section.
30
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Performance:
Responsible Leadership
in Action
31
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Connecting Communities:
Schools in El Salvador
Internet connectivity has become an essential
part of educational success. We support the ICT
Alliance for the Americas and its efforts to
connect all schools in Latam through joint action
by 2030. As an example of that support, we are
providing internet connectivity to 350 public
education centers in El Salvador. In 2018, we also
delivered 25,000 tablets across more than 1,450
public education centers that have benefited
approximately 66,000 students.
Learning to Code in Bolivia
To help Bolivian children access digital knowledge
and future employment opportunities, Tigo
Bolivia has implemented a program with local
partner COGNOS-COGNOTEC, to teach coding
skills to primary and secondary school students
in public schools. This program was launched in
2017. To ensure continuity and capacity building,
schools commit to continue with the program
after the first year. This allows the inclusion of 45
new schools every year and the continuity of the
courses. By the end of 2018, 38,267 children and
adolescents had received this training.
Women, Children and
Communities
As a company, we do more than just offer communications services. Our
purpose is to build digital highways that connect people, improve lives, and
develop communities. This purpose guides the actions that we take and
how we conduct our business responsibly.
This larger, overarching purpose puts us in a unique position to act as
agents of positive change in the lives of our customers and communities we
serve. Our approach to connectivity and the building of digital highways go
hand in hand with setting our corporate responsibility programs and goals.
For example, gender inequality and poverty are risk factors in the countries
where we operate because they limit the market for our products and
services. By educating women and giving them digital tools to enhance
their livelihoods, we seek to unleash their confidence and power to create
durable prosperity in their communities. Similarly, our public education
efforts and engagement with youth provide social benefit and new
opportunities to children in Latin America, while helping us cultivate the
informed, connected, and self-sufficient customer base we aspire to serve.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Key Activities and Accomplishments
In 2018, we leveraged varied opportunities to create value and benefits for
both Millicom and the communities we serve. Each initiative described in this
section underscores how Empowering Women, Connecting Communities, and
Protecting Children remain essential chapters in Millicom’s story.
Empowering Women: Our “Conectadas” Initiative
Gender equality expands economic growth, promotes social development,
and enhances business performance. Digital financial services can increase the
participation of women in the workforce and create opportunities for women
in the formal market economy. According to the UN1, the full incorporation
of women’s capacities into labor forces would add percentage points to most
national growth rates - double digits in many cases.
Connectivity can also help women bypass social restrictions and lead to better
outcomes for their own livelihoods and their children’s health and education.
Females comprise half of our potential consumer base and available talent
pool for employment. In 2018, we stepped up our commitment to women’s
empowerment by committing all country operations to the Connected Women
Initiative. This program from Groupe Spéciale Mobile Association (GSMA)
strives to reduce the gap in the use of mobile and internet between men and
women by 2020. By providing women with our technologies and services, we
unlock opportunities and knowledge that allow families, communities, and
economies to prosper and thrive.
In 2018, our gender
parity efforts in
Guatemala received
recognition again
by the Equals in
Tech Awards. Of 357
nominations from
80 countries, we
ranked among the
top five finalists in
the Leadership II
Category and
among the top 15
overall.
As we strategically promote digital highways and connectivity, this game-
changing initiative helps narrow the gender gap. In El Salvador alone, “Mujeres
Conectadas” (Connected Women) trained 30,000 women on how to use
smartphones, protect children online, and manage finances with Mobile
Financial Services (MFS). Our goal by 2020: increase the total number of
women trained in El Salvador to 100,000 and arrive at 50/50 gender parity.
Furthermore, our Women’s Digital Inclusion program in Guatemala in
partnership with the NGO Sheva, provides training to women and girls to
reduce the digital gender gap, teaching them about the advantages of using
mobile technology in their day-to-day lives. Training content includes online
safety, privacy, and responsible use of social networks, among other areas.
By the end of 2018, 23,848 women had been trained. The program began in
Guatemala in 2017. Due to its success, it will be rolled out to all other Latam
Tigo operations in 2019, complementing the digital inclusion programs
already underway or serving as the initial program on this topic.
1 https://sdgcompass.org/sdsg/sdg-5/
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Protecting Children
As information and communication technologies rapidly penetrate all
regions of the world, the use of these technologies increasingly informs
children’s experiences. While these tools provide opportunities for learning,
participation, and creativity, global concern has coalesced around how
to reduce the risk of harm children face online. When developing online
technologies, networks, services, and policies, service providers, parents,
teachers, and others need to better understand the ways young people use
the internet.
Protecting children has long been a cornerstone of our commitment in
corporate responsibility to help them lead safer, healthier lives, with access
to more opportunities through education and inclusion. Because of the
nature of our business, online protection is an aspect where we can make
a significant difference and maintain a leadership role. Through carefully
designed programs, we bring years of dedication to this cause and leverage
partners who share the same values.
Consultations and Outreach
Too often children and adolescents are excluded from the design and
planning phase of digital technology projects that will most impact
them. In 2018, Millicom changed that by partnering with several local
universities and organizations in Central and South America to conduct
research and direct outreach to children and adolescents to acquire a
better understanding of the risks and opportunities that the internet and
communications technology pose for them.
In Colombia, Millicom partnered with EAFIT University in Medellin to launch
a first-of-its-kind assessment on internet and communications technology
(ICT) use in children’s day-to-day lives that included participation from 485
children aged nine to 16, plus the review of hundreds of best practices and
more than 5,000 scientific articles.
With help from more than 500 local Tigo employee volunteers, Millicom
will use the results of the research to design and implement a nationwide
program to advance the safe and productive use of technology.
The study identified many opportunities for parents, grandparents, and
teachers to better engage with children on their internet use, as well as ways
children and teens can use the internet to advance creativity and positive
connections, all while minimizing risk. For example, our research shows the
greater the use of the internet for educational activities, the less likely a child
will be to send or request messages with sexual content and the increased
likelihood they will not meet people they have encountered on the internet.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
“ In Colombia,
TigoUne contributed
substantially to the
production of useful and
appropriate knowledge
to promote the creative
and responsible use of
ICT among young
people. ”
Maria Isabel Villa, Ph.D.
Communications. EAFIT University
OverviewStrategyPerformanceGovernanceFinancialsAppendix Going to the Source: Consultations with Children
and Adolescents
A long-standing premise of our work with children has been to protect and
inspire them as they learn to use the internet safely and creatively. This is
key in helping them become responsible digital citizens and thrive in an
interconnected world. To inform the design of upcoming initiatives, we decided
to reach out to them directly with the objective of better understanding how
they regard and use technology as a tool for their voices to be heard and take
part in decisions that affect the societies in which they live.
With our “Crianza Tecnologica” partner, Paniamor Foundation, we conducted
consultations in Costa Rica, El Salvador, Colombia, and Guatemala. The study
included 157 adolescents between 14 and 19 years of age from public and
private schools, and enabled participants to identify the main issues affecting
them and alternatives to address and mitigate those issues through responsible
ICT use. Key findings of the consultations show us that adolescents see the
internet and technology as a platform to participate in society and have their
voices heard. Even though they feel that because of their age they are not
included in many conversations on important social issues, the internet allows
them to have an awareness on these issues that also motivates them to take
part in finding solutions.
Such findings will help us create relevant and effective initiatives aimed at
supporting this key demographic.
Engaging Everyone in the
Responsible and Creative Use
of the Internet by Children
Our 2017 - 2018 study with EAFIT University in
Colombia revealed some startling findings about
children and adolescent internet use and the risks they
face on line:
» 75 percent of children and adolescents connect to
the internet via mobile phones versus 28 percent via
laptop or computer. The greater the use of a
handheld device in a private room, the more
exposure a child has to sexual images or videos.
» The average daily duration of connection for a
nine-year-old is 1:46 hours and for a sixteen-year-old
is five hours.
» 97 percent of children use the internet for school work;
almost 50 percent spend time in a virtual world.
» The greatest risk identified to children and adolescents
related to internet and communications technologies
is excessive use; 43 percent of children surveyed have
tried, unsuccessfully, to go online less.
» 30 percent of those surveyed have met strangers
through the internet and 17 percent have met
strangers in person.
“ Technologies allow us
to inform ourselves
on what is happening
in the world, be more
critical and express
ourselves.”
Paniamor Foundation
Consultation Participant
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Overview
Strategy
Performance
Beyond Online Protection:
Protecting Child Rights
The opportunities for helping children fulfill their potential are large. This is why we have collaborated with
governments and nonprofits in other important ways, such as the mobile birth registration program which,
in Tanzania alone, has given more than 2.1 million children since 2013 the basic right to an identity and the
ability to access health care, education, and social protection. To ensure that our company respects child
rights, we continue developing both partnerships and internal capabilities to positively impact children’s
lives in as many ways as we can.
Building on a previous assessment conducted by UNICEF, in 2018 we completed and deployed in all our
Latam operations the Mobile Operator Child Impact Assessment (MOCRIA). This tool, developed jointly with
UNICEF in 2016 is
publicly available and allows ICT companies to assess how and where our business
may affect children and better understand our impact on child rights. For example, we can more clearly see
the potential risk of child labor in our supply chains, or consider the impact of our marketing on children.
Based on implementation of the tool, we created specific action plans and new procedures to deal with
these impacts in 2018, including the establishment of Responsible Marketing Guidelines for Millicom.
These new guidelines embed our values related to transparency and protecting children in our marketing
and communications policies and procedures.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Strategy
Performance
UNICEF Partnership Against Violence
We remain committed to protecting the rights of children and adolescents
in our Latam markets as they develop and grow into active participants
in digital economies and societies. We believe we can best solve complex
problems through partnerships in which each party focuses on their
strengths. For several years, we have worked closely with UNICEF to provide
thought leadership and share best practices industry-wide on how to
prevent violence against children. In May 2018, we renewed our strong
commitment to work with UNICEF in Latam through an updated three-
year collaboration agreement aimed at preventing violence and protecting
children and teens in the region.
As part of the agreement, Millicom supports programs related to the
promotion of child rights, the safe use of technology, and violence
prevention against children and teens across our markets in Latin America.
During the first year of the renewed partnership, Millicom supported
projects in Paraguay, El Salvador and Guatemala and hosted a two-day
workshop with UNICEF and other subject matter experts to help the
telecommunications industry understand its impact on children’s rights, and
explore opportunities to scale and deepen the impact of our joint programs.
In Guatemala and El Salvador, Millicom supported the creation of new
child helplines in both countries, through which children can seek advice on
online risks like cyberbullying, grooming, and harassment, and also receive
assistance in cases where their rights are being violated.
In Paraguay, the company supported a program that aims at using
technology in classrooms and developing young leaders in the safe
and responsible use of the internet. This program is being continued
during 2019.
“ This agreement is an
example of how the
private sector can
articulate sustainability
strategies that center
on childhood and
youth. In a region that
is becoming more
digital, the online and
offline prevention and
protection of the most
vulnerable ones, who
are usually the children
and teens, have to be
priorities for us. ”
Stefan Stefansson
Responsible for UNICEF’s Private Sector
for Latin America and the Caribbean.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Performance:
Our People Make
Our Purpose Happen
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OverviewStrategyPerformanceGovernanceFinancialsAppendix “ Our culture and our
Tigo people are our
absolute competitive
advantage.”
Susy Bobenrieth
Chief Human Resources Officer
Performance:
Our People Make
Our Purpose Happen
With a global workforce of more than 21,000 individuals, over the past
25 years Millicom has become one of the largest employers in many of the
countries where we operate. Rooted in the dedication, agility, and skills of
our people, we have brought connectivity to some of the most challenging
and diverse markets in the world. Representing more than 50 nationalities,
our enthusiastic ambassadors live our purpose in the work they do and inter
actions they have within their communities every day.
Millicom strives to be the employer of choice in all our markets a company
where people want to work because of the opportunities to learn, grow, and
interact in a positive work environment and contribute to a greater purpose.
It all starts by finding the right people and developing them in the right
positions. To do this, we assess our talent based on present and future needs,
offering advancement opportunities based on merit and performance.
Other elements of our approach include:
» Creating a positive and inclusive work culture;
» Providing employees with a sense of purpose in their jobs; and
» Ensuring our employees are safe, since many of them work in countries
where security issues are a concern.
In this section, you will find highlights of key 2018 accomplishments related
to our human capital.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Key 2018 Activities and
Accomplishments
Our “Sangre Tigo”
Culture and Employee
Engagement
Pride runs deep at Millicom, and it shows in the
passion employees bring to work and the loyalty of
longserving team members. Many of our seniorlevel
executives started in field sales or as customer service
representatives. They stay with us because they believe
in what we do and see room for professional growth
and development.
We use the descriptor “Sangre Tigo” as a reference to
the key values, practices, behaviors, and beliefs that are
shared by all our employees across the board. Sangre
Tigo helps us to define the beating heart that enables
our organization to grow.
Because of our strong company culture, we have
earned our place as a top 25 employer in Latin
America for two years in a row and were a recipient
of “Great Place To Work” awards in many of the
countries where we operate.
Culture Survey
We believe that a strong cultural reference closely aligned to our business strategy, gives us a strong competitive
advantage. It needs to continue to evolve with the business, industry, and our markets.
In 2018, our Top Leadership Team came together to shape and determine this framework. They defined the specific
attitudes and behaviors most relevant to our customers, employees, communities, and investors, that together make up
Sangre Tigo’s DNA. We also conducted a company-wide survey to better understand and define our culture in which more
than 11,000 employees took part. The results helped us identify both cultural positives as well as improvement areas.
In 2019, all our offices will work on evolving our cultural framework. We plan to appoint more than 100 internal
ambassadors across Latam to spread the message and educate our organization towards our desired Sangre Tigo culture.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Sangre Tigo Culture at Work
in Our Communities
Sangre Tigo is inseparable from giving back to our communities through our
time and personal involvement. Our employees put in the passion and hard
work while we provide the spaces, resources, and connections to meet the needs
of our communities, leveraging everyone’s power to make a difference.
We continue our core program on volunteering by focusing our efforts in Child
Online Protection, which provides guidance to children, adolescents, teachers,
parents, and caregivers on how to navigate digital technologies safely and
productively. For example, our Colombia operation started deploying over 500
volunteers in the last quarter of 2018 to provide such training, designed and
developed according to the findings of the study described on pages 34 35.
Furthermore, in 2017 Tigo Guatemala began its local implementation of our
Tech Teaching Program based on the regional Crianza Tecnologica content,
training 60 Tigo volunteers on online protection for children and adolescents.
This group of volunteers led a program of educational talks aimed at primary
school teachers that allowed us to reach a total of 771 teachers during that
year. The next step was to adapt the contents of the program to pedagogical
materials that teachers could use in their classes. We worked closely with the
Ministry of Education and a group of experts in the design of the content
and materials. The key messages focused on the risks associated with social
networks and the internet and were presented in easytouse formats for
classroom education. A first group of 150 teachers who received this training,
were able to directly impact 4,395 children. By 2019, the goal is to train a
further 1,000 teachers, which will allow us to directly reach more than 25,000
students from first to sixth grade at primary school.
In El Salvador, Tigo employees dedicated 2,000 volunteer hours to working in
their communities, supporting essential projects such as constructing houses
and providing education on child protection online.
Stepping Up in Difficult Times
In June 2018, the Volcan de Fuego eruption in central Guatemala affected
1.7 million people, destroying homes, infrustructure and agriculture. An army
of 130 Tigo volunteers responded swiftly to the crisis and coordinated relief
efforts aroundtheclock to provide aid, food, water, medicines, and blankets to
those most inneed.
Our flagship programs co-exist with a readiness to help our communities in
other areas of need at critical times.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Rewards
and Incentives
We reward our employees based on merit and perfor
mance, striving to develop transparent, standardized
packages and procedures across the organization. In 2018,
our global rewards group implemented a new variable pay
design for the top leadership of the company, that includes
short-term incentive (STI) and long-term incentive (LTI)
pay. The changes have had a positive impact on our com
pany’s strategy; thus the Compensation Committee has
agreed that no changes are required to the design of these
programs for 2019. Approximately 370 employees receive
part of their annual compensation package in Millicom
shares via our Deferred Share Plan (DSP) or Performance
Share Plan (PSP) equity compensation plans. To learn more
about our remuneration policy, see pages 79 to 83.
Standardized EOE Practices
and Sensitivity Training
In 2018, we standardized Equal Opportunity Employer (EOE) practices. We
also designed and implemented behavioral interviewing standards, which
help determine which applicants are the best fit for Millicom. In addition,
we have a structured recruiting process, where the decisionmaking is based
on the assessment shared by different members of a relevant team, rather
than on HR or the hiring manager alone.
We plan to continue sensitivity training programs with all employees to
help them understand how to communicate and interact in ways that make
everyone feel included. We also discuss what inclusion really means and
share ways to recognize and break through social barriers.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Responsible
Leadership in Action
CR
Fundamentals
Empowering
Women
Ethics
Environment
Purpose:
Build Digital Highways
that connect people,
improve lives
and develop
communities
Inclusion
Supply
Chain
Protecting
Children
Human
Rights
Connecting
Communities
Diversity and Inclusion
At Millicom, we take diversity and inclusion seriously across all
Because we believe our differences unite us, we also actively recruit
levels throughout our operations.
individuals with physical disabilities and hearing impairment at
To support gender equality, we continue to close the pay gap and
our facilities, adjusting work environments to accommodate their
we strive to develop and promote women from within, as well as
needs. This includes everything from adding ramps to the primary
facilitate mobility between our operations and corporate offices.
entrance at a call center to expanding aisle space in offices. We
A few examples highlight our diversity and inclusion efforts in 2018:
» Gender Pay Gap Analysis: We conducted a comprehensive gen
invite you to learn more about Tigo Guatemala’s exemplary inclu
sivity efforts in this video.
der pay gap analysis at our headquarters and across all Latam
operations to ensure equal remuneration between men and
women. In operations where we identified issues, we will imple
Diversity and Inclusion
https://www.youtube.com/
watch?v=9CwUBmXvi7I)
ment corrective actions.
» Leadership Training in Costa Rica: We have selected women
within Millicom who have demonstrated strong leadership po
tential and enrolled them in the highly regarded INCAE Business
School in Costa Rica for additional, advanced training.
Global Policy to Promote a
Positive Work Environment
In an effort to promote a positive work environment with freedom
» Mentoring Program in El Salvador: We implemented a women’s
to express beliefs and acceptance of diverse backgrounds, we
mentoring program called Empoderate, where female managers
created a global policy in 2018. After first training the Executive
mentor potential future female leaders using the VitalVoices.org
Team on the new policy, we shared the policy with general
mentoring framework.
managers and their direct reports. As part of our implementation
of the new policy, we have set key performance indicators that
include more diversity, especially as it relates to gender equity and
individuals with disabilities.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix accreditations, which means 100 percent of all Millicom
operating entities are aligned to OHSAS and ISO
standards
» Approximately 80 percent of employees based in Miami
attended educational sessions facilitated by the Miami
Police Department during Millicom’s 2018 annual Safety
and Security Matters week. Training sessions included
Active Shooter, First Aid, Fire Marshal and Warden,
Managers’ Roles and Responsibilities, Travel Safety &
Security, Environmental Awareness, Occupational Health,
and Stress & Wellbeing
» For the third straight year, we improved our supplier
duediligence and vetting processes and conducted
comprehensive compliance audits for those suppliers
considered to be at greatest risk of significant health,
safety, and security issues
» A combined $1.8 million in savings from 2017 through
our extended integrated services approach to the
management of non-financial risk areas.
While we are proud of our 2018 health and safety
accomplishments, we also understand there is always more
work to do. In 2019, as we prepare for transition to the new
ISO Health and Safety 45001 standard, we will address
several specific observations from external audits related
to increased engagement from all levels of management,
further engagement of appropriate staff committees, and
increased support for wellbeing, mental health and travel.
Workforce Health,
Safety and
Wellness Updates
Many of our employees live and work in emerging markets
where security issues including civil unrest, armed and
organized criminal activity, and terrorism may threaten
personal security. When intense political and civil unrest
spread across Nicaragua in 2018, more than 200 individuals
were shot and killed, and over 2,000 were wounded.
Millicom did not suffer the loss of any employees or business
activities during that time, in part because of the sound
controls put in place.
Millicom manages the health, safety, and wellbeing of its
employees based on international (OHSAS) standards and
industry best practices, with advice and support from local
authorities.
Our central security and safety team empowers and trains
operational teams, and every market has a professionally
trained and certified physical security and health and safety
officer. All third-party vendors and partners must abide by
our security and safety standards.
In 2018, we successfully operated our businesses with a
reduced number of health and safetyrelated incidents,
both employeerelated, as well as with contractors and
outsourced service providers. No employee fatalities
occurred in 2018. Other statistics from this past year include:
» 80 percent reduction in the overall number of fatalities,
with two fatalities reported among contractors, down
from a total of ten in 2017
» 71 percent decrease in Lost Time Incident Rate for
incidents causing greater than three days’ absence from
work, with Total Incident Rate remaining stable from
2017
» Our Costa Rica, El Salvador and Guatemala operations
achieved externally verified health and safety
A colleague in El Salvador attends our annual international health
and well-being program.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Talent Acquisition, Growth and Development
2018 marked the second year of a five-year strategic initiative to enhance the ways in which we attract, grow,
and develop talent within Millicom.
As part of the program, we map the skill sets and capabilities of our current team, fill our bench with top
candidates, and grow talent from within the company. In 2018, to fill open positions for critical jobs, we were able
to promote internal candidates about 70 percent of the time.
The program also includes preparation for executive succession, emergency plans, and focus on key countries.
Tracking talent and creating succession plans strengthens our pipeline with diverse leaders across functions
and levels.
For pivotal job families, we are developing a career framework and curricula that addresses ideal career
progressions and identifies the capabilities and resources needed to grow our business.
To the extent that turnover happens, we strive to better understand how, when, and where it happens. We believe
our new CR framework will assist with recruitment and retention because it gives employees a sense of purpose
and the feeling they are making a contribution to something greater than themselves.
Consolidation of Operations
and Organizational
Effectiveness and Efficiency
To align our structure across countries and drive operational excellence,
innovation, and productivity, in 2018 we continued the consolidation
of corporate functions, primarily to Miami. We also implemented an
empowered organization and efficiency model in Latin America and created
the Business Transformation Office (BTO). These actions make it easier for
us to identify areas where we can become more efficient and share Best
Management Practices (BMPs) across all our operations for the benefit of
employees and customers.
In 2018, we also created a function to boost team and business
performance by applying organizational effectiveness capabilities such as
change management to the company. We started with deploying a change
management framework for critical Millicom projects, and training and
coaching change leads as part of our Change Management Subject Matter
Expert program.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Performance:
CR Fundamentals
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Empowering
Women
Ethics
Inclusion
Responsible
Leadership in Action
CR
Fundamentals
Environment
Protecting
Children
Supply
Chain
Purpose:
Build Digital Highways
that connect people,
improve lives
and develop
communities
Human
Rights
Connecting
Communities
Corporate Responsibility Fundamentals:
The Building Blocks for
Fulfilling Our Purpose
The way we conduct our business is an essential building block to our
success and expansion in the markets we serve. With a large regional
footprint, we recognize our responsibility to minimize our impact on the
planet, build trust with key stakeholders and partners, and model
transparency.
From reverse logistics to proactive supply chain management, we
minimize the potential for harm while maximizing positive impacts and
efficiencies. In 2018, we took significant steps toward this objective. This
section contains key activities and accomplishments related to our
environmental stewardship and supply chain management. Other CR
fundamentals related to human rights and business ethics are covered
in the Responsible Leadership in Action, and Governance sections of
this report.
Hybrid cooling system in TigoUne operations
Titanium datacenter
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Key 2018 Activities and Accomplishments
Reducing our Environmental
Footprint
Energy costs, power outages, and increased regulations and costs
related to disposing of e-waste can affect our business continuity
and growth. Apart from our goal of being responsible stewards of
the environment, we know that by reducing waste and operating less
carbon-intensive networks, we are optimizing our business and serving
our customers with improved connectivity and services.
Energy efficiency measures in our operations enable us to achieve
stable operational expenses while our network expands. The benefits
of securing network growth while managing the proportional increase
of energy consumption and its related costs include the ability to
provide our customers with affordable service and improved coverage,
and maintain a competitive advantage in our markets.
In 2018, we stepped up the collaboration among our CR and
technical teams to leverage their vast pool of knowledge of the
technologies and practices that enhance efficiency gains. This led to
the development of the 2019–2023 Corporate Responsibility plan for
our environmental performance. The Plan lays out the work we will do,
focused on capability building, energy and resource efficiency, and
carbon footprint reduction. Find details of our 2018 environmental key
performance indicators on pages 204–205 of the Appendix.
Reverse Logistics and Global E-Waste Program
Implemented in All Operations
Our approach to e-waste includes reverse logistics as a central element, as it helps us recover equipment that can be repaired and reused
in the network. Because of the nature of our business, the growth of our markets and the pace of technological changes, we handle great
quantities of such equipment and therefore regard e-waste as an ongoing concern and opportunity. One focus area during 2018 was our
Cable business. As it continues to grow in all of our markets, so does the importance and complexity of reverse logistics processes to
properly track our Customer Premises Equipment (CPEs), which are important assets for the company, and quickly recover them when
necessary as we upgrade our service. We have achieved significant improvements in two key aspects:
» Home recollection (making sure we recover equipment no longer in use by a customer); and
» Laboratory recovery rates (repairing and refurbishing equipment as needed for redeployment to the network, thus reducing the need to
buy new equipment).
The equipment that, due to obsolescence or deterioration, cannot be reintroduced to the network is processed by our approved e-waste
vendors. This is the final step of a layered approach that effectively enables waste minimization and recovery of whole pieces of
equipment and/or valuable materials that can then be recycled. We have been consistently increasing the amounts of recycled e-waste as
a result of effectively rolling out the program in all operations.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Commitment to Tier III
Datacenters
By setting up the first Tier III certified state-of-the-art datacenter in Bolivia and
with the acquisition of Cable Onda, we continued the progress we have made
in recent years in Paraguay, Colombia, and Africa to modernize our datacenters.
The goals for this program include:
» Increase data protection measures;
» Automate facility operations;
» Optimize use of datacenter resources; and
» Increase energy efficiency up to 40 percent for the new datacenters.
In 2019, we plan to add new cutting-edge datacenters in Nicaragua, Honduras,
and El Salvador to fulfill the goal of having at least one highly energy efficient
datacenter in each of the countries we serve.
Millicom Datacenters
www.youtube.com/
watch?v=1QBwd_2_2-g
Supply Chain
Management
Millicom’s commitment to corporate responsibility extends to its supply chain.
Our
Supplier Code of Conduct requires suppliers to conduct themselves
with the highest standards of honesty, fairness, and ethics and sets baseline
expectations in the areas of health & safety, environment, fair labor and
compliance. As part of our supplier qualification process and contractual
process, suppliers must acknowledge that they will act in accordance with the
“ The training has had a huge positive
impact in our business. Thanks to this,
we initiated an internal evaluation
process through which many
improvement opportunities were
identified, leading to the creation and
institutionalization of our CR policies.”
Rafael Ayala, General Manager
Ayala Quintanilla S.A DE C.V (participat-
ed in the 2017 supplier training)
First-in-Class CR Training for
Key Suppliers
For the second straight year, Millicom sponsored
a third-party program that has now trained more
than 200 key suppliers on critical CR issues, such
as Ethics, Privacy, Child Rights, Diversity, Health
and Safety and Environmental Stewardship. A
cross-functional team of procurement and CR
staff, together with external subject matter
experts, developed and conducted the 2018
program. The training, which was enhanced
through lessons learned during the 2017
program, provided one-on-one follow-up to
ensure our suppliers understand the high
expectations and standards they need to meet
Code of Conduct. Once the relationship is established we ask our suppliers to
to do business with us, as well as the
obtain a threshold score for their CR performance under Millicom’s sustainable
procurement platform EcoVadis.
In 2018, we expanded the internal team responsible for supply chain
opportunities available for vendors willing to
walk the talk on corporate responsibility. In 2018,
we also worked with each supplier to develop
corrective action plans they will implement in
management to enhance the evaluation of our suppliers. With EcoVadis, we
2019 and beyond to address areas of
can target our suppliers’ performance in key CR areas such as Environment
improvement.
Stewardship, Labor & Human rights, Ethics, and Sustainable Procurement, and
customize practical means of evaluating the extent to which CR is embedded in
suppliers’ business, products, and services.
Moreover, our supplier portfolio in EcoVadis increased 28 percent from the
previous year. Also, absolute response rates for suppliers, increased from 47
percent in 2017 to 64 percent in 2018. Supplier performance in EcoVadis is
measured by the development of Corrective Action Plans, which impact their
overall scores. For 2019, we will focus our efforts on working closely with our
suppliers to continue improving current scores. We will also continue tailoring
the platform to our business priorities and use other tools, such as the Supplier
Training program, to further drive the pursuit of win-win, sustainable practices.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Performance:
Our Financial Performance
in 2018
50
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Chief Financial Officer’s Message
We entered 2018 with positive operational momentum, and
this was sustained throughout the year and allowed us to
report solid financial annual results, as we continued to
execute on our strategy, which focuses on capturing the
broadband opportunity in our Latin American markets.
A key measure of our financial success in 2018 is the Group’s return on invested capital
(ROIC), which rose to 18.2% in 2018, up strongly from 16.2% in 2017, driven mostly by
increased operating efficiency in Latam, and by a reduction in the amount of capital
allocated to Africa and to passive infrastructure, such as mobile towers.
In our Latam segment, I am pleased to report that organic service revenue growth
improved noticeably to 4.3% and exceeded our initial target of 2% to 4% for the year.
EBITDA growth also improved to 3.5%, in line with our target, even as a number of one-off
items affected reported growth by 1.0 percentage point.
As we can see from these solid 2018 results, our strategy is now beginning to produce
faster organic growth, while also generating cash flow in excess of what we need to fund
our internal growth plans and to pay an attractive dividend to our shareholders. Against
this backdrop and considering also our healthy balance sheet, we took the bold step of
accelerating the company’s growth in 2018 by acquiring Cable Onda, Panama’s leading
cable operator. The acquisition also accelerates the reconfiguration of our revenue mix,
which is becoming increasingly subscription-based. This is enhancing the predictability and
sustainability of the company’s financial performance and gives us increased confidence in
our ability to deliver even faster growth over the medium term.
Following our acquisition of Cable Onda in December 2018, our leverage ended 2018 at
2.5x on a proportionate net debt to EBITDA basis, above our target of around 2.0x, which
we view as prudent when considering that the company operates in emerging markets
where political and macroeconomic risks are high.
We are confident that by executing our strategy, delivering efficiencies, and investing
carefully, we will continue to create value for shareholders over the long term.
This chapter provides a summary of the financial and operating performance of our Latin
American and African segments through selected performance indicators which are based
on our management reporting, presenting Guatemala and Honduras joint ventures as if
fully consolidated.
For more extensive details on Millicom’s financial performance please refer to pages 95 to 189.
Tim Pennington
Chief Financial Officer
51
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Our 2018 Financial Performance in Latin America
During 2018, we continued to invest to rapidly expand both the reach
Cable services, as well as mobile market share gains. Guatemala
and capacity of our 4G mobile and hybrid fiber-cable (HFC) networks
and Paraguay performed well and sustained above average levels of
to meet strong pent-up demand for broadband services in the region.
profitability, while Colombia and Honduras showed very encouraging
We are seeing these investments pay off, as organic service revenue
growth accelerated to 4.3% year-over-year in 2018 from 0.9% growth
in 2017, exceeding our targets. Importantly, growth improved in most
signs of improvement throughout 2018. Among our six largest
markets, El Salvador was the only one to disappoint, but we took
meaningful steps throughout 2018 to improve our operating and
country markets and in both our Mobile and Cable business units.
financial performance in 2019.
In Mobile, which accounts for 63% of Latam service revenues,
organic service revenue growth improved to 1.3% year-over-year
in 2018 from a decline of 2.3% in 2017, fueled by the addition of
EBITDA growth for the Latam segment improved to 3.5% in 2018
from 2.8% growth in 2017 on an organic basis. A number of one-
offs affected both years and reduced our reported growth by about
3.2 million 4G customers. Our studies show that a typical customer
1.0 percentage point in 2018.
consumes about 30 - 40% more data after they upgrade from 3G
Capex in Latin America totaled US$954 million in 2018. Although
to 4G, and the ARPU from that customer increases approximately
we spent almost US$50 million less than the $1.0 billion we had
10%. At year-end, we had more than 10 million 4G customers,
planned, we exceeded our network expansion plans in both Mobile
which is still only about one-third of our total mobile customers in
and Cable, as we remained focused on expanding both coverage
the region, implying that we still have a long way to go to bring
and capacity to enhance customer experience and reduce churn.
mobile broadband services to all our customers.
By year-end, our 4G networks already covered approximately 65%
In Cable, which generates about 36% of our Latam service revenue,
organic service revenue growth accelerated to 10.0% in 2018, from
7.3% in 2017. Over the past year, we expanded our HFC network to
cover an additional 1.3 million homes, and we added 406,000 net
customer relationships, while driving ARPU growth of 1.4% in reported
dollar terms, even as currencies broadly weakened throughout the year.
By country, organic service revenue growth accelerated in Bolivia,
Colombia, Guatemala, and Honduras, and remained stable in
Paraguay, while EBITDA grew in our five largest markets. Our
performance in Bolivia was particularly robust, driven by the rapid
expansion of our HFC network and strong pent up demand for
of the population in our markets, up from 56% at the end of 2017.
Good 4G network coverage is allowing us to continue to deploy
more capital toward our Cable build, and network investment was
split approximately 68% Cable and 32% Mobile in 2018. Customer
premise equipment deployed to support the growth of our Cable
customer base accounted for more than 30% of our total capex in
the region, indicating that an important part of our capex is success-
driven and variable in nature, thereby enhancing the predictability
of our financial performance.
LATAM
Revenue by
country
Revenue by
service*
3%
Other
7%
El Salvador
12%
Paraguay
36%
Cable
US$1,808m
10.0% Growth
1%
Other
US$48m
63%
Mobile
US$3,214m
1.3% Growth
30%
Colombia
25%
Guatemala
5,069
Service Revenue
Organic growth +4.3%
2,077
EBITDA
Organic growth +3.5%
11%
Honduras
11%
Bolivia
Our Latin America (Latam) segment includes our Guatemala
and Honduras joint ventures as if they were fully consolidated.
Service revenue, EBITDA and organic growth are non-IFRS
measures. Please refer to page 196 for description of
non-IFRS measures.
* Other service revenue not allocated to the Business Units
includes revenue from tower rentals and contact center services.
AFRICA
Revenue by
country
Revenue by
service*
24%
Chad
2%
Cable
US$12m
15.9% Growth
1%
Other
US$3m
526
52
Service Revenue
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
Organic growth +0.9%
143
EBITDA
Organic growth +4.0%
97%
Mobile
US$510m
0.8% Growth
76%
Tanzania
OverviewStrategyPerformanceGovernanceFinancialsAppendix Our markets in numbers
Colombia
Revenue by
service*
Cable
US$892m
4% Growth
Others
US$37m
Mobile
US$624m
2% Growth
Paraguay
Revenue by
service*
Cable
US$207m
19% Growth
Others
US$1m
Mobile
US$423m
0% Growth
Others
US$1m
Cable
US$149m
57% Growth
Bolivia
Revenue by
service*
Mobile
US$446m
1% Growth
CABLE
Customer relationships
1,674,000
As of year end 2018
Service revenue US$m
Organic growth 3.5%
2018
2017
$1,553
$1,614
EBITDA US$m
Organic growth 4.4%
2018
2017
EBITDA margin %
2018
2017
$494
$469
29.7
27.0
Service revenue US$m
Organic growth +5.5%
2018
2017
EBITDA US$m
Organic growth +5.1%
2018
2017
EBITDA margin %
2018
2017
$632
$622
$332
$318
48.8
48.0
Service revenue US$m
Organic growth +11.1%
2018
2017
EBITDA US$m
Organic growth +7.3%
2018
2017
EBITDA margin %
2018
2017
$597
$549
$232
$217
37.8
39.1
41,000
Net additions
+3%
YOY Growth
MOBILE
4G smartphone data users
2,688,000
As of year end 2018
673,000
Net additions
+25%
YOY Growth
CABLE
Customer relationships
406,000
As of year end 2018
38,000
Net additions
+10%
YOY Growth
MOBILE
4G smartphone data users
988,000
As of year end 2018
322,000
Net additions
+48%
YOY Growth
CABLE
Customer relationships
389,000
As of year end 2018
158,000
Net additions
+69%
YOY Growth
MOBILE
4G smartphone data users
1,741,000
As of year end 2018
351,000
Net additions
+25%
YOY Growth
Earnings release pdf
*Others includes revenue from tower
rentals and contract center services.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix
Our markets in numbers
El Salvador
Revenue by
service*
Cable
US$127m
–2% Growth
Others
US$3m
Mobile
US$242m
–5% Growth
Guatemala**
Cable
US$184m
21% Growth
Others
US$1m
Revenue by
service*
Mobile
US$1,014m
4% Growth
Others
US$5m
Mobile
US$463m
–1% Growth
Honduras**
Cable
US$87m
16% Growth
Revenue by
service*
Service revenue US$m
Organic growth –4.6%
2018
2017
$371
$398
EBITDA US$m
Organic growth –14.2%
2018
2017
EBITDA margin %
2018
2017
$133
$155
32.9
36.6
Service revenue US$m
Organic growth +6.2%
2018
2017
EBITDA US$m
Organic growth +5.6%
2018
2017
EBITDA margin %
2018
2017
$1,200
$1,182
$689
$665
50.2
50.1
Service revenue US$m
Organic growth +1.8%
2018
2017
EBITDA US$m
Organic growth +3.4%
2018
2017
EBITDA margin %
2018
2017
$555
$566
$268
$265
45.8
45.3
CABLE
Customer relationships
273,000
As of year end 2018
(38,500)
Net additions
–12%
YOY Growth
MOBILE
4G smartphone data users
596,000
As of year end 2018
285,000
Net additions
+92%
YOY Growth
CABLE
Customer relationships
485,000
As of year end 2018
124,000
Net additions
+34%
YOY Growth
MOBILE
4G smartphone data users
2,870,000
As of year end 2018
902,000
Net additions
+46%
YOY Growth
CABLE
Customer relationships
165,000
As of year end 2018
14,000
Net additions
+9%
YOY Growth
MOBILE
4G smartphone data users
1,197,000
As of year end 2018
646,000
Net additions
+117%
YOY Growth
* Others includes revenue from tower rentals and contract center services.
** Our Latin America (Latam) segment includes our Guatemala and Honduras
joint ventures as if they were fully consolidated.
54
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Our markets in numbers
Costa Rica
Revenue by
service
Panama
Revenue by
service
Cable
US$151m
1% Growth
CABLE
Customer relationships
264,000
As of year end 2018
16,500
Net additions
+7.0%
YOY Growth
100%Cable
CABLE
Customer relationships
476,000
As of year end 2018
Revenue Generating
Units (RGUs)
923,000
As of year end 2018
Millicom’s acquisition of Panama was closed on
December 13, 2018
55
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Our 2018 Financial
Performance in Africa
Our consolidated Africa operations comprise Tanzania, including Zantel, and Chad, and
these deliver around 9% of Millicom’s Group revenue, predominantly from Mobile services.
Millicom’s strategy in the region is focused on accelerating and growing mobile data
adoption, strengthening our Mobile Financial Services (MFS) capabilities, and growing B2B.
In 2018, we added 1.3 million B2C mobile subscribers bringing the total to about 16 million,
a year-on-year increase of 8.6%.
Our efforts to drive digitized payments and innovations with our Mobile Financial Services
(MFS) has also brought a positive outcome. The number of customers using MFS grew 4.6%
7%
and reached more than 7 million accounting for 45% of our B2C Mobile customer base as
El Salvador
3%
Other
of year-end 2018.
LATAM
1%
Other
The region’s financial results showed a meaningful improvement in 2018, following a more
US$48m
5,069
Service Revenue
Organic growth +4.3%
12%
Paraguay
25%
Guatemala
Revenue by
challenging 2017.
country
Revenue by
service*
Organic service revenue growth improved to 0.9% year-over-year from a decline of 5.5%
in 2017, while organic EBITDA growth reached 4.0% in 2018 from a decline of 12.1%
2,077
EBITDA
in 2017. The improvement was underpinned by more favorable operating conditions in
Organic growth +3.5%
63%
Mobile
US$3,214m
1.3% Growth
36%
Cable
US$1,808m
10.0% Growth
Tanzania.
30%
Colombia
Our capital investment in Africa totaled US$40 million for the full year 2018, and the region
11%
Honduras
generated US$91 million of operating free cash flow, consistent with our strategic objective
11%
Bolivia
of ensuring that the Africa segment be self-sufficient and fund its internal growth and
capital requirements.
AFRICA
Revenue by
country
Revenue by
service*
24%
Chad
2%
Cable
US$12m
15.9% Growth
1%
Other
US$3m
97%
Mobile
US$510m
0.8% Growth
526
Service Revenue
Organic growth +0.9%
143
EBITDA
Organic growth +4.0%
76%
Tanzania
Service revenue, EBITDA and organic growth are non-
IFRS measures. Please refer to page 196 for description
of non-IFRS measures.
* Other Service Revenue not allocated to the Business
Units includes revenue from tower rentals.
56
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Governance:
Governance and Business
Ethics
57
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Governance:
Governance and Business Ethics
Doing the Right Things for the Right Reasons
Chairman’s Report
Millicom’s Board of Directors (“the Board”) and its committees dealt with many
significant strategic, operational and compliance matters during 2018. These
included further enhancement of governance structures related to the Group’s
joint ventures, ongoing development of compliance and control programs,
oversight of the process of acquiring the Cable Onda (Panama) operation, and
preparation for re-listing on the Nasdaq Stock Market in the U.S..
Role of the Board
The Board is responsible for approving Millicom’s strategy,
financial objectives, and operating plans and for oversight of
Strength through Diversity, Teamwork and
Sharing
Millicom’s diversity of people in our operating countries,
governance. The Board also plans for CEO succession and
offices, and headquarters is a key strength. We value
reviews plans for other senior management positions.
different perspectives, encourage the sharing of
Board Changes
We welcomed Mr. Lars-Åke Norling to the Board in
September 2018. Mr. Norling brings significant experience in
leadership and digital transformation in the
telecommunications business.
alternate viewpoints, and promote equal opportunity.
These remain core elements that contribute to Millicom’s
corporate culture.
We are proud of our success in fostering strong work place
environments and the accolades received in this respect.
I would like to thank Alejandro Santo Domingo for his
long-standing role as a Director of the Board and his
Compliance
During 2018, we continued building and refining our
contributions to both the Board and the Compliance and
compliance program, supported by the Executive
Business Conduct Committee during his tenure. Gratitude
Committee and our Ethics and Compliance team.
also goes to Simon Duffy for his role and valuable
contributions to both the Audit Committee and Board over
recent years. Both Mr. Santo Domingo and Mr. Duffy
stepped down from the Board in May 2018.
On behalf of the Board, I would like to reconfirm our
commitment to a culture of compliance and strong internal
control that leads to strength and success. We are proud to
be a leader in our dedication to ethics and compliance in our
In November 2018, Millicom also announced the proposed
markets. We look forward to engaging with you and thank
election of José Antonio Rios García as new Chairman of the
you for being part of the Millicom journey.
Board, as well as Pernille Erenbjerg and James Thompson as
new Directors of the Board, replacing myself and Anders
Jensen. As the company passes the baton to these new
leaders, we look forward to many years of continued success
Tom Boardman
in delivering on our mission as a company.
Former Chairman of the Board of Directors
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Corporate Governance Framework
Background
Millicom International Cellular S.A.
(“Millicom” or the “Company”) is a public
limited liability company (société
anonyme) governed by the Luxembourg
law of August 10, 1915 on Commercial
Companies (as amended), incorporated
on June 16, 1992, and registered with
the Luxembourg Trade and Companies’
Register (Registre du Commerce et des
Sociétés de Luxembourg) under number
B 40 630. The Millicom Group comprises
Millicom and its subsidiaries, joint
ventures and associates.
Millicom’s shares are listed on Nasdaq
Stockholm in the form of Swedish
Depository Receipts and on the Nasdaq
Stock Market in the U.S. as from January
9, 2019.
Millicom’s Corporate Governance Framework is primarily based on the following legislation, principles and regulations:
Publication
Swedish Code of Corporate Governance
Luxembourg Law
EU Directives and Regulations
Nasdaq Stockholm Issuer Rule Book
Nasdaq Stock Market Rules
U.S. Securities Laws
Good Stock Market Practice
Authority
Guiding Principles
Legislation
Legislation
Regulation
Regulation
Regulation
Guiding Principles
Philosophy
Comply or Explain
Comply
Comply
Comply
Comply
Comply
Corporate Citizenship
Millicom governance deviated in 2018 in relation to the Swedish Code in the following areas:
Code requirement
1.5–A shareholder, or a proxy representative of a
shareholder, who is neither a member of the board
nor an employee of the company is to be appointed
to verify and sign the minutes of the shareholders’
meeting.
9.7–Vesting of share-related incentive programs to
be no less than three years.
Millicom practice
Minutes are signed by the chairman of
the shareholders’ meeting (who is not a
member of the Board or an employee of
the Company), the meeting Secretary
and an appointed Scrutineer.
Deferred share incentive plans contain
vesting of 16.5%–30% of granted
shares after one year, 16.5%–30%
after two years, and 40%–67% after
three years.
Explanation
While this represents a deviation
from the Swedish Code, Millicom
follows Luxembourg Law in
connection with procedures and rules
for its shareholders’ meetings.
The Company believes that this
vesting schedule ensures alignment
between the interests of the
Company’s shareholders and its
employees.
Within these frameworks, the Board has
developed and continuously evaluates
internal guidelines and procedures, as
further described below, to ensure
quality and transparency of corporate
governance practices within Millicom.
Swedish Corporate Governance Code
The Swedish Corporate Governance
Code (the “Swedish Code”) promotes
positive development of corporate
governance. The Code complements
laws and regulations and sets its good
practice level above regulatory
requirements. The Swedish Corporate
Governance Board states that self-
regulation is often preferable to
mandatory legislation and therefore
allows companies to deviate from its
rules, following a “comply or explain”
philosophy.
Compliance with Applicable Stock
Exchange Rules
There has been no infringement of
applicable stock exchange rules and no
breach of good practice on the securities
market reported by Nasdaq Stockholm’s
disciplinary committee or the Swedish
Securities Council in 2018.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Corporate Governance Structure
Millicom’s Corporate Governance structure comprises the following three levels:
1.
Shareholders and representatives
of shareholders.
2.
Board of Directors and Committees
appointed by the Board from among
its members.
Shareholders’ meeting
Nomination Committee
Board of Directors
Compliance and Business
Conduct Committee
Compensation Committee
Audit Committee
3.
CEO and Executive management,
and its main functions managing
governance, risk, compliance and
ethics (including security), corporate
responsibility, controls.
Chief Executive Officer
Internal Audit
Executive Management Team
Compliance and
Business Ethics
Business Control
Risk Management
Corporate Responsibility
1. Shareholders and shareholders’
meeting
The shareholders’ meeting is the highest
decision-making body of Millicom and a
forum for shareholders to exercise
influence. Each shareholder has the right
to participate in the shareholders’
meeting and to vote according to the
number of shares owned. Shareholders
unable to attend in person may exercise
their rights by proxy.
Millicom’s Articles of Association (as
amended on May 4, 2018) set the Annual
General Meeting of Shareholders (“AGM”)
to be held within six months of the close
of the financial year in Luxembourg.
Millicom’s Articles of Association are
available in the “Governance” section of
Millicom’s website. Unless otherwise
required under Luxembourg law, an
extraordinary general meeting must be
convened to amend any provisions of
the Articles of Association.
At the 2018 AGM, which was held on
May 4, 2018, the following key items
were decided:
• Approval of the 2017 Consolidated
Financial Statements and distribution
of a dividend of US$2.64 per share;
• Approval of a Share Repurchase Plan.
On the same date, an Extraordinary
General Meeting (“EGM”) was held
during which several amendments were
made to the Articles of Association.
On January 7, 2019, an EGM was held at
which the following key items were
decided:
• Resignation and election of two
• Election and re-election of the Directors
Directors;
• Amendment to the Articles of
Association of the Company
regarding the procedure for
nomination of directors.
until the date of the 2019 AGM;
• Reappointment of Ernst & Young
(“EY”) as the external auditor;
• Approval of remuneration to the
Board and auditor and procedures
for the Nomination Committee;
• Approval of guidelines for the
remuneration of senior management;
and
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Nomination Committee
Nomination Committee
Ms. Cristina Stenbeck
Mr. John Hernander
Mr. Scott Cobb
On behalf of:
Kinnevik AB
Nordea Investment Funds
Southeastern Asset Management
Position
Chairman
Member
Member
The Nomination Committee is
appointed by the major shareholders of
Millicom. It is not a committee of the
Millicom Board. The Nomination
Committee’s role is to propose decisions
to the shareholders’ meeting in a
manner which promotes the common
interests of all shareholders. The
Nomination Committee has a term of
office typically commencing at the time
of the announcement of the interim
report for the period January to
September each year and ending when
a new Nomination Committee is formed.
At the January 7, 2019 Extraordinary
General Meeting, it was resolved that
the articles of association of the
company be amended to stipulate that
the Nomination Committee rules and
procedures of the Swedish Code of
Corporate Governance shall be applied
for the election of Directors to the Board
of Directors of the Company, as long as
such compliance does not conflict with
applicable mandatory law or regulation
or the mandatory rules of any stock
exchange on which the Company’s
shares are listed. Nomination Committee
proposals to the AGM include:
• Election and remuneration of Directors
of the Board, and Chairman of the
Board;
• Appointment and remuneration of the
external auditor; and
• Proposal of the Chairman of the AGM.
Under the terms of the Nomination
Committee charter, the Nomination
Committee consists of at least three
members, with a majority representing
the larger shareholders of the Company.
The current Nomination Committee was
formed during July 2018, in consultation
with larger shareholders of the Company
at June 20, 2018 and in accordance with
the resolution of the 2018 AGM.
The table below sets out beneficial
ownership of Millicom common shares, par
value US$1.50 each, by each person who
beneficially owns more than 5% of Millicom
common stock at December 31, 2018.
Shareholder
Kinnevik AB
Dodge & Cox
Southeastern Asset Management
Number of
shares
37,835,438
8,128,305
5,852,130
%
Shareholding
37.2
8.0
5.8
Footnote: Except as otherwise indicated, the holders listed above (“holders”) have sole voting and investment power with respect to all shares beneficially owned by them.
The holders have the same voting rights as all other holders of Millicom common stock. For purposes of this table, a person or group of persons is deemed to have “beneficial
ownership” of any shares as of a given date which such person or group of persons has the right to acquire within 60 days after such date. For purposes of computing the
percentage of outstanding shares held by the holders on a given date, any security which such holder has the right to acquire within 60 days after such date (including
shares which may be acquired upon exercise of vested portions of share options) is deemed to be outstanding, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
Promoting Board Diversity
Millicom’s Nomination Committee
recognizes the importance of diversity
for promoting strong corporate
governance, competitive advantage, and
effective decision-making. The
Nomination Committee is responsible
for periodically determining the
appropriate skills, perspectives,
experiences, and characteristics required
of Board candidates, considering the
Company’s needs and current Board
composition. This determination will
include knowledge, experience, and skills
in areas that are critical to understanding
the Company and its business; richness of
views brought by different personal
attributes such as gender, race, age, and
nationality; and other personal
characteristics, such as integrity and
judgment; and candidates’ commitment
to the boards of other publicly-held
companies.
In its work, the Nomination Committee
applies rule 4.1 of the Swedish Corporate
Governance Code as its diversity policy,
and the ambition to further improve
gender diversity is included in the
Nomination Committee charter.
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OverviewStrategyPerformanceGovernanceAppendixFinancials 2. Board of Directors and Board
Independence of the Board
committees
The Chairman convenes the Board and
leads its work. The Chairman is
accountable to the Board and acts as a
direct liaison between the Board and the
management of the Company, through
the CEO. Together with the CEO, meeting
agendas are set and the Chairman acts
as the communicator for Board decisions
where appropriate.
Role of the Board
Millicom’s Board of Directors (the
“Board”) is responsible for approving
Millicom’s strategy, financial objectives,
and operating plans, and for oversight of
governance. The Board also plans for
management succession of the CEO and
reviews plans for other senior
management positions.
As set forth in the Company’s Articles of
Association, the Board must comprise at
least six members. The 2018 AGM set
the number of Directors at eight,
comprising a Chairman and seven
members (all of whom are Non-
Executive Directors).
The Board selects the CEO, who is
charged with the daily management of
the Company and its business. The CEO
is responsible for recruiting, and the
Chairman of the Board is responsible for
approving, the senior management of
the company. The Board reviews and
approves plans for key senior
management positions, and the Board
supervises, supports and empowers the
senior management team, and monitors
their performance. In accordance with
the Swedish Code, the division of work
between the Board and the CEO is set
out in “The Rules of Procedure,
Instruction to the CEO, and Reporting
Instruction”.
Further details on the roles and activities
of the various committees, as well as
their responsibilities and activities, are
set out later in this section.
Board of Directors
Chairman, Deputy Chairman and six
members
Non-Executive Directors
Independent from the Company and its
Executive Management
100%
José Antonio Ríos García
Pernille Erenbjerg
Odilon Almeida
Janet Davidson
Tomas Eliasson
Lars-Åke Norling
Roger Solé Rafols
James Thompson
Not independent of the major shareholders
13%
Lars-Åke Norling
deliberating and voting on any
matters that pertain to such contract
or transaction at any meeting of the
Board of the Company; and
II. any such personal interest shall be fully
disclosed to the Company by the
relevant Director, officer or employee.
If any Director or officer of the Company
should have any personal interest in any
transaction of the Company, the Director
shall make known to the Board such
personal interest and shall not consider
or vote on any such transaction, and
such transaction and such Director’s or
officer’s interest therein shall be reported
to the next general meeting of
shareholders.
Powers and Limitations of the Board
Borrowing powers–The Board has
unrestricted borrowing powers on behalf
of, and for, the benefit of Millicom.
Time and age limit–No age limit exists
for being a Director of Millicom. Directors
can be elected for a maximum period of
six years before either re-election or
ending service. Directors are generally
elected annually. There are no
restrictions on the maximum continuous
period that a Director can serve.
Directors hold office until their
successors are elected.
Restrictions on voting–No contract or
other transaction between the Company
and any other person shall be affected
or invalidated by the fact that any
Director, officer or employee of the
Company has a personal interest in, or is
a director, officer, or employee of such
other person, except that:
I. such contract or transaction shall be
negotiated on an arm’s-length basis
on terms no less favorable to the
Company than could have been
obtained from an unrelated third party
and, in the case of a Director, the
Director shall abstain from
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Share Ownership Requirements
The Directors are not required to be
shareholders of the Company. Share
ownership of Directors is included in the
Director biographies set out on the
following pages.
The Corporate Secretary is also a
confidante and resource to the Board and
senior management, providing advice
and counsel on Board responsibilities and
logistics, and plays a leading role in the
Company’s corporate governance.
Chairman of the Board
Chief Executive Officer
The Chairman is elected by the AGM. If the
Chairman relinquishes the position during
the mandate period, the Board is to elect a
Chairman from among its members to
serve until the end of the next AGM.
Deputy Chairman of the Board
If elected, the Deputy Chairman of the
Board acts as a sounding board and
provides support for the Chairman. The
Deputy Chairman convenes Board
meetings in accordance with the
Company’s Articles of Association, and
leads its work in the event the Chairman is
unavailable or is excused from Board
meetings. The Deputy Chairman may act
as an intermediary for other Directors if
there are conflicts among Board members
or between the Chairman and the CEO, as
and when necessary. The Deputy
Chairman leads the annual processes for
evaluation of the performance of the
Board and of the Chairman. Additional
roles and responsibilities of the Deputy
Chairman can be determined by the
Board.
Corporate Secretary
The Corporate Secretary is appointed by
the Board. The role of the Corporate
Secretary is to ensure that Board
members have the proper advice and
resources for performing their duties to
shareholders under the relevant legal
frameworks. The Corporate Secretary is
also responsible for organization and
coordination of Board and Committee
meetings, and ensuring that the records,
or minutes of those meetings, reflect the
proper exercise of those duties.
The CEO is responsible for leading the
development and execution of the
Company’s strategy with a view to
creating shareholder value, together
with the management team. The CEO is
responsible for day-to-day activities of
the Company and management
decisions, both operating and financial.
The CEO acts as a direct liaison between
the Board and management of the
Company and communicates to the
Board on behalf of management.
The CEO also leads communication on
behalf of the Company to shareholders,
employees, government authorities,
other stakeholders, and the public.
Board Membership, Balance and
Independence
The Nomination Committee and the
Board periodically review the size and
balance of the Board to determine
whether any changes are appropriate.
At the AGM, held annually within six
months of the end of the financial year, or
at any other general meeting of
shareholders, shareholders may vote for or
against the Directors proposed by the
Nomination Committee or may elect
different Directors.
The Board has adopted the qualification
guidelines of an “independent director”
as defined by the Swedish Code, and
with consideration of specific
independence requirements of the
Nasdaq Stock Market rules. A director’s
independence is determined by a
general assessment of all factors that
may give cause to question the
individual’s independence of the
Company or its Executive Management.
Factors that are considered include
whether the individual:
•
•
is the CEO, or has been the CEO, of the
Company or a closely-related
company within the past five years;
is employed, or has been employed, by
the Company or a closely related
company within the last three years;
• receives a not insignificant
remuneration for advice or other
services beyond the remit of the
Board position from the Company, a
closely-related company or a person
in the executive management of the
Company;
• has, or has within the last year, had a
significant business relationship or
other significant financial dealings with
the Company or a closely-related
company as a client, supplier or partner,
either individually or as a member of
the Executive Management, a member
of the Board or a major shareholder in
a company with such a business
relationship with the Company;
•
•
is or has within the last three years
been a partner at, or has, as an
employee, participated in an audit of
the Company conducted by, the
Company’s or a closely-related
company’s current or then auditor;
is a member of the executive
management of another company if a
member of the board of that company
is a member of the executive
management of the Company; or
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials • has a close family relationship with a
person in the executive management
or with another person named in the
points above, if that person’s direct or
indirect business with the Company is
of such magnitude or significance as
to justify the opinion that the Board
member is not to be regarded as
independent.
In accordance with the Swedish Code:
• The majority of Millicom’s Board must
be independent from the Company and
its Executive Management (all Millicom
Directors meet this criteria); and
• at least two of those independent
Directors must also be independent
from the Company’s major
shareholders (seven of Millicom’s
Directors meet this criteria); and
• not more than one member of the
Board may be part of the executive
management team of the Company or
any of its subsidiaries (no members of
the Executive Team sit on the Board).
In addition, in accordance with Nasdaq
Stock Market rules:
• The Audit Committee must have at
least three members, all of whom meet
the Nasdaq Stock Market and SEC’s
relevant definitions of independence.
Gender of the Board
Male
75%
Female
25%
Tenure of Directors
1st year
3
2nd year
2
3rd year
1
4th year
1
5th year
1
Nationalities
American
3
Swedish
2
Spanish
1
Danish
1
Brazilian
1
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OverviewStrategyPerformanceGovernanceAppendixFinancials Board Profile: Skills and Experience
Mr. José Antonio Ríos García
(Venezuelan and American)
Chairman, Non-Executive Director
Ms. Pernille Erenbjerg
(Danish)
Deputy Chairman, Non-Executive Director
Mr. Odilon Almeida
(Brazilian)
Non-Executive Director
(FIRST APPOINTED: MAY 2017)
(FIRST APPOINTED: JANUARY 2019)
(FIRST APPOINTED: MAY 2015)
Mr. José Antonio Ríos García was re-elected
to the Board in May 2018 and was elected
as the Chairman of the Board in January
2019. He is also a member of the Audit
Committee and the Compensation
Committee.
Mr. Ríos (1945) is a U.S. citizen and currently
the Chairman and CEO of Celistics
Holdings, a leading provider of distribution
and intelligent logistics solutions for the
consumer technology industry in Latin
America. Prior to joining Celistics in 2012,
he was the International President of
Global Crossing, the telecommunications
company later acquired by Level 3
Communications.
Between 1999 and 2001, Mr. Ríos served as
member of the Global Management
Committee of Telefónica and President and
CEO of Telefónica Media, and prior to
joining Telefónica he served as Vice
President of Hughes Electronics
Corporation, was the founding President
and CEO of Galaxy Latin America (DirecTV
Latin America), and served as Chief
Operating Officer and Corporate Vice
President at the Cisneros Group of
Companies for 14 years.
Mr. Ríos brings to the Millicom Board his
significant experience in leading a variety
of consumer technology businesses in Latin
America including the telecommunications
and electronics industries.
INDEPENDENT from the Company, its
Executive Management, and its major
shareholders.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 1,623 shares.
Ms. Pernille Erenbjerg was elected as a new
member of the Board of Millicom in
January 2019. She is the Deputy Chairman
and a member of the Audit Committee.
Pernille Erenbjerg (1967) is a Danish citizen
and formerly (until December 2018) the
President and Group Chief Executive Officer
of TDC, the leading provider of integrated
communications and entertainment
solutions in Denmark and Norway. Before
being appointed President and Group Chief
Executive Officer, Pernille served as TDC’s
Chief Financial Officer and as Executive
Vice President of Corporate Finance.
Pernille currently serves on the Boards of
Nordea, the largest financial services group
in the Nordic region, and Genmab, the
Danish international biotechnology
company. Pernille holds an MSc in Business
Economics and Auditing from Copenhagen
Business School.
Ms. Erenbjerg brings years of experience
from operating a converged provider of
communication and entertainment services,
as well as from driving transformational
processes in complex organizations, both
organically and through M&A.
INDEPENDENT from the Company, its
Executive Management, and its major
shareholders.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: Ms. Erenbjerg does not
hold any Millicom shares.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
Mr. Odilon Almeida was re-elected to the
Board in May 2018. He is a member of the
Compliance and Business Conduct Committee.
Mr. Almeida (1961) is the President for Western
Union Global Money Transfer. He leads
Western Union’s global consumer omni-
channel business across more than 200
countries and territories. With a 15-year tenure
at Western Union, he most recently (2016) was
the President of the Americas and European
Union. His global business leadership and
board experience at Western Union, Millicom,
BankBoston (now Bank of America), The
Coca-Cola Company and Colgate-Palmolive,
has given him deep knowledge of corporate
governance, general management,
technology platforms, regulatory and
compliance as well as consumer insights of
developed and emerging nations.
Mr. Almeida holds a Bachelor of Civil
Engineering degree from the Maua
Engineering School in São Paulo, Brazil, a
Bachelor of Business Administration Degree
from the University of São Paulo, and an
MBA with specialization in Marketing from
the Getulio Vargas Foundation, São Paulo.
He advanced his education at IMD
Lausanne, The Wharton School, and
Harvard Business School.
Mr. Almeida strengthens the Millicom
Board with decades of experience from
the financial services and Fintech sectors,
and a leadership style anchored in growth
acceleration and business turnarounds
involving retail and digital transformation,
organic growth and successful M&A.
INDEPENDENT from the Company, its
Executive Management, and its major
shareholders.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 3,176 shares.
OverviewStrategyPerformanceGovernanceAppendixFinancials
Board Profile: Skills and Experience–continued
Ms. Janet Davidson
(American)
Non-Executive Director
Mr. Tomas Eliasson
(Swedish)
Non-Executive Director
Mr. Lars-Åke Norling
(Swedish)
Non-Executive Director
(FIRST APPOINTED: MAY 2016)
(FIRST APPOINTED: MAY 2014)
(FIRST APPOINTED: MAY 2018)
Ms. Janet Davidson was re-elected to the
Board in May 2018. She is the Chairman of
the Compliance and Business Conduct
Committee.
Ms. Davidson (1956) is a Supervisory Board
member of STMicroelectronics. She held
various managerial positions in Alcatel
Lucent (1979 - 2011) including the role as
Chief Strategy Officer, Chief Compliance
Officer, and Executive Vice President,
Quality & Customer Care.
She has been a Member of the Supervisory
Board of STMicroelectronics since June,
2013 and serves on its Audit Committee
and Strategy Committee. She has also been
recognized by Working Woman Foundation
with one of its first Women Enabling Science
and Technology awards in 2001. In 1999, she
was inducted into the Academy of Women
Achievers of the YWCA of the City of New
York, which honors women of high
achievement.
She brings to Millicom’s Board her long
experience in the telecommunications and
IT sectors.Ms. Davidson received a Bachelor
of Science degree in physics from Lehigh
University, a Master of Science degree in
Electrical Engineering from Georgia Tech,
and a Master of Science in Computer
Science through Bell Laboratories.
INDEPENDENT from the Company, its
Executive Management, and its major
shareholders.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 2,518 shares.
Mr. Tomas Eliasson was re-elected to the
Board in May 2018. He is the Chairman
of the Audit Committee.
Mr. Eliasson (1962) is Executive Vice
President, Chief Financial Officer of
Sandvik.
Previously Mr. Eliasson was the Chief
Financial Officer and Senior Vice-
President of Electrolux, the Swedish
appliances manufacturer.
Mr. Eliasson has also held various
management positions in Sweden and
abroad, including ABB Group, Seco Tools
AB and Assa Abloy AB.
Mr. Eliasson holds a Bachelor of Science
Degree in Business Administration and
Economics from the University of
Uppsala.
Mr. Eliasson brings to the Millicom Board
his significant experience as a CFO for
multinational and global Swedish
companies, roles including governance
and oversight over financial reporting,
internal control and risk management
processes and procedures within global
finance functions.
INDEPENDENT from the Company, its
Executive Management, and its major
shareholders.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 3,763 shares.
Mr. Lars-Åke Norling was elected to the
Board in May 2018 and commenced in the
role in September 2018. He is the Chairman
of the Compensation Committee and a
member of the Compliance and Business
Conduct Committee.
Mr. Norling (1968) is an Investment
Director and Sector Head of TMT at
Kinnevik. Prior to that, he was the Chief
Executive Officer of Total Access
Communications (dtac) in Thailand where
he executed a digital transformation and
led a turnaround of the company’s financial
performance. He has also been EVP of
Developed Asia for Telenor as well as Chief
Executive Officer of DigiTelecommunications
Malaysia and of Telenor Sweden.
Mr. Norling holds an MBA from Gothenburg
School of Economics, an MSc in Engineering
Physics from Uppsala University, and an
MSc in Systems Engineering from Case
Western Reserve University, USA.
He brings to Millicom’s Board his extensive
experience in leading telecommunications
and media businesses and digital
transformation in emerging markets.
INDEPENDENT from the Company
and its Executive Management, but
NON-INDEPENDENT from the major
shareholders due to his significant
affiliation to Kinnevik AB.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 507 shares.
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Board Profile: Skills and Experience–continued
Mr. Roger Solé Rafols
(Spanish)
Non-Executive Director
Mr. James Thompson
(American)
Non-Executive Director
(FIRST APPOINTED: MAY 2017)
(FIRST APPOINTED: JANUARY 2019)
Mr. Roger Solé Rafols was re-elected to
the Board in May 2018.
Mr. Solé (1974) is the Chief Marketing
Officer of Sprint Corporation, a leading
American telecommunications company.
Prior to joining Sprint in 2015, he spent
seven years at TIM Brasil (owned by
Telecom Italia) as Chief Marketing Officer
and previously as Marketing Director.
Before TIM Brasil, he was the Marketing
Director for Vivo in Brazil (owned by
Telefonica and PT) and previously the
Head of Innovation and VAS.
Mr. Solé holds a BA and MBA in Business
Administration from ESADE Business &
Law School in Barcelona.
Mr. Solé brings to the Millicom Board his
in-depth knowledge of the
telecommunications sector, marketing
and convergence of traditional
telecommunications products with
innovative products and services.
INDEPENDENT from the Company, its
Executive Management, and its major
shareholders.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 1,623 shares.
Mr. James Thompson was elected as a
new member of the Board of Millicom
in January 2019. He is a member of the
Audit Committee and the Compensation
Committee.
James Thompson (1961) is a U.S. citizen
and currently a Managing Principal at
Kingfisher Family Office, where he manages
a portfolio focused on value-oriented
investment strategies. Previously, he was a
Managing Principal at Southeastern Asset
Management, where he was responsible for
the operations of the firm and was a senior
member of the investment team that was
responsible for firm-wide investment
decisions. Between 2001 and 2006,
Mr. Thompson opened and managed
Southeastern Asset Management’s London
research office. He holds an MBA from
Darden School at the University of Virginia,
and a Bachelor’s degree in Business
Administration from the University of North
Carolina.
Mr. Thompson brings to the Millicom Board
his extensive experience from investment
management, and will contribute significantly
to the Board’s discussions on Millicom’s
long-term strategy and capital allocation.
INDEPENDENT from the Company, its
Executive Management, and its major
shareholders.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 6,941 shares.
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OverviewStrategyPerformanceGovernanceAppendixFinancials
Board Program
The Board’s annual program includes:
1
Company strategy and
strategic direction;
2
Operating and financial
performance review;
3
Governance and
compliance matters;
4
External affairs;
5
Corporate culture;
7
Risk management;
8
Dividend policy;
6
External financial
reporting;
9
Acquisitions and
divestments;
10
Evaluation of CEO and
self-evaluation; and
11
Human Resource matters,
including compensation,
health, safety, and
well-being.
Summary of Board Activities in 2018
The Board of Directors has an annual program which consists of specific areas
of focus on which the Board has a role to oversee and advise the Company.
Specific projects and topics arise in the normal course of business which are
added to the program of the Board, certain of which are dealt with by specific
Board committees.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Summary of Areas of Focus in 2018
Activity/issues covered
Board actions
Reports of committees
• The Board regularly reviewed reports from its Audit, Compliance and Business Conduct,
Operational review
Strategic review
and Compensation Committees on recent activities.
• Discussion of Nomination Committee Director appointment proposals.
• Priorities and challenges for each of the Latin American and African businesses were
regularly presented and discussed by the Board, including development of cable and
mobile data businesses, efficiency measures, and capital expenditure allocation.
• The Board discussed and approved the 2019 budget.
• The Board dedicates at least one Board meeting every year to discuss strategy.
• The Board discussed with the Executive Team industry and geographic trends and the
operational and financial strategy for each region, including the portfolio strategy.
Organizational structure
• The Board was involved in the process of review of performance of the Executive Team,
Review and approval of capital
structure and dividend
Review and approval of corporate
governance
Mergers, acquisitions, disposals, and
joint ventures
Review and approval of financial
reports
Risk management
External affairs
and the management organizational and reporting structures.
• Issuance of the US$500 million bond.
• Additional financing in several markets.
• Recommendation of a dividend of US$2.64 per share to the 2018 AGM.
• Revisions to the Corporate Policy Manual (including Board and Committee charters).
• Updates to the Authority matrix.
• Election of Committee members.
• The Board discussed acquisition and disposal developments across the Group, including
approval of transactions such as the acquisition of Cable Onda in Panama.
• 2018 Annual Report including the 2018 Consolidated Financial Statements of the
Group, and interim consolidated financial statements.
• Standalone financial statements of Millicom International Cellular SA (the parent
company).
• Review of the key risks facing the Group and approach to managing risks.
• Setting of risk appetite.
• Review of the external affairs strategic framework, and implementation activities.
• Periodical reviews of the political situation per market with a specific focus on election
periods and advice on risk management required in relation thereto.
• Review of regulatory and engagement challenges with advice from the Board on
best-practice engagement strategy.
• Review of the state of government relations in our markets and internationally.
Millicom’s non-financial performance
• Review of main non-financial performance and trends, including corporate
responsibility.
• Recommendation for continued focus in line with existing non-financial focus areas.
Listing on the Nasdaq Stock Market in
the U.S.
• Review and approval to list Millicom’s shares on the the Nasdaq Stock Market in the
U.S., and related filings with the U.S. Securities and Exchange Commission (SEC).
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OverviewStrategyPerformanceGovernanceAppendixFinancials Induction and Training
Millicom provides Incoming Board
members with information on their
roles and responsibilities, operating
procedures and information on
Millicom’s business and industry. Access
to governance documents, policies, and
procedures, as well as meeting materials
and Company information, is provided
through a secure online tool, in meetings
set with the Executive Management
team, and in ongoing dissemination of
information.
Training programs covering key topics
such as anti-bribery and corruption,
ethics, independence, and insider trading
are provided. The Board regularly
receives detailed reports on specific
areas that support their understanding
of Millicom’s business and operating
environment.
Millicom Directors also participate in an
annual visit to one of Millicom’s
operations (Bolivia in 2018), to learn
about the characteristics of the local
market, conduct field trips to see aspects
of the business in operation, and interact
with local management.
Board Effectiveness
The Board conducts an annual
performance review process, wherein
each Board member’s personal
performance is also reviewed. The review
process involves an assessment of the
Board’s and its committees’ actions and
activities during the year against the
Board’s mandate as determined in the
Board Charter (and those of its various
committees).
The evaluation of the Board’s
performance during 2018 was
conducted internally through a
questionnaire, prepared with the
assistance of an external advisor, to
assess the Board’s performance against
its key duties, the Board’s composition,
and processes, as well as the
performance of individual Board
members. The results of the evaluation
were presented to the Nomination
Committee.
Board Meetings/Attendance at regularly scheduled meetings of the Board in the 2018 Financial Year
Director
Mr. Tom Boardman
Mr. Odilon Almeida
Ms. Janet Davidson
Mr. Tomas Eliasson
Mr. Anders Jensen
Mr. Lars-Åke Norling
Mr. José Antonio Rios Garcia
Mr. Roger Solé Rafols
Attendance
Former Directors (until May 2018):
Mr. Simon Duffy
Mr. Alejandro Santo Domingo
Overall attendance
Meeting
7/7
6/7
7/7
6/7
5/7
3/3
7/7
6/7
47/52
2/2
2/2
51/56
Attendance %
100
86
100
86
71
100
100
86
90
100
100
91
70
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OverviewStrategyPerformanceGovernanceAppendixFinancials Board Committees
The Board and each of its Committees
have written approved charters which
set out the objectives, limits of authority,
organization, and roles and
responsibilities of the Board and its
Committees. The charters can be found
on our website www.millicom.com/
our-company/governance. Details of the
roles and responsibilities, activities in
2018, and Directors’ emoluments are set
out on the following pages.
I. Audit Committee
2018 was a very active year for the Audit
Committee, with specific attention paid
to the preparedness of the Group for
listing of the Company’s shares on the
Nasdaq Stock Market in the U.S.. We
provided oversight over implementation
projects of new accounting standards,
regular reporting, internal control, risk
management, and internal audit
activities. The Committee convened
eight scheduled meetings during the
year and covered internal audit, and
internal control activities during all
meetings.
The Committee also reviewed and
discussed actions and activities around the
important regulatory updates and
upcoming changes in financial reporting,
treasury, tax, risk management, revenue
assurance, and compliance. Further work
remains to be done as the Group continues
to standardize and implement best
practices both in controls and assurance.
I would like to thank my fellow
Committee members for their dedication
and commitment to the activities of the
Audit Committee and look forward to
continuing our mandate through to the
2019 AGM.
Mr. Tomas Eliasson
Chairman of the Audit Committee
Audit Committee Membership and Attendance ar regualrory scheduled meetings in 2018
Audit Committee
Mr. Tomas Eliasson
Mr. Tom Boardman
Ms. Janet Davidson
Mr. Lars-Åke Norling
Mr. Simon Duffy
Overall attendance
Position
Chairman*
Member
Member
Member
Member (until May 4, 2018)
First appointment
May 2014
May 2016
July 2018
May 2018
May 2016
Meetings/Attendance %
100
100
75
67
75
89
8/8
8/8
3/4
2/3
3/4
24/27
*Designated as having specific accounting competence per EU Directive.
Appointment and Role of the Audit
Committee
The Audit Committee is comprised solely
of non-executive Directors, the majority
of whom were independent Directors in
2018 (in 2019 all are independent).
Members are appointed to ensure there is
a mixture of relevant experience of both
finance and broader commercial matters.
The Board is confident that the collective
experience of the members enables them
to act as an effective Audit Committee.
The Committee is also satisfied that it has
the expertise and resource available to it
to fulfill its responsibilities.
The Board has delegated to the Audit
Committee the responsibilities for
oversight of the robustness, integrity,
and effectiveness of financial reporting,
risk management, internal controls,
internal audit and the external audit
process, pre-approval of certain audit
and non-audit services provided by the
external auditor, establishment of
procedures pertaining to accounting-
related, and certain other types of
complaints or concerns, as well as
compliance with related laws and
regulations.
The Audit Committee focuses particularly
on compliance with financial requirements,
accounting standards and judgments,
appointment, oversight and independence
of the external auditors and appointment
and oversight of certain other accounting
firms that may be retained from time to
time, transactions with related parties
(including major shareholders), the
effectiveness of the Internal Audit
function, the Group’s approach to risk
management, and ensuring that an
efficient and effective system of
internal controls is in place.
Ultimate responsibility for reviewing and
approving Millicom’s Annual Report and
Accounts remains with the Board.
The Chief Executive Officer, Chief
Financial Officer, Group Financial
Controller, Head of Internal Audit, Head of
Business Controls, Chief Risk Officer and
representatives from Ernst & Young (“EY”),
the Company’s external auditor, are
invited to attend Committee meetings.
The agenda for meetings is prepared by
the Audit Committee Chairman in
conjunction with the Chief Financial
Officer. Each meeting includes a private
session, attended only by Audit Committee
members and the external auditor, to
provide an opportunity for open dialogue
without management presence.
At each regularly scheduled meeting, the
Audit Committee receives reports from
the Chief Financial Officer, the external
auditor, the Head of Internal Audit, the
Head of Business Controls, and the Chief
Risk Officer, together with reports from
other officers of the Company as
required. More particularly, the Audit
Committee has received from the
external auditor the required
information in accordance with
Luxembourg regulations.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Summary of Areas of Focus and Actions in 2018
Governance
Financial reporting
• Reviewed and amended the Audit Committee Charter.
• Reviewed key accounting and reporting issues at each meeting.
• Reviewed and approved each quarter’s earnings release, the 2017 annual earnings release and
summary financial statements, and the 2018 half year earnings release and interim financial
statements.
• Reviewed and discussed transition impact of IFRS 15 (“Revenue from Contracts with Customers”)
and IFRS 9 (“Financial Instruments”) as well as activities around implementation of IFRS 16
(“Leases”) and other changes in the financial reporting landscape and accounting policy changes/
updates.
External auditor
• Received reports from the external auditor at each meeting covering important financial reporting,
accounting and audit issues.
• Received reports from the external auditor in compliance with EU regulations.
• Reviewed and approved all non-audit services rendered by the external auditors.
• Approved the 2018 external audit strategy and fees.
• Considered the results of control testing performed by the external auditor.
• Considered the performance of the external auditor and independence, including monitoring of
the nature and value of non-audit services, as well as approving these fees.
• Received reports on the preparedness of the Group for the U.S. listing.
Internal audit activities
• Approved the 2018 and 2019 internal audit plan.
• Reviewed internal audit findings arising from the delivery of the 2018 audit plan.
Financing, treasury and tax
• Reviewed the Group’s tax strategy and structure and approved the tax policy.
• Approved the updated Group treasury and related policies, including the policy on financial risk
Risk management
Internal controls
management.
• Provided guidance and oversight over risk management processes.
• Reviewed alignment of top risks with strategy.
• Reviewed regular risk reports and remediation plans.
• Reviewed the remit and proposed activities of the Business Controls team.
• Reviewed the Group’s Sarbanes-Oxley implementation plan related to the U.S. listing and received
regular progress reports from the implementation team and external advisors.
• Received the summary findings of internal control self-assessments performed in the year against
the 2018 internal targets.
Fraud management
• Reviewed fraud policies and quarterly fraud reports, as well as proposed actions to remediate
identified cases.
Revenue assurance
• Received quarterly updates on revenue assurance activities.
• Reviewed trends and actions taken to minimize loss and revenue leakage.
Related party transactions
• Reviewed related party transactions that were performed at each meeting.
Listing on the Nasdaq Stock
Market in the U.S.
• Oversight of re-listing Millicom’s shares on the Nasdaq Stock Market in the U.S., and related filings
with the U.S. Securities and Exchange Commission (SEC).
• Review internal and third party assessments to evaluate Group’s readiness to re-list on the Nasdaq
Stock Market in the U.S..
2018 Meetings
• The review of the effectiveness of
• The completeness and compliance of all
structural disclosures made in the
financial statements; and
• The financial reporting implications of
the U.S. listing.
A summary of all related party
transactions was presented quarterly.
During 2018, the Audit Committee had eight
regular meetings, mainly coinciding with key
dates in Millicom’s external reporting:
Financial reporting
The Audit Committee reviewed earnings
releases for each quarter and financial
statements, having received reports from
management and the external auditor. In
2018, attention was mainly focused on:
• Significant accounting issues where
judgment has been applied;
internal financial control;
• The transition impacts of the new
revenue recognition standard, IFRS 15,
and of IFRS 9 for financial instruments.
•
The review of the implementation
project around the upcoming adoption
of the new lease accounting standard,
IFRS 16;
• The appropriateness of and application
of the Group’s accounting policies and
practices;
• Compliance with financial reporting
standards and other financial reporting
requirements;
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials The significant issues considered by the
Audit Committee in relation to the
financial statements for the year ended
December 31, 2018 were:
1) Acquisition of Cable Onda–also refer
to note A.1.2. of the consolidated
financial statements
On October 7, 2018, the Company
entered into an agreement to acquire
a controlling 80% stake in Cable Onda,
the largest cable and fixed
telecommunications services provider
in Panama. The selling shareholders
retain a 20% equity stake in the
company. The transaction completed
on December 13, 2018 after receipt of
regulatory approvals and consent from
Cable Onda’s bondholders. Millicom
concluded that it controls Cable Onda
since completion date and therefore
fully consolidates it in its financial
statements with a 20% non-
controlling interest. The purchase
accounting remains provisional as of
December 31, 2018.
2) Africa divestment–also refer to note
A.1.3. of the consolidated financial
statements
During 2018, disposals of the
operations in Senegal and Rwanda
were completed, and our operations
in those countries were
deconsolidated.
3) Tower sale and leaseback–also refer
to notes C.3.4. of the consolidated
financial statements
During 2018 and 2017, Millicom
entered into tower sale and leaseback
transactions in Paraguay, Colombia
and El Salvador whereby Millicom
sells its passive infrastructure to tower
companies and leases back a portion
of the towers and ground, and
receives related services. These
transactions require management
judgment in respect of the asset
classification on the balance sheet
and as to whether the leaseback
qualifies as a finance or operating
lease or as a service agreement.
The above accounting treatments
and decisions were discussed with the
Committee.
4) Impairment testing–also refer to
note E.1.6. of the consolidated
financial statements
Under accounting standards, the
Group is required to test goodwill and
indefinite life intangible assets
annually and, where there are
indicators of potential impairment,
also test the carrying value of other
non-current assets. Assessment of
the recoverable amount, be it under
the “value in use” or the “fair value
less cost of disposal” model, is
subjective and requires significant
judgment. In addition, the Group also
tests its investments in joint ventures
and associates in case of an
impairment indicator. The Audit
Committee received analysis from
Management as to their assessment
of the recoverable amounts of the
Group’s non-current assets, as well as
the results of the sensitivity analysis.
The Audit Committee also received
analysis from the external auditor,
including their view of significant
assumptions such as discount rates.
Following consideration, the
Audit Committee agreed with
Management’s proposal that
impairment losses had to be
recognized on our operation in Zantel.
Except for the above, the results of
the annual impairment testing
showed that sufficient headroom
exists for the Group’s other
operations.
5) Tax provisions and contingencies–
also refer to note G.3.2. of the
consolidated financial statements
The Group operates in many
countries where the tax and legal
system is less mature and may be less
predictable. There are a number of
matters therefore relating to tax
contingencies which require
judgment as to the likely probability
of cash outflow or the potential
amount of any outflow. The Audit
Committee therefore received regular
reports from the Group Tax Director
as to the status of each of these
matters, the likely outcome, the
provision required, if any, and
proposed disclosure in the financial
statements. Analysis of judgmental
tax matters was also presented by
the external auditor.
6) Revenue recognition–also refer to
note B.1. of the consolidated financial
statements
Judgment is required in assessing the
application of revenue recognition
principles. This includes the
application of revenue between
multiple deliverables, such as the sale
of a handsets with service in a
bundled package, or managed
services contracts that have complex
contractual agreements. The Group
has adopted the new revenue
recognition standard, IFRS 15, using
the modified retrospective approach.
Hence, the cumulative effect of
initially applying the Standard has
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
been recognized as an adjustment to
the opening balance of retained
profits as at January 1, 2018 and
comparative financial statements
have not be restated in accordance
with the transitional provisions in
IFRS 15. The Group developed new
accounting policies compliant with
IFRS 15, tailored to the services and
products sold.
7) Capitalization and assets useful
lives–also refer to notes E.1.1. and
E.2.1. of the consolidated financial
statements
The assessment and timing of
whether assets meet the
capitalization criteria set out in the
relevant accounting standards, the
estimation of appropriate useful
economic lives and the assessment of
whether any impairment indicators
are present, such as redundant
assets, as well as the identification
and the classification of leases, all
require judgment. In addition,
Management regularly review and
benchmark its assets useful lives with
peers. Once a year, Management
presents its conclusions to the Audit
Committee.
8) Investigation by the International
Commission Against Impunity in
Guatemala (CICIG) and Tanzania
share ownership issue–also refer to
note G.3.1. of the consolidated
financial statements
On July 14, 2017, the CICIG disclosed
an ongoing investigation into alleged
illegal campaign financing that
includes Comcel, our Guatemalan
joint venture.
In June 2016, Millicom was served by a
third party seeking monetary damages
and seeking to exert rights as a
shareholder of MIC Tanzania Public
Limited Company.
On July 26, 2018, the Court of Appeal
of Tanzania, the country’s highest
court, reaffirmed in a ruling that MIC
Tanzania Public Limited Company
remains owned and controlled by
Millicom. Late 2018, the opposing
party has filed for a review of the
ruling by the same Court of Appeals,
which already ruled in our favor.
Millicom considers the success of this
review as remote and therefore
continues to control and fully
consolidate MIC Tanzania Public
Limited Company.
The Audit Committee has been
updated at least quarterly on the
progress of these cases.
OverviewStrategyPerformanceGovernanceAppendixFinancials
This feedback allows the Committee to
monitor and assess the performance of
the external auditor in making a
recommendation to the Board regarding
external auditor appointment.
Auditor independence
The Audit Committee has established
policies to maintain the independence of
the external auditor and to govern the
provision of audit and non-audit services.
During 2018, and as a result of the
Company’s re-listing on Nasdaq, the
approval process of non-audit services and
audit related services has been reviewed
to comply with SEC independence rules
and the latest EU and local regulations.
Under these rules, the Audit Committee
has pre-approved a list of services that can
be rendered by the audit firm. If services to
be rendered are pre-approved in nature,
these can be approved by management
when requested (following an established
authority matrix) and then presented to
the Audit Committee on a quarterly basis
for formal approval. If services to be
rendered are not pre-approved in nature,
these should be pre-approved by the
Chairman of the Audit Committee when
requested and then submitted to the next
full audit committee for formal approval. A
schedule of all non-audit engagements
with the external auditor is reviewed at
each meeting.
For the year ended December 31, 2018, the
Audit Committee approved fees for audit
services of US$6.7 million, together with
fees for non-audit work of US$0.9 million.
Under independence rules, the current
audit partner will rotate off for the audit
of the consolidated financial statements
as of December 31, 2019.
Audit tendering
EY was first appointed auditor of the
Company for the year ended December 31,
2012 following a competitive tender.
Based on the EU audit regulations and
applicable Luxembourg law, EY would
have to rotate off by 2032 (20 years) at
the latest, with mandatory tender in
2022 (after ten years).
Management Disclosure Committee
To assist with all matters relating to
earnings releases and financial
statement disclosures, the Group has a
Disclosure Committee comprised of
senior management from finance, legal,
communications, investor relations and
other functions as and when required.
The Disclosure Committee identifies and
considers disclosure matters in market
releases which contain material financial
and other price sensitive information.
Risk management
The Audit Committee received regular
reports on the Group’s risk management
framework and process, changes to
significant risks at both operational and
Group level and how these are
managed. Further information is set out
in the risk management section of this
Annual Report.
In addition, the Audit Committee
reviewed financial risk, tax risk and
strategy, treasury policy and risks, and
Group insurance cover.
Internal control
The Audit Committee reviewed the
Company’s internal control framework.
The Audit Committee remained focused
on the need to promote the
development of internal controls, both
financial and non-financial.
In preparation for the U.S. listing, the
Company commenced a program to
comply with the internal control over
financial reporting requirements of the
U.S. Sarbanes-Oxley Act. The Group
Head of Business Controls together with
the Group’s external advisors made
progress reports on the Sarbanes-Oxley
program.
Regular updates were provided on the
Group’s program of Internal Control Self
Assessment and the status of ongoing
control improvement projects.
Internal Audit
The execution of the 2018 Internal Audit
Plan provided Executive Management and
the Audit Committee an independent
view on the effectiveness of Millicom’s
internal control environment and
governance processes. It was developed
to ensure alignment with the strategic
risks of the Millicom Group, along with
consideration of the overall Group
strategy, input from senior management
across multiple geographies and functions,
external audit findings and Internal Audit’s
knowledge of the business.
In December 2017, the Audit Committee
ratified the Internal Audit Plan for 2018,
which included reviews focusing on
Mobile, Home and B2B revenue streams,
information security, IT & network
resilience, key financial processes,
compliance and ethics activities and
large business and technology change
programs. Follow-up audits were also
built into the Internal audit plan, to
provide independent assurance that
management actions from previous
audits had been addressed
effectively. The plan was primarily
executed by the in-house Internal Audit
team based in London, Luxembourg and
Miami, with specialist support provided
by one of the “Big 4” accounting firms. At
each meeting, the Audit Committee
received an update on Internal Audit
activities, progress against the plan and
results of the audits completed in the
period, including associated
recommendations and management
action plans where findings had been
identified.
Fraud risk and whistleblowing
The Audit Committee received and
reviewed quarterly fraud reports in
accordance with the Group’s Fraud policy.
The Group provides an ethics helpline
which is administered by an independent
third party and is available to all
employees, contractors and third parties.
External Audit effectiveness
The quality and effectiveness of the
external audit is of great importance to
the Audit Committee. A detailed audit
plan is prepared and discussed with the
Audit Committee at the start of each
annual audit cycle, outlining the key risks
and proposed geographic coverage.
Audit quality is assessed by reference to
the standard of the reports received by
the Audit Committee, the caliber of
senior members of the audit team and
the level of challenge provided to
Management. Also, feedback is received
by the Audit Committee from
Management. In addition, on a regular
basis the performance of the external
auditors is reviewed by Management
both centrally and in each of Millicom’s
operating countries against a set of 17
criteria ranging from knowledge of the
business, to timeliness of communication
and quality of reporting.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials II. Compliance and Business Conduct
Committee
The Board of Millicom is committed to
strengthening corporate governance
and supporting the success that comes
with a robust culture of compliance and
strong internal controls. The Board
believes that Millicom can lead the way
in its dedication to ethics and
compliance in all its markets. The Board
oversees and regularly reviews Millicom’s
Ethics & Compliance program to ensure
it continuously focuses on three essential
pillars. Company systems are reasonably
designed and managed to prevent,
detect, and respond to compliance
misconduct and non-compliance with
applicable laws.During 2018, Millicom
continued building and enhancing the
Ethics and Compliance program,
supported by the Executive Committee
and the Ethics and Compliance team.
On behalf of the Board, I would like to
reconfirm our commitment to strong
corporate governance and supporting a
strengthened control environment, a
more concentrated approach to
managing compliance risks across the
organization and enhanced ability to
comply with changes to the company’s
regulatory expectations.
The Board’s objective is to reinforce a
culture of compliance that is practiced
wholeheartedly by every employee,
across all ranks, with no exceptions. The
Board will continue to exercise
independent review over proposed
corporate actions as we receive the
outcomes of investigations of
misconduct and non-compliance.
The Board reinforced the need to build a
culture of recognition for the right
actions and an appropriate balance with
disciplinary steps to address instances of
misconduct and non-compliance. To
assist Millicom’s employees and all
external parties with whom the
Company interacts, Millicom educates
employees and third parties on
standards of business conduct by
operationalizing compliance as part of
everyday business decision-making, and
reinforcing the importance of doing
business the right way, under the living
theme “I Am Compliance”.
I want to thank the members of the
Compliance and Business Conduct
Committee, the Company’s
management team and Millicom’s Board
and Chairman for their unwavering
commitment and dedication to the
Ethics and Compliance program in 2018
and for the great progress we made this
year. We will continue on this important
journey in 2019.
Mr. Odilon Almeida
Chairman of the Compliance
and Business Conduct Committee
Compliance and Business Conduct Committee Membership and Attendance 2018
Committee
Position
Mr. Odilon Almeida
Mr. Lars-Åke Norling
Ms. Janet Davidson
Mr. Tom Boardman
Mr. Alejandro Santo Domingo
Overall attendance
Chairman
Member
Member
Member (until January 7, 2019)
Member (until May 4, 2018)
First
appointment
November 2015
May 2018
May 2016
May 2016
November 2015
Meetings/Attendance %
6/6
2/2
6/6
6/6
1/3
21/23
100
100
100
100
33
100
Appointment and Role of the
Compliance and Business Conduct
Committee
Millicom’s Compliance and Business
Conduct Committee oversees and makes
recommendations to the Board regarding
the Group’s compliance programs and
standards of business conduct. More
specifically, the Compliance and Business
Conduct Committee:
• monitors the Group’s Compliance
program, including the activities
performed by the Compliance Team
and its interaction with the rest of the
organization;
• monitors the investigations resulting
from cases brought through the
Group’s ethics line or otherwise;
• oversees allocation of resources and
personnel to the Compliance area;
• assesses the Group’s performance in
the Compliance area; and
• ensures that the Group maintains
proper standards of business conduct.
Management representatives invited to
attend the Compliance and Business
Conduct Committee include the Group
CEO, the Chief Compliance and Ethics
Officer, General Counsel, Group CFO, the
Chief External Affiars Officer, and Head
of Internal Audit.
Summary of Committee Activities
in 2018
The Committee convened, as planned,
six times during the year. The Committee
Chairman prepares the agenda in
conjunction with the Chief Ethics and
Compliance Officer and reports are
provided on the status of the Ethics &
Compliance Program and any
compliance related issues including
investigations resulting from cases
brought through the Company’s ethics
line or otherwise, anti-money laundering,
and information security issues. The CEO
and Executive Team have been
demonstrably committed and continue
to be actively involved in fostering a
culture of ethics and compliance from
the top, across all our lines of business.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Summary of Areas of Focus and Action Items in 2018
Program elements
• Third party management - Through a centralized due diligence program
• Anti-corruption Program - Compliance policies and procedures were reviewed and new
ones developed to cover emerging areas of risk and to strengthen the company’s
Anti-corruption program.
• All compliance policies and procedures, revised and new, were communicated to the
whole organization.
• Training on company compliance policies was provided to all employees with bonus
award for select managers dependent on completion rates.
• Independent Assurance - Reviews of the Company’s Compliance framework by group
internal audit were conducted throughout the year and remediation actions were taken.
• Communication campaigns were launched throughout the year on various compliance
subjects.
• Compliance Risk Assessment - Establish Pro-active Compliance risk management
process. Regularly monitor, collect and analyze data to confirm results.
• Resources: hired two new compliance officers.
• All GMs were given a set of Compliance KPIs to meet during year to be eligible for
year-end bonus award.
Reporting & Investigations
• “SpeakUp” Campaign - Encouraged employees to use the system to report issues of
Global Anti-money laundering (AML)
program
Information Security program
non-compliance with our policies and values.
• Strengthened investigation process by building an investigations team, developing
investigations resources in the operations, and publishing a Global Investigations Policy.
• Incentives programs - Compliance factors were incorporated into executives’ incentives
program. Bonus awards are now dependent upon achievement of all compliance KPIs.
• Implemented a robust Know Your Customer (KYC) tool in certain countries with the plan
to implement globally.
• Enhanced current monitoring and implemented a new system in certain countries.
• Training: provided AML training to several operations, including targeted groups such as
upper management, MFS, and operation’s teams.
• Deployed new review processes for dealers and agents in several operations in Latam
and Africa that included adherence to local regulations, level of training, and AML
program compliance.
• Added additional resources for AML department’s functions in operations.
• External assessments with remediation actions were developed for all Latam operations
• Developed a strategic 36-month plan to mature the corporate and local Information
Security programs, as well as address any technology-control related Sarbanes-Oxley
requirements.
• Approval of requisitions for new hires for the Security program.
• Initiated deployment of the Global Security Operations Center (GSOC). An industry
leading partner has been selected and the initial operational integrations have
begun.
• The development of the enterprise-wide Identity and Access Management (IAM)
program has begun. All critical Sarbanes-Oxley requirements have been identified,
including account management, segregation of duties, and management
attestation. Strategic roadmaps have been developed and the process of vendor
selection has begun.
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OverviewStrategyPerformanceGovernanceAppendixFinancials III. Compensation Committee
In 2018, the Compensation Committee
continued to focus on the review of
Millicom’s reward strategy to ensure that
senior management compensation
reflects company performance closely.
We have designed our employee and
executive compensation programs to
support three goals:
1) Attract and retain great talent;
2) Support our culture of
entrepreneurship and performance,
with an increased focus on pay based
on geographical / line of business
accountability; and
3) Align employee interests with
shareholder interests.
We pay employees competitively
compared to other opportunities they
might have in the respective local
market. We also offer competitive
benefits to promote the health and
happiness of our employees, and create
a fun and invigorating work culture. We
believe in pay for performance.
A portion of compensation is tied to
performance for all top executives,
including the senior teams at each of our
operations. The proportion of overall pay
tied to performance is higher for
employees at more senior levels in the
organization, reflecting their opportunity
for higher impact on company
performance. We use equity awards to
align employee and shareholder
interests. We require employees in our
top 50 roles and other senior executives
to maintain significant holdings of
Millicom shares. This incentivizes our top
leaders to take a longer-term view on
positive business performance in
alignment with company and
shareholder interests.
I would like to thank my fellow
Compensation Committee members for
their dedication and commitment to the
activities of the Compensation
Committee and look forward to
continuing our mandate through to the
2019 AGM.
Mr. José Antonio Ríos García
Chairman of the Compensation
Committee
Compensation Committee Membership and Attendance in 2018
Committee
Mr. José Antonio Rios Garcia
Mr. Tom Boardman
Mr. Anders Jensen
Overall attendance
Position
Chairman
Member
Member
First
appointment
May 2017
May 2016
May 2017
Meetings/attendance %
100
6/6
100
6/6
100
6/6
100
18/18
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Appointment and Role of the
Compensation Committee
The Compensation Committee reviews
and makes recommendations to the
Board of Directors regarding the
compensation of the CEO and the other
senior managers as well as management
succession planning.
The Board, based on guidelines by the
Compensation Committee, proposes the
remuneration of senior management.
The objective of the guidelines is to
ensure that Millicom can attract, motivate
and retain executives, within the context
of Millicom’s international talent pool,
which primarily consists of telecom,
media, and FMCG companies.
Remuneration of the CEO requires Board
approval. Guidelines for remuneration of
senior management, and share-based
incentive plans for employees are
approved by the shareholders at the
AGM.
The evaluation of the CEO is conducted
by the Compensation Committee. The
evaluation criteria and the results of the
evaluation are then discussed by the
Chairman with the entire Board. The Board
considered that the CEO provided strong
leadership for the Company during 2018.
The results of the review and evaluation
were communicated to the CEO by the
Chairman.
The Compensation Committee comprises
three members.
Main Activities of the Committee
during 2018
The Compensation Committee met six
times in 2018.
Summary of Areas of Focus and Action Items in 2018
Bonus and performance reports
• Received and reviewed senior executive performance reports and Executive
Committee individual payouts STI/LTI (cash /equity).
• Reviewed and approved the 2018 variable compensation target and performance
results.
Compensation review
• Reviewed and approved the peer group for executive benchmarking.
• Approved all payments for Executive Committee members, including base pay
Share-based incentive plans
increases.
• Reviewed executive remuneration and governance trends and developments.
• Reviewed executive benchmarking for the CEO and all Executive Committee
members.
• Approved changes to CEO and Executive Committee compensation elements based
on market competitiveness.
• Reviewed and approved the 2018 Share Plan Rules.
• Approved the 2015 LTI (PSP) vesting.
• Reviewed and approved all equity grants.
• Reviewed the treasury shares’ balance reserved for share-based incentive plans and
the period they cover.
• Reviewed shared ownership guidelines and the compliance of each covered executive.
• Reviewed performance and projections of outstanding LTI plans.
Global reward strategy and
executive remuneration review
• Reviewed Remuneration/C&B Philosophy & Strategy.
Variable pay design
• Reviewed and approved the Variable Plans Redesign (STI/LTI) for 2019 including pay
Other
our vehicle for JVs.
• Discussed and approved STI/LTI redesign for 2019.
• Reviewed and approved STI and LTI performance measures for 2019.
• Reviewed and approved exceptional items, new hire equity grants, etc.
• Reviewed LTI retirement eligibility clause.
• Reviewed COC (Change of Control) / Reviewed GSMT severance plan payout.
• Reviewed final MICSA budget for upcoming year.
Compensation Committee
governance
• Reviewed and updated Compensation Committee Remit and Obligations.
• Review and approved the Compensation Committee annual meeting cycle and
calendar.
• Reviewed the Compensation Commitee charter.
• Introduced an oversight dashboard.
• Reviewed of composition of the Compensation Commitee.
• Reviewed and approved an external compensation consultant.
78
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Remuneration Guidelines
The Board proposes to the AGM
guidelines for remuneration and other
employment terms for the senior
management. The annual base salary
and other benefits of the CEO is
proposed by the Compensation
Committee and approved by the Board.
Remuneration Policy
Remuneration packages for members of
the Executive Team at Millicom comprise
an annual base salary, an annual bonus,
share-based compensation, social
security contributions, pension
contributions, and other benefits. Bonus
and share-based compensation plans
(see note B.4.1 to the consolidated
financial statements) are based on
actual performance. Share-based
compensation is granted once a year by
the Compensation Committee.
Base salary - The Executives’ base
salaries are competitive and based on
each individual Executive’s
responsibilities and performance.
Variable STI (Short-Term Incentive)
cash remuneration - The Executives
may receive variable remuneration in
addition to base salary. The maximum
target variable remuneration in any
Executive’s contract is 100% of the base
salary and, in case of exceptional
business and personal performance, up
to two times that target. The variable
amounts or percentages are considered
to be competitive within market
standards at total compensation levels.
The variable remuneration shall be
based on the performance of the
Executives in relation to established
goals and targets along with Millicom’s
financial performance (see table below).
Use and relative weighting of financial
performance target measures under the
variable compensation rules are equal to
all employees regardless of seniority.
Variable STI share-based remuneration -
Portion of the STI is paid in the form of
deferred shares with a three-year
pro-rated vesting, strengthening our pay
for performance and retention
incentives.
Long-term share-based incentive plans
(LTIPs) - The aim of the LTIPs is to
complement and support Millicom’s
long-term business view and strategy.
The plans and the amounts need to be
competitive in order to attract and retain
key executives. These incentives are
targeted for a selected group of
employees only, approximately the top
50 roles and have a three-year cliff
vesting.
Other benefits - Other benefits can
include, for example, a car allowance,
medical coverage, and in cases of
ex-patriate assignments, housing
allowance, school fees, home leave, and
other travel expenses.
Pension - The Executives are eligible to
participate in a global pension plan, in
accordance with market standards. The
global pension plan is secured through
premiums paid to reputable insurance
companies.
Deviations from the guidelines - In
special circumstances, the Board may
deviate from the above guidelines, such
as additional variable remuneration in
the case of exceptional performance. In
these instances the Board of Directors
will explain the reason for the deviation
at the following AGM.
Payment for loss of office - If there is a
company-initiated termination, other
than for cause, of the Millicom
Executives that are part of our Executive
Committee (e.g. the CEO and his/her
direct reports), a notice period of 6 - 12
months potentially applies.
Bonus measurements
Personal performance
Service Revenue
EBITDA
Operating Free Cash Flow
Net Promoter Score
Total
Rationale
The individual goals and objectives of Millicom management and employees are
critical in achieving its financial objectives and in long-term value creation.
Recurring revenue is a key growth measure used by the Group as it seeks to monetize
opportunities in all countries and all business units.
EBITDA is used as a measurement of ongoing earning power/value creation in the
Group and is used as a measure of how well management controls the operational
cost of growing revenue.
Operating Free Cash Flow is a measure aligned to return on invested capital and is
used to measure how efficiently management are generating cash flow.
The Net Promoter Score is an index that measures the willingness of customers to
recommend a company’s products or services to others.
Weighting
30%
20%
20%
20%
10%
100%
79
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Executive Team Remuneration
Compensation of the Executive Team 2018
Cash Compensation (US$ ‘000)*
Base salary
Bonus (for 2018 performance)
Pension
Other benefits**
Termination benefits
Total salary and benefits
Equity Compensation (number of shares)***
Performance share plan(i)
Deferred share plan(ii) (for 2018 performance)
Total shares (number)
Value of shares(iii) (US$ ’000)
CEO
CFO
Other
Executives
(9 members)
1,112
1,492
247
66
—
2,918
673
557
101
63
—
1,393
34,154
25,011
59,165
3,628
17,716
9,339
27,055
1,665
3,930
2,445
962
805
301
8,444
41,710
40,988
82,698
5,053
(i) Amounts relating to the 2016 performance share plan based on the actual performance over the three-year period. The value of shares is based on the closing market
value of Millicom shares in US$ on December 28, 2018 of US$62.53. These shares will vest on March 1, 2019. Final performance metrics subject to approval by the
Remuneration Committee on March 5, 2019.
(ii) Amounts relating to the 2019 deferred share plan (awarded in 2019 based on 2018 results). The value of shares is based on the average Q4 closing market value of
Millicom shares of US$59.65. These shares will vest over three years from the award date with a vesting schedule 30%/30%/40%, dependent on continued service of the
employee.
(iii) The value is calculated on the basis described above which differs from the value calculated for the IFRS financial statements.
*Other Executives Cash Compensation includes Daniel Loria, former CHRO and Rodrigo Diehl, EVP Strategy. ** Other Benefits include relocation support when applicable
with an average amount of US$25K. *** Other Executives Equity Compensation includes Rodrigo Diehl, EVP Strategy during 2018.
Compensation of the Executive Team 2017
Cash Compensation (US$ ‘000)*
Base salary
Bonus (for 2017 performance)
Pension
Other benefits
Termination benefits
Total salary and benefits
Equity Compensation (number of shares)*
Performance share plan(i)
Deferred share plan(ii) (for 2017 performance)
CEO Dividend Share Award
Total shares (number)
Value of shares(iii) (US$ ’000)
CEO
CFO
Other
Executives
(9 members)
1,000
707
150
64
—
1,921
11,865
10,688
1,179
23,732
1,588
648
455
97
15
—
1,215
6,230
6,877
13,107
877
3,822
1,590
629
1,193
—
7,233
10,044
24,040
34,084
2,280
(i) Amounts relating to the 2015 performance share plan based on the actual performance over the three-year period. The value of shares is based on the closing market
value of Millicom shares in US$ on December 29, 2017 of US$66.91. These shares will vest on March 1, 2017. Final performance metrics will be approved by the
Remuneration Committee on March 5, 2018.
(ii) Amounts relating to the 2017 deferred share plan (awarded in 2018). The value of shares is based on the closing market value of Millicom shares in US$ on December
29, 2017 of US$66.91. These shares will vest over three years from the award date, dependent on continued service of the employee.
(iii) The value is calculated on the basis described above which differs from the value calculated for the IFRS financial statements.
*Other Executives compensation includes Daniel Loria, former CHRO.
80
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Share-based Incentive Plans
The share-based incentive plans currently
consist of a Deferred Share Plan (DSP) and a
Performance Share Plan (PSP).
The 2019 DSP (2018 results) corresponds to
the portion of the STI paid with the DSP that
will be granted in Q1 2019 based on 2018
performance. The 2018 PSP (LTIP)
corresponds to the grant of PSP made in Q1
2018, that covers performance of 2018 – 2020
and vests in Q1 2021. Shares granted under
the 2019 DSP are based on personal and
corporate performance of the previous year
and the awards vest over three years, 30%
after one year, 30% after two years and
40% after three years. Shares granted under
the 2018 PSP vest at the end of a three-year
period, whereby vesting is subject to certain
company performance conditions. The CEO
and CFO are participating in the Group’s
2018 PSP, with target opportunities as per the
table below. For the 2018 year, equity-based
incentive plans were offered to Executives,
other senior management, as well as to
high-potential employees and employees in
key roles (by nomination exception) under
the plans set out in the following table. In
addition, the rules of the plans set out certain
criteria and conditions in which new
employees can be awarded sign-on awards.
In countries where Millicom has a local
partner, in certain cases, the same eligibility
and rules apply for the incentive plans, except
that instead of being granted awards
denominated in Millicom shares, the
executives receive deferred cash awards.
LTIP
2019 Deferred Share Plan
(DSP)
2018 Performance Share
Plan (PSP)
Eligibility
CEO, CFO, other
Executives and other
(global) senior
management*
CEO, CFO, other
Executives and other
(global) senior
management
Participants
231
Maximum shares
awarded
for 2018
297,856
Basis for
calculating award
20–50% on base
salary
Comment
48
237,196
400%
175%
35%–160%
on base salary, as
per 01.01.18
CEO
CFO
Global senior
management
team
*A limited number of high-potential employees and employees in key roles can be nominated by exception.
Specific rules of each plan are set out below. Vesting under all plans is conditional on the participant remaining employed by the
Group at each vesting date. Additional vesting criteria are noted under each plan.
LTIP
2019 Deferred Share Plan (DSP)
2018 Performance Share Plan (PSP)
Additional vesting criteria
(terms and conditions)
—
Achievement of Service Revenue CAGR, Operating Free
Cash Flow CAGR and Relative Total Shareholder Return
targets measured over the three-year vesting period.
Vesting period
1 year
30.0%
—
2 years
30.0%
3 years
40%
— 100%
Measurements used for PSP performance measure
Operating Free Cash Flow (OFCF) with a specific 3-year CAGR target
Service Revenue with a specific 3-year CAGR target
Relative Total Shareholder Return (RTSR) vis-vis a peer group of companies
(no award is made for performance below peer group median. Achieving TSR performance
at media of pre-determined peer triggers 25% of the relative TSR component)
Weighting
50%
25%
25%
81
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials CEO Compensation
The 2018 components of the CEO remuneration package were:
• an annual base salary of US$1.15 million;
• variable cash remuneration with a target of 100% of base salary;
• participation in Millicom’s share-based compensation plans and;
• other standard benefits, as described under the senior
management remuneration principles earlier in this report.
CEO Earnings Opportunity from 2018 Award Levels
The tables below provide estimates of the potential future
remuneration for the CEO based on the
remuneration opportunity granted in the 2018 financial year.
Potential outcomes are based on different performance scenarios.
Assumptions underlying each scenario are described below.
Fixed
• Fixed income consists of base salary, employment benefits and company
pension contributions.
• Base salary is at December 31, 2018.
• Benefits and Pension are valued using the figures in the total
remuneration for the 2018 financial year table detailed below.
• Pension contributions are made at 15% of base salary as at December
of the preceding year.
Base
(US$ ’000)
1,150
Benefits
(US$ ’000)
66
Pension
(US$ ’000)
247
Total Fixed
(US$ ’000)
1,463
Mauricio Ramos
Variables on target
• Values are based on what the CEO would receive if performance was in
line with Incentive Performance Targets.
• The target STI award opportunity is 200% of base salary, of which half
is paid in cash, and the remaining half is paid via the Deferred Share
Plan (DSP)
• The target award opportunity for the LTI, the Performance Share Plan
(PSP), is 400% of base salary for the CEO, assuming relative total
shareholder return (RTSR) performance being at peer group median and
the CAGR for both Service Revenue and Operating Free Cash Flow
(OFCF) to be at target.
Variables at maximum
• The maximum STI award opportunity is 400% of base salary, of which
half is paid in cash and the remaining half is paid via the Deferred
Share Plan (DSP)
• The maximum award for performance under the PSP is 800% of base
salary, where relative total shareholder return outperforms the peer
group median by 20% and the CAGR for both Service Revenue and
OFCF to be at 120% of target.
At target
US$000
$2,562
Cash
Benefits $ 51
Shares $5,750
TOTAL $8,363
30%
69%
1%
17%
Fixed
$1,463
Variable $6,900
TOTAL $8,363
83%
At maximum
US$000
24%
0.3%
Cash
$ 3,712
Benefits $ 51
Shares $11,500
TOTAL $15,263
75%
Fixed $ 1,463
Variable $13,800
TOTAL $15,263
10%
90%
82
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Details of Share Purchase and Sale
Activity
During 2018, Millicom’s CEO, Mauricio
Ramos, acquired 15,400 Millicom shares.
Shareholding Requirements
Millicom’s share ownership policy sets
out the Compensation Committee’s
requirements on Global Senior Managers
to retain and hold a personal holding of
common shares in the Company in order
to align their interests with those of our
shareholders. All Share Plan participants
in the Global Senior Management Team
(including all Executives) are required
to own Millicom shares to a value of
a percentage of their respective base
salary as of January of the calendar
year.
2018
%
Global Senior Management Level
400
CEO
200
CFO
100
EVPs
General managers and VPs
50
Unless this requirement is met each year,
no vested Millicom shares can be sold by
the individual.
Share ownership and unvested share awards granted from company equity
plans
(number of shares)
December 31, 2018
Share ownership (vested from equity plans and otherwise acquired)
Share awards not vested
December 31, 2017
Share ownership (vested from equity plans and otherwise acquired)
Share awards not vested
2018 Remuneration for the Chairman,
Deputy Chairman and Non-Executive
Directors
Decisions on annual remuneration of
Directors (“tantièmes”) are reserved by
the Articles of Association to the general
meeting of shareholders. Directors are
therefore prevented from voting on their
own compensation. The Nomination
Committee reviews and recommends
the Directors’ fees, which are approved
by the shareholders at the AGM or EGM.
Fees are set based on the role
(Chairman, Deputy Chairman), and for
participation in and roles of Chairman of
the Audit Committee, the Compliance
and Business Conduct Committee, and
Compensation Committee.
Other
CEO
Executives
Total
122,310
172,485
80,159
148,324
84,782
339,726
207,092
512,211
55,888
299,067
136,047
447,391
The remuneration of Directors comprises
an annual fee and shares denominated
in Swedish Krona (SEK) or U.S. Dollars
(USD). Director remuneration for the
period is as follows:
Board and committees
Directors
Mr. Tom Boardman (Chairman)
Mr. José Antonio Rios Garcia
Mr. Odilon Almeida
Ms. Janet Davidson
Mr. Lars-Åke Norling
Mr. Tomas Eliasson
Mr. Anders Jensen
Mr. Roger Solé Rafols
Former Directors (until May 2018):
Mr. Simon Duffy
Mr. Alejandro Santo Domingo
Total in SEK 000’s
Total (US$ ’000)(i)
Remuneration
2018
SEK 000’s
Remuneration
2017
SEK 000’s
1,470 (ii)
1,075
1,050
1,050
772(iii)
1,250
650 (ii)
850
2,150
1,075
1,050
—
—
1,250
950
850
—
—
SEK 8,201
US$943
1,050
950
SEK 10,275
US$1,122
(i) Cash compensation converted from SEK to USD at exchange rates on payments dates each year. Share based compensation based on the market value of Millicom
shares on the 2018 AGM date (in total 6,591 shares). Net remuneration comprised 51% in shares and 49% in cash (2017: 52% in shares and 48% in cash).
(ii) From the period from the 2018 AGM to the date of the EGM in January 2019.
(iii) From the period from September 1, 2018 to the 2019 AGM on May 2, 2019.
83
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Millicom CEO and Executive Team
CEO
Mr. Mauricio Ramos
Position
CEO
Mr. Mauricio Ramos
Chief Executive Officer
Role and responsibilities
• Leading the development and execution of the Company’s strategy.
• Day-to-day activities and management decisions, both operating and financial.
• Liaison between the Board and Management of the Company.
• Leading the Executive Team.
Mauricio Ramos, born in 1968, joined Millicom in April 2015 as Chief Executive Officer
(CEO). Before joining Millicom, he was President of Liberty Global’s Latin American
division, a position he held from 2006 until February 2015.
During his career at Liberty Global, Mauricio held several leadership roles, including
positions as Chairman and CEO of VTR in Chile, Chief Financial Officer of Liberty’s Latin
American division and President of Liberty Puerto Rico.
Mauricio is also a Member of the Board of Directors of Charter Communications (U.S.).
He is a dual Colombian and U.S. citizen who received a degree in Economics, a degree in
Law, and a postgraduate degree in Financial Law from Universidad de Los Andes in
Bogota.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 122,310 shares
Millicom’s Executive Team supports the CEO in the day-to-day operation and management of the Group, within their specific areas
of expertise. Millicom’s Executive Team meets on at least a monthly basis and more frequently when required. Millicom’s Executive
Team is as follows:
Executive Team
Role
Responsibilities
Mr. Tim Pennington
Chief Financial Officer
Mr. Esteban Iriarte
Chief Operating Officer–Latam
Mr. Mohamed Dabbour
Head of Africa Division
Finance and financial planning. Reporting financial
performance, including external financial reporting.
Budgeting and forecasting, monitoring expenditures
and costs. Implementation and enhancement of
related controls. Risk management.
Operations and development of the Latin American
businesses.
Operations and development of the African
businesses.
Mr. Xavier Rocoplan
Chief Technology and Information Officer Networks, information technology and procurement
Ms. Rachel Samrén
Chief External Affairs Officer
Mr. Salvador Escalón
General Counsel
Ms. Susy Bobenrieth
Chief Human Resources Officer
Mr. HL Rogers
Chief Ethics and Compliance Officer
within the Group.
Government relations, regulatory affairs, corporate
communications, and corporate responsibility.
Legal and corporate governance matters including
oversight, identification, and management of legal
cases and issues of the Group, as well as legal aspects
of mergers and acquisitions and other corporate
transactions.
Human Resource matters including talent acquisition
and management, compensation, diversity, and
inclusion.
Compliance matters including ethics, anti-bribery,
anti-corruption, anti-money laundering, and related
compliance programs. Also, corporate security and
information security.
84
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials The profiles of the CFO and Executive Team members are provided below:
Mr. Tim Pennington
Executive Vice President,
Chief Financial Officer
Mr. Esteban Iriarte
Executive Vice President,
Chief Operating Officer, Latin America
Mr. Mohamed Dabbour
Executive Vice President,
Head of Africa Division
Mohamed Dabbour joined Millicom in
2008 and has held a broad variety of roles
in the Africa region including Chief
Financial Officer in Chad in 2009 and Chief
Financial Officer in Ghana in 2011. Prior to
being appointed as Head of the Africa
division, he held the position of Chief
Financial Officer, Africa since August 2015.
Prior to joining Millicom, Mohamed worked
for BESIX, the largest Belgian construction
company. He started his career at
PricewaterhouseCoopers in Brussels as a
Senior Accountant.
Mohamed holds an Executive MBA degree
from London Business School.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 4,525 shares
Tim Pennington joined Millicom in June
2014 as Senior Executive Vice President,
Chief Financial Officer.
Esteban Iriarte was appointed as Executive
Vice President, Chief Operating Officer
(COO), Latin America in August 2016.
Previously, he was the Chief Financial
Officer at Cable and Wireless
Communications plc, Group Finance
Director for Cable and Wireless plc and,
prior to that, CFO of Hutchison
Telecommunications International Ltd,
based in Hong Kong. Tim was also Finance
Director of Hutchison 3G (UK), Hutchison
Whampoa’s British mobile business.
He also has corporate finance experience,
firstly as a Director at Samuel Montagu &
Co. Limited, and then as Managing Director
of HSBC Investment Bank within its
Corporate Finance and Advisory
Department.
He is a British national and has a BA
(Honours) degree in Economics and Social
Studies from the University of Manchester.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 15,933 shares
Previously, Esteban was General Manager
of Millicom’s Colombian businesses where,
in 2014, he led the merger and integration
of Tigo and the fixed-line company UNE.
Prior to leading Tigo Colombia, Esteban
was head of Millicom’s regional Home and
B2B divisions.
From 2009 to 2011, he was CEO of Amnet,
a leading service provider in Central
America for broadband, cable TV, fixed line,
and data services, acquired by Millicom in
2008.
In 2016, Esteban joined the Board of
Directors of Sura Asset Management. Sura
is one of Latin America’s leading financial
groups.
Esteban is from Argentina and received a
degree in Business Administration from the
Pontificia Universidad Catolica Argentina
“Santa Maria de los Buenos Aires”, and an
MBA from the Universidad Austral in
Buenos Aires.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 19,309 shares
85
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Mr. Xavier Rocoplan
Executive Vice President, Chief Technology
and Information Officer
Ms. Rachel Samrén
Executive Vice President,
Chief External Affairs Officer
Mr. Salvador Escalón
Executive Vice President,
General Counsel
Xavier Rocoplan started working with
Millicom in 2000 and joined the Executive
Committee as Chief Technology and
Information Technology Officer in
December 2012.
Xavier is currently heading all mobile and
fixed network and IT activities across the
Group as well as all Procurement & Supply
Chain.
Xavier first joined Millicom in 2000 as CTO
in Vietnam and subsequently for South
East Asia. In 2004, he was appointed CEO
of Millicom’s subsidiary in Pakistan (Paktel),
a role he held until mid-2007. During this
time, he launched Paktel’s GSM operation
and led the process that concluded with the
disposal of the business in 2007. Xavier was
then appointed as head of Corporate
Business Development, where he managed
the disposal of various Millicom operations
(e.g. Asia), the monetization of Millicom
infrastructure assets (towers) as well as
numerous spectrum acquisitions and
license renewal processes in Africa and in
Latin America.
Xavier is a French national and holds
Masters degrees in engineering from Ecole
Nationale Supérieure des
Télécommunications de Paris and in
economics from Université Paris IX
Dauphine.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 26,935 shares
Rachel Samrén joined Millicom in July 2014
and manages the Group’s External Affairs
function, which encompasses government
relations, regulatory affairs, corporate
communications, and corporate
responsibility functions.
Her focus is on driving Millicom’s global
engagement with particular responsibility
for special situation strategies.
Rachel’s background is in the risk
management consulting sector, most
recently as Head of Business Intelligence at
The Risk Advisory Group plc. Previously, she
worked for Citigroup as well as non-
governmental and governmental
organizations.
Rachel currently serves as Chairman of the
Board of Directors of Reach for Change and
Zantel.
She is a Swedish national and holds a BSc in
International Relations from the London
School of Economics and a MLitt in
International Security Studies from the
University of St Andrews.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 2,627 shares
Salvador Escalón was appointed as
Millicom’s General Counsel in March 2013
and became Executive Vice President in
July 2015.
Salvador leads Millicom’s legal team and
advises the Board of Directors and senior
management on legal and governance
matters.
He joined Millicom as Associate General
Counsel Latin America in April 2010. In this
role, he successfully led legal negotiations
for the merger of Millicom’s Colombian
operations with UNE-EPM
Telecomunicaciones S.A., as well as the
acquisition of Cablevision Paraguay.
From January 2006 to March 2010,
Salvador was Senior Counsel at Chevron
Corporation, with responsibility for legal
matters relating to Chevron’s downstream
operations in Latin America.
Previously, he was in private practice at the
law firms Skadden, Morgan Lewis, and
Akerman Senterfitt.
Salvador is an American national and has a
J.D. from Columbia Law School and a B.B.A.
in Finance and International Business from
Florida International University.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 14,712 shares
86
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Ms. Susy Bobenrieth
Executive Vice President, Chief Human Resources
Officer
Mr. HL Rogers
Executive Vice President, Chief Ethics and
Compliance Officer
Susy Bobenrieth, a global Human Resource
professional, joins Millicom with over 25
years of experience in major multi-national
companies that include Nike Inc., American
President Lines, and IBM.
HL Rogers joined Millicom in August 2016
as Chief Ethics and Compliance Officer. As
the leader of Millicom’s Compliance
function, he is committed to maintaining a
world-class compliance program.
As an ex-Nike executive, she has extensive
international knowledge and proven results
in leading large-scale organizational
transformations, driving talent
management agenda, and leading teams.
She is passionate about building great
businesses and winning with high-
performing teams.
Susy was raised in the USA by her Chilean
immigrant parents and is one of eight
children.
She has deep international experience
having lived and worked in Mexico, USA,
Brazil, the Netherlands, and Spain. She
received a degree from the University of
Maryland, University College in 1989.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: no shares
Previously, he was partner in the
Washington DC office of international law
firm Sidney Austin LLP, where he
represented individual, corporate, and
government clients in compliance issues
and complex litigation.
Throughout this period, HL Rogers
developed a wealth of experience in setting
up and managing compliance programs,
strengthening compliance policies and
procedures, as well as conducting training
and development. He has also assisted
many large corporations in negotiations
with authorities in multiple jurisdictions.
HL clerked for Judge Thomas Griffith of the
United States Court of Appeals for the
District of Columbia Circuit in 2005. He
received his Juris Doctorate from Harvard
Law School in 2004 and has published
several articles on compliance and ethics
matters within the corporate setting.
In 2001, HL received his BA degree in
English from Brigham Young University.
MILLICOM SHAREHOLDING AT
JANUARY 31, 2019: 741 shares
87
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials International Financial Reporting
Standards as adopted by the European
Union. Due to its inherent limitations,
internal controls over financial reporting
may not prevent or detect
misstatements.
Cable Onda was acquired on December
13, 2018 and the first assessment of
Internal Controls over Financial
Reporting will take place in 2019.
Management has assessed the
effectiveness of internal control over
financial reporting as of December 31,
2018 and concluded that it was
effective. The foregoing assessment
does not constitute and is not meant to
be an assessment of Millicom’s internal
control over financial reporting for
purposes of the U.S. Securities Exchange
Act of 1934, as amended, requirement
which is not yet applicable to Millicom.
Risk Management
The risk function is tasked with
identifying, analyzing, measuring, and
monitoring of Millicom’s risks. The Chief
Risk Officer is responsible for providing
risk owners at central functional and
country level with methodology and
tools to support the approach to
balancing risk with return, and reporting
to the Executive Team. The Audit
Committee, on behalf of the Board, is
responsible for oversight of risk
management activities.
Our risk assessment processes and the
principal risks managed by the Group are
set out in the Risk Management section
of this annual report.
Ethics and Compliance
The Millicom Ethics and Compliance
function has overall responsibility for the
group-wide Millicom Ethics and
Compliance program with robust
anti-bribery and anti-corruption,
anti-money laundering (AML) and
Information Security programs.
Millicom aims to be a Compliance Leader
in all its markets. Our Ethics & Compliance
Program is intended to prevent and
detect misconduct and protect the
interests of shareholders, employees and
the public, and is executed by an efficient
compliance function focused on the most
important risks.
Management Governance
The Group seeks to ensure that
governance activities are embedded in
the daily operations of all businesses and
in the Group’s corporate functions. The
role of the Group’s governance functions
is to set policies and procedures in
accordance with our obligations and
international best practice. These
functions then ensure policies and
procedures are embedded in our
businesses and monitor compliance.
Each function has clear reporting lines
through to the Executive Management
Team and the CEO. Reporting is also to
the Board committees, as previously
described, based on the responsibilities
of each committee. For instance, the
Chief Ethics and Compliance Officer
reports directly to the relevant Board
committee with a dotted line report to
the CEO.
In addition, the Group has a dedicated
Internal Audit function to provide
independent assurance over all
businesses and corporate functions
through a program of risk-based internal
audits. Internal Audit reports to the
Audit Committee of the Board and to
Executive Management. Improvements
are identified, management actions are
assigned and implementation progress is
monitored.
Business Control
The Board has overall responsibility for
the Group’s system of internal control,
which is designed to manage, rather
than eliminate, the risk of failure to
achieve business objectives and can only
provide reasonable, but not absolute,
assurance against material
misstatement or loss. The concept of
reasonable assurance recognizes that
the cost of control procedures should not
exceed the expected benefits.
Responsibility for maintaining effective
internal controls is delegated to the CEO
and the Executive Team with oversight
provided by the Audit Committee.
Millicom continued to invest significantly
during the year to further strengthen its
internal control framework including
preparatory work for the U.S. secondary
listing. Within the Millicom control
framework, operational and functional
management teams perform controls.
Key controls are documented in the
Millicom internal control manual, which
covers both financial and non-financial
controls across 15 core business
processes. The control manual was
updated at the start of the year. Each
country has its own dedicated, local
Business Control team responsible for
monitoring and development of the local
internal control environment.
Monitoring Systems
A process of internal control self-
assessment is operated and requires
self-certification of the operation of key
controls. Self-certified responses are then
subject to review and challenge by the
Group Business Controls team and
Global Process Owners. The results are
also compared to findings from Internal
and External Audit. Where controls are
found not to be operating effectively,
action plans are designed with
responsibilities and timescales assigned
for remediation.
Self-assessment results are reported to
the Audit Committee and the Executive
Team. The results enable an assessment
of the relative maturity of our internal
control environment by both business
process and by country. In 2018, three
self-assessment exercises were
performed (2017:3).
Fraud Management and Reporting
Business Control has responsibility for
fraud risk management. Education
activities continued, including an
awareness campaign aligned with
International Fraud Awareness Week, in
November.
A quarterly fraud report is prepared by
each operation. A summary of this is
presented to the Audit Committee along
with the key actions taken. Quantitative
and qualitative thresholds have been
agreed to govern the reporting of
individual fraud incidents to the Group
CFO, CEO, and the Audit Committee.
Internal Control over Financial
Reporting
The Management of Millicom is
responsible for establishing and
maintaining adequate internal control
over financial reporting. Internal control
over financial reporting is a process
designed to provide reasonable
assurance regarding the reliability of
financial reporting and the preparation
of financial statements for external
reporting purposes in conformity with
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OverviewStrategyPerformanceGovernanceAppendixFinancials Management and Governance of
Compliance Activities
The Millicom Management team is
committed to the highest level of ethics
and compliance. This requires that every
employee is responsible for understanding
the important legal and ethical issues
that affect our business. Our commitment
to compliance begins with each and every
one of our employees and our third parties
acting with Integrity. This means more
than just complying with the law; it means
acting in an ethical manner as described
in the company’s Code of Conduct.
The performance of all our senior
management is measured by
Compliance KPIs, requiring continual
improvement for compliance-related
issues. In 2018, integrated compliance
factors were incorporated into
executives’ incentives program, including
bonus awards tied to achievement of all
these KPIs. We use performance ratings
to drive concrete action and promote
ethical business practices. It is our
obligation to include appropriate
incentives for taking reasonable steps to
prevent or detect criminal conduct and
appropriate disciplinary measures for
failing to take such steps.
We continued reinforcing our Third
Parties management space in 2018
through a centralized and elevated due
diligence program. The use of
technology allowed for a stronger
automation of third-party screening with
a goal of improved compliance
outcomes. We published a procedure on
interactions with government and other
public officials in order to strengthen and
clarify risks and controls around third
party management.
All Compliance policies were reviewed
and new ones developed to cover
emerging areas of risk (Government
Interaction Policy) to strengthen the
company’s Anti-corruption program.
Specific training modules were rolled out
to all employees on the new and
reviewed policies. Automation of
compliance Declaration and Attestation
was launched. In 2018 we continue
advancing a culture of compliance by
accountability “Do Business the Right
Way” with the living theme “I am
Compliance” & raising the key question
#Howdoyoucomply. Special attention
was given to reinforcing everyone’s
compliance duties and embracing the
understanding of Compliance being in
the Culture, not just a policy.
We launched group-wide e-learning on
the Millicom Code of Conduct &
Anti-Corruption policy. The purpose of
the training was to heighten attention to
key risk areas such as improper
payments, gifts and hospitalities,
donations, managing third parties,
relationships with Government Officials,
and approval and recording of expenses.
This training was part of the Company’s
Anti-Corruption Program, enhancing
employees’ ability to identify warning
signs of bribery, to understand and apply
our anti-corruption policy, and to adhere
to a solid decision-making strategy when
making business decisions.
Speak Up Policy and Issue
Management
A new Hotline campaign, “Speak Up-We
Will Act On It”, was launched groupwide
to promote our Millicom Ethics Line,
encouraging employees to use this
external, independent system to report
issues of non-compliance with our
policies and values. This initiative was
part of our larger communication
campaign “Integrity Starts With You”
that we have been using to continue to
raise awareness of compliance and
ethics and to drive a corporate culture of
integrity.
Key Governance Initiatives
Millicom strengthened the Compliance
function, adding two additional senior
Compliance Officers for the Africa
operations and a replacement in Latin
America.
Internal Audit worked with the business
units to develop action plans to address
the findings from the compliance audit,
and we implemented those plans. Third
parties found to be in violation of our
policies were terminated or remediated.
Millicom has strengthened its Ethics and
Compliance program monitoring and
data analysis. In 2018, we expanded
quarterly Compliance monitoring on key
business and Compliance risks. We
performed regular analysis of risk,
control maturity, and training
effectiveness and cross referenced our
efforts with results of audits and internal
control self-assessments in quarterly
Local Compliance Committees.
Corporate Responsibility
This is the third year that Millicom has
integrated corporate responsibility-
related performance data and
information in our annual financial and
operational report to demonstrate how
managing responsible growth and key
risks support the successful delivery of
our business strategy.
Millicom’s Corporate Responsibility
team sets CR strategy, drives policies and
processes for CR governance, guides and
coordinates CR performance across
business functions, and publishes
CR-related performance information in
the annual integrated report. Our
integrated report will continue to be a
key vehicle in promoting transparency
towards investors and other key
stakeholders on CR risks and
opportunities.
The CR team constantly engages with
internal and external stakeholders to
ensure that Millicom understands and
addresses CR issues that are important
to our business and relevant to our
stakeholders.
Stakeholder engagement is done
through a biennial materiality analysis,
and for the most part via ongoing
interaction with our key stakeholders. In
addition to anticipating and improving
preparedness on risks, the CR function
also adds value by seeking responsible
leadership opportunities for the Group to
assess where we can make the greatest
positive impact to society, to the
environment and, in turn, to our
business.
Governance of CR
Millicom’s Board of Directors oversees
the Government Relations (GR),
Regulatory Affairs, Corporate
Responsibility (CR), and Social
Investment (SI) functions of the Group,
which fall under the umbrella of External
Affairs. This is due to the depth and
materiality of these topics and the
importance of monitoring
interconnected risks and opportunities
relating to them. The Executive Vice
President (EVP), Chief External Affairs
Officer, a direct report of the CEO, is
accountable for delivering updates on
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials How CR is governed
Role
As part of the External Affairs
function, CR oversees, advises
and makes recommendations to
Management regarding our
strategy and activities in the
areas of CR and social investment.
Board of Directors
Chief
Executive
Officer
Executive Management Team
sponsors for managing CR
Chief Ethics and
Compliance Officer
EVP
Chief External
Affairs Officer
Direct reports
to the CEO
EVP
Chief Technology
and Information
Officer
Senior
management
Corporate
Compliance
Corporate
Investigations
& Security
Corporate
Anti-Money
Laundering
Corporate
Information
Security
Director Corporate
Responsibility
Responsible for:
Corporate Responsibility,
Environmental and
Social Investment
programs
Vice President
Supply Chain
Responsible for:
Responsible supply
chain management
the CR and SI strategy to the Board.
Progress on CR and SI strategy
implementation and issues
management is also reported to the
Millicom Executive Committee on a
monthly basis through the EVP, Chief
External Affairs Officer, and in specific
cases directly.
Security
Throughout 2017 - 2018 the Integrated
Services team, evolved from Corporate
Security in 2018, continued its ambitious
drive to implement international risk
management standards such as ISO
14001, 22301, and OHSAS 18001 and
can report that all operating entities
except Nicaragua are accredited to the
ISO standards. Nicaragua was put on
hold until mid 2019 due to the significant
civil and political unrest that spanned
the country.
The focus of the Integrated Services
team, which covers both health and
safety, security, and other areas of
non-financial risk, is to protect life,
assets, and Millicom’s reputation while
promoting employee well-being, and to
build resilience throughout the business
to unexpected events or crises. In
addition, Integrated Services oversees
the implementation of policy and Group
standards in physical security, health,
and safety by local operational teams.
Our teams responded quickly and
professionally to several major incidents
and events during 2018, including
volcanic eruptions, earthquakes, civil
unrest, and several major fires. In each
instance, we were able to prevent any
employee fatalities and major losses to
the Group.
The Integrated Services team is
overseen by the Vice President of Global
Investigations, reporting to the Executive
Vice President, Chief Ethics &
Compliance Officer.
Business Continuity and Crisis
Management
We designed our global and operational
business continuity and crisis
management system to address any
significant disruption that might affect
our capabilities to perform critical day-to-
day activities. This continues to mature
and has already responded to events,
such as extreme weather, civil unrest, and
criminal and political activities in the
countries where we operate.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
Risk assessment is a continuous process,
It starts with a business impact analysis
that identifies all critical services and
business processes which will require a
disaster recovery and business continuity
plan. After performing a risk assessment
on all critical assets identified in the
analysis, we address every relevant
operational threat in a formal risk
mitigation plan.
Millicom crisis management defines the
proper response to, and management of,
an intense, unexpected, and unstable
situation that disrupts normal operations
and has highly undesirable outcomes,
which require extraordinary measures to
restore normal operations. Crisis
management aims to protect the safety
of our staff and our reputation, together
with continuous and reliable delivery of
service to customers, while maintaining
contractual, legal, and regulatory
compliance.
In parallel, Millicom has in place physical
security and loss prevention standards
which set minimum acceptable levels of
critical site protection, as defined by
industry best practice. All activities are
subject to a program of monitoring and
compliance activities.
OverviewStrategyPerformanceGovernanceAppendixFinancials Our focus on “zero fatalities” has had a
profound impact on our culture and the
way we strive to work in a safer manner,
resulting in zero employee fatalities.
Unfortunately, there were two contractor
fatalities in 2018, down from ten in 2017.
The events resulted from a recent
electrocution in which an engineer was
struck when working underneath
overhead power cables and an earlier
reported road traffic accident (RTA),
which occurred in November 2017 but
forms part of our reporting period. RTA’s
while still figuring as the #1 reported
event, have reduced significantly along
with falls from height, violent crime
associated with criminal gang activity,
making central America, somewhat safer
place to operate. However, there was
significant support required to assist
staff in Nicaragua during and
throughout the ongoing civil unrest.
In comparison to 2017, our current
reporting figures indicate the number of
events reported has remained stable, our
fatality rate is down 80%, and the
number of lost time incidents has
significantly decreased. The increase in
reported numbers during 2017
compared to 2016 was expected and it
was anticipated that during 2018 the
figures would start to decrease as the
safety culture becomes further
embedded in the organization.
Supply Chain & Procurement has been
instrumental in pushing the strict health,
safety, and environmental requirements
to ensure our due diligence process is
completed. Additionally, our local staff
and suppliers, have been bolstering
training and awareness in auditing,
health and safety vetting, and site
inspections. There is a key focus now on
the end user or sponsoring department
to engage more with their outsourced or
managed services areas to ensure they
manage their activities sufficiently to
maintain and improve the safety culture
and awareness.
Information Security
In 2017, Millicom reorganized its
information security effort to advance
the global program. Reporting to the
Executive Vice President, Chief Ethics &
Compliance Officer, the program is
managed by the Global Chief Information
Security Officer (CISO), who assumes
responsibility for the identification,
management and mitigation of technology-
centric risks throughout the company.
The CISO oversees the regional
information security teams to ensure the
confidentiality, integrity, and availability
of all business-critical systems and
assets. Other responsibilities include the
identification of emerging threats and
risks potentially detrimental to Millicom
and the safeguarding of proprietary and
personal customer information.
Additionally, the regional teams work
closely with business and technology
leadership to ensure compliance to
corporate policies and regional
information security-related regulatory
requirements within the various countries
where Millicom conducts business.
The Global CISO meets regularly with
the Compliance and Business Conduct
Committee and Audit Committee to
ensure appropriate risks have been
elevated and are being addressed. As part
of the move to centralize Information
Security services, in 2018 the Information
Security team began to reevaluate the
existing technology risk management
processes and consolidated all
identification and mitigation efforts under
the new global function.
The following key initiatives kicked off in
2018:
• Formalization of the Global
Information Security Office: The
Millicom Global Information Security
Office (GISO) is charged with strategy,
tactics, and oversight of all security
efforts with the broader Millicom
environment. The GISO is divided up
into four critical pillars–Risk
Management, Security Engineering,
Vulnerability Management, and the
Global Security Operations Center.
Lead by the Millicom Global CISO, the
GISO strategy, budget, and activities
are overseen by the InfoSec Steering
Committee, which is comprised of
various Millicom executives, technical
resources, and business personnel. The
InfoSec Steering Committee meets
monthly to discuss projects,
approaches, and engagement across
the company.
• Development of a Global Security
Operations Center: To better
understand and manage risk across
the entire enterprise, Millicom is
moving forward with the consolidation
and centralization of all local security
operations management into a single,
all-encompassing global security
operations center. Millicom has
partnered with an industry-leading
service provider to provide 24x7
monitoring and analysis of all global
events which could impact the
company. Vendor selection has been
completed and the migration project
has begun. Initial locations will be
migrated in Q1 2019, with full
deployment targeted for completion
by the end of year.
• Development of a Global Vulnerability
Management program: Due to the
differences in maturity levels around
operational security, the Global
program will identify, report, and track
risks and vulnerabilities within all
operations to provide a better insight
into the technical security risks of the
company. The initial phases of the
program have been initiated and full
roll out is expected to be completed by
the end of Q3 2019.
• Development of a Global Identity and
Access Management program: In
order to effectively manage user
access, especially with respect to the
U.S. regulatory requirements, Millicom
has decided to centralize all business
and critical access provisioning to a
central solution. Phase One of this
effort will address all regulatory
requirements by the end of Q3 2019,
with the remaining deployment
schedule running through mid-2020.
Health and Safety Management
All operating entities including corporate
are in compliance with the current
internal OHSAS 18001 standard, and all
were externally accredited. Our teams at
Group and within the operating entities
are now preparing for the transition to
the new ISO 45001 standard which will
commence in Q1 2019 with Chad, Tigo
Tanzania, and Honduras.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceAppendixFinancials Directors’ Financial and
Operating Report
Group Performance
The Group returned to solid top line
growth as the strategy continued
yielding positive results.
In 2018, total revenue for the Group
was US$4,074 million, and gross profit
was US$2,928 million, a margin of
71.9 percent.
Operating expenses represented 41.1%
of revenue, a slight increase compared to
last year, mainly due to acquisition costs
for Cable Onda in Panama. Beside this
effect, the Group has continued
delivering on operational efficiencies
which underpinned our margins and
cash flows, delivering a lower operating
cost run rate and lower capex.
Our operating profit amounted to
US$645 million, a 16.8 percent margin
impacted positively by the gain on tower
deals in El Salvador, Colombia, and
Paraguay as well as higher profit from the
joint ventures in Guatemala and Honduras.
Net financial expenses were US$350 million,
lower than for the same period last year
mainly because 2017 figures included
one-off costs in respect of early
redemptions of the 2020 and 2021 Senior
Notes outstanding bonds.
Profit before taxes at US$129 million
included the effects of the increase in
operating profit and decrease in interest
expense described above, negatively
affected by higher foreign exchange
losses and higher losses from our joint
venture in Ghana and associates.
The Group net tax charge in 2018 was
US$116 million, leaving a net gain for the
year from continuing operations at
US$13 million. The loss of US$39 million
from discontinued operations mainly
reflected the loss on disposal of our
business in Rwanda.
As a result, the net loss for the year was
US$26 million. The share of losses of
non-controlling interests was US$16 million.
The net loss for the year attributable to
Millicom owners was US$10 million.
Earnings per share was US$0.10 cents.
Share Capital
At December 31, 2017, Millicom had
101.7 million issued and paid up
common shares of par value US$1.50
each, of which 913 thousand were held
by the Company as treasury shares (2017:
1.2 million). During the year, the company
acquired approximately 70,000 shares
and issued around 343,000 shares to
management and employees under
the LTIP remuneration plans and
approximately 6,600 shares to Directors
as part of their annual remuneration.
Distribution to Shareholders and
Proposed Distributions
On May 4, 2018, at the Annual General
Meeting of shareholders, a dividend
distribution of US$2.64 per share was
approved, and subsequently paid to
shareholders in equal portions in May
and November.
This year’s proposed dividend is
consistent with distributions in 2017
and 2018.
Risks and Uncertainty Factors
The Group operates in an industry and in
markets which are characterized by rapid
change and subject to macro-economic,
competitive and political uncertainty.
This change creates both opportunities
and at the same time a degree of risk.
Many of the inherent underlying risks in
these markets, including regulatory
change (including tariff controls and
taxation), currency fluctuations, and
underlying macroeconomic conditions,
impact on the level of disposable income
and consumers’ attitudes and demand
for our products and services.
Further information on these and other
key risks faced by the Group are set out in
the Risk Management section on pages
22 - 25.
Financial Risk Management
Objectives and Policies
Millicom’s financial risk management
policies and objectives, together with a
description of the various risks and
hedging activities undertaken by the
Group, are set out in Section D, financial
risk management, of the consolidated
financial statements.
Internal controls and risk management
on the preparation of the consolidated
financial statements are covered in the
Governance section from pages 57 - 91.
Non-Financial Information
Non-financial information, such as
environmental, social, human rights, and
the fight against corruption, are
integrated throughout this report, and
in the Appendix.
Management and Employees
Over recent years, the Group has
developed many key functions and
improved support to local operations,
including in the areas of procurement,
network development, marketing, IT, HR,
compliance, and finance. Since 2017, the
Executive Management Team is
complete.
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
At December 31, 2018, the Group’s
headcount from continuing operations
reached approximately 21,000, up from
almost 19,000 at December 31, 2017,
the increase being mainly related to the
acquisition of Cable Onda.
Outlook for the Group
We anticipate another solid year in 2019
marked by the continued expansion of
our high-speed data networks and
customer growth. For our Latam
segment, we expect organic service
revenue growth to range between 3%
and 5%, while EBITDA is expected to
grow at a faster rate, ranging between
4% and 6%, on a like-for-like basis. As
usual, these organic growth rates are
expressed in constant currency terms to
exclude the impact of changes in foreign
exchange and accounting standards.
Finally, Latam segment capex should be
slightly above US$1.0 billion, including
about US$85 million at Cable Onda,
which we expect will generate EBITDA of
approximately US$184 million.
Subsequent Event
On February 20, 2019, the Group
announced it has entered into
agreements with Telefónica S.A. and
certain of its affiliates (Telefónica), to
acquire the entire share capital of
Telefónica Móviles Panamá, S.A.,
Telefónica de Costa Rica TC, S.A. (and its
wholly owned subsidiary, Telefónica
Gestión de Infraestructura y Sistemas de
Costa Rica, S.A.) and Telefonía Celular de
Nicaragua, S.A. (together, Telefonica
CAM) for a combined enterprise value of
US$1,650 million (the Transaction)
payable in cash. The Transaction is
subject to customary closing conditions,
including regulatory approval in each
market, and closings are expected during
H2 2019. Millicom has secured bridge
funding commitments to finance the
acquisition, and the bridge will be
refinanced predominantly with the
issuance of new debt by Millicom and its
operating subsidiaries.
José Antonio Ríos García
Chairman of the Board of Directors
Luxembourg, February 28, 2019
OverviewStrategyPerformanceGovernanceAppendixFinancials Management Responsibility Statement
We, Mauricio Ramos, Chief Executive
Officer, and Tim Pennington, Chief
Financial Officer, confirm, to the best of
our knowledge, that these 2018
consolidated financial statements which
have been prepared in accordance with
the International Financial Reporting
Standards as adopted by the European
Union, give a true and fair view of the
assets, liabilities, financial position, and
profit or loss of the Millicom Group and the
undertakings included in the consolidation
taken as a whole, and that the Directors’
report includes a fair review of the
development and performance of the
business and the position of the Millicom
Group and the undertakings included in the
consolidation taken as a whole, together
with a description of the principal risks and
uncertainties that they face.
Luxembourg, February 28, 2019
Mauricio Ramos
Chief Executive Officer
Tim Pennington
Chief Financial Officer
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OverviewStrategyPerformanceGovernanceAppendixFinancials Overview
Strategy
Performance
Governance
Financials
Appendix
Financial Statements
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2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Millicom International Cellular S.A.
Consolidated statement of income
for the years ended December 31, 2018, 2017 and 2016
Notes
2018
2017 (i)
2016 (i)
(US$ millions)
Revenue..............................................................................
Cost of sales .......................................................................
Gross profit.......................................................................
Operating expenses ............................................................
Depreciation.......................................................................
Amortization ......................................................................
Share of profit in joint ventures in Guatemala and
Honduras ........................................................................
Other operating income (expenses), net.............................
Operating profit ...............................................................
Interest and other financial expenses .................................
Interest and other financial income....................................
Other non-operating (expenses) income, net .....................
Profit (loss) from other joint ventures and associates,
net ...................................................................................
Profit before taxes from continuing operations.............
Charge for taxes, net ..........................................................
Profit (loss) for the year from continuing operations ...
Profit (loss) for the year from discontinued operations,
net of tax.........................................................................
Net profit (loss) for the year ............................................
Attributable to:
The owners of Millicom.....................................................
Non-controlling interests ...................................................
Earnings (loss) per common share for profit (loss)
attributable to the owners of the Company:
Basic (US$ per common share):
— from continuing operations ...........................................
— from discontinued operations........................................
— total...............................................................................
Diluted (US$ per common share):
— from continuing operations ...........................................
— from discontinued operations........................................
—total................................................................................
B.1.
B.2.
B.2.
E.2.2.
E.1.3.
A.2.
B.2.
B.3.
C.3.3.
B.5.
A.3.
B.6.
E.3.2.
A.1.4.
B.7.
B.7.
4,074
(1,146)
2,928
(1,674)
(685)
(144)
154
76
655
(371)
21
(40)
(136)
129
(116)
13
(39)
(26)
(10)
(16)
0.29
(0.39)
(0.10)
0.29
(0.39)
(0.10)
4,076
(1,205)
2,871
(1,593)
(695)
(146)
140
68
645
(396)
16
(4)
(85)
176
(158)
18
51
69
86
(17)
0.36
0.50
0.86
0.36
0.50
0.86
4,043
(1,175)
2,868
(1,627)
(678)
(175)
115
(14)
490
(372)
21
20
(49)
109
(179)
(70)
(20)
(90)
(32)
(58)
(0.12)
(0.20)
(0.32)
(0.12)
(0.20)
(0.32)
(i) Re-presented for discontinued operations (shown in note A.4.). Not restated for the application of IFRS 15 and 9, as the
Group elected the modified retrospective approach for both standards.
The accompanying notes are an integral part of these consolidated financial statements.
95
Millicom International Cellular S.A.
Consolidated statement of comprehensive income
for the years ended December 31, 2018, 2017 and 2016
Net profit (loss) for the year ......................................................................
Other comprehensive income (to be reclassified to the statement
of income in subsequent periods), net of tax:
Exchange differences on translating foreign operations............................
Change in value of cash flow hedges, net of tax effects............................
Other comprehensive income (not to be reclassified to the
statement of income in subsequent periods), net of tax:
Remeasurements of post-employment benefit obligations, net of tax
effects.....................................................................................................
Total comprehensive income (loss) for the year....................................
Attributable to:
Owners of the Company............................................................................
Non-controlling interests ...........................................................................
Total comprehensive income (loss) for the year arises from:
Continuing operations ...............................................................................
Discontinued operations ............................................................................
2018
2017 (i)
2016 (i)
(US$ millions)
69
(26)
(81)
(1)
—
(108)
(78)
(30)
(97)
(11)
85
4
(2)
158
173
(15)
120
38
(90)
(14)
(3)
(2)
(109)
(60)
(49)
(86)
(23)
(i) Re-presented for discontinued operations (shown in note A.4.). Not restated for the application of IFRS 15 and 9, as
the Group elected the modified retrospective approach for both standards.
The accompanying notes are an integral part of these consolidated financial statements.
96
Millicom International Cellular S.A.
Consolidated statement of financial position
at December 31, 2018 and 2017
ASSETS
NON-CURRENT ASSETS
Intangible assets, net..................................................................................
Property, plant and equipment, net ............................................................
Investments in joint ventures.....................................................................
Investments in associates...........................................................................
Contract costs, net .....................................................................................
Deferred tax assets.....................................................................................
Derivative financial instruments................................................................
Other non-current assets ............................................................................
TOTAL NON-CURRENT ASSETS .......................................................
CURRENT ASSETS
Inventories, net ..........................................................................................
Trade receivables, net ................................................................................
Contract assets, net ....................................................................................
Amounts due from non-controlling interests, associates and joint
ventures ..................................................................................................
Prepayments and accrued income .............................................................
Current income tax assets..........................................................................
Supplier advances for capital expenditure.................................................
Other current assets ...................................................................................
Restricted cash...........................................................................................
Cash and cash equivalents .........................................................................
TOTAL CURRENT ASSETS .................................................................
Assets held for sale....................................................................................
TOTAL ASSETS ......................................................................................
Notes
December 31
2018
December 31
2017 (i)
(US$ millions)
E.1.
E.2.
A.2.
A.3.
F.5.
B.6.
D.1.2.
G.5.
F.2.
F.1.
F.5.
G.5.
C.4.
C.4.
E.3.2.
2,374
3,041
2,867
169
4
202
—
126
1,265
2,880
2,966
241
—
180
—
113
8,784
7,646
39
343
37
34
129
108
25
127
158
528
1,529
3
10,316
45
386
—
37
145
99
18
90
145
619
1,585
233
9,464
(i) Not restated for the application of IFRS 15 and 9, as the Group elected the modified retrospective approach for both
standards.
The accompanying notes are an integral part of these consolidated financial statements.
97
Millicom International Cellular S.A.
Consolidated statement of financial position
at December 31, 2018 and 2017 - continued
EQUITY AND LIABILITIES
EQUITY
Share capital and premium ........................................................................
Treasury shares ..........................................................................................
Other reserves............................................................................................
Retained profits .........................................................................................
Profit (loss) for the year attributable to equity holders..............................
Equity attributable to owners of the Company ....................................
Non-controlling interests ...........................................................................
TOTAL EQUITY.....................................................................................
LIABILITIES
NON-CURRENT LIABILITIES
Debt and financing ....................................................................................
Amounts due to non-controlling interests, associates and joint
ventures ..................................................................................................
Provisions and other non-current liabilities...............................................
Deferred tax liabilities ...............................................................................
TOTAL NON-CURRENT LIABILITIES .............................................
CURRENT LIABILITIES
Debt and financing ....................................................................................
Put option liability .....................................................................................
Payables and accruals for capital expenditures .........................................
Other trade payables ..................................................................................
Amounts due to non-controlling interests, associates and joint
ventures ..................................................................................................
Accrued interest and other expenses .........................................................
Current income tax liabilities ....................................................................
Contract liabilities .....................................................................................
Derivative financial instruments................................................................
Provisions and other current liabilities ......................................................
TOTAL CURRENT LIABILITIES .......................................................
Liabilities directly associated with assets held for sale .............................
TOTAL LIABILITIES............................................................................
TOTAL EQUITY AND LIABILITIES ..................................................
Notes
December 31
2018
December 31
2017 (i)
(US$ millions)
C.1.
C.1.
A.1.4.
635
(81)
(538)
2,535
(10)
2,542
249
2,790
637
(106)
(472)
2,950
86
3,096
185
3,281
C.3.
4,123
3,600
G.5.
F.4.2.
B.6.
C.3.
C.6.3.
G.5.
F.5.
D.1.2.
F.4.1.
E.3.2.
135
351
233
124
335
56
4,841
4,116
458
239
335
282
348
383
58
87
—
494
2,684
—
7,526
10,316
185
—
304
288
296
353
81
—
56
425
1,989
79
6,183
9,464
(i) Not restated for the application of IFRS 15 and 9, as the Group elected the modified retrospective approach for both
standards.
The accompanying notes are an integral part of these consolidated financial statements.
98
Millicom International Cellular S.A.
Consolidated statement of cash flows
for the years ended December 31, 2018, 2017 and 2016
Notes
2018
2017 (i)
2016 (i)
(US$ millions)
E.3.2.
A.2.
B.2, E.
3.2.
C.1.
A.1.2
A.3.
B.5.
Cash flows from operating activities (including
discontinued operations)
Profit before taxes from continuing operations....................
Profit (loss) before taxes from discontinued operations.......
Profit (loss) before taxes........................................................
Adjustments to reconcile to net cash:
Interest and other financial expenses, net.............................
Interest and other financial income ......................................
Adjustments for non-cash items:
Depreciation and amortization .............................................
Share of profit in Guatemala and Honduras joint
ventures.............................................................................
Gain (loss) on disposal and impairment of assets, net .........
Share-based compensation ...................................................
Transaction costs assumed by Cable Onda ..........................
(Profit) loss from other joint ventures and associates, net ...
Other non-cash non-operating (income) expenses, net ........
Changes in working capital:..............................................
Decrease (increase) in trade receivables, prepayments
and other current assets, net..............................................
(Increase) decrease in inventories ........................................
Increase (decrease) in trade and other payables, net ............
Changes in contract assets, liabilities and costs, net ............
Total changes in working capital ......................................
Interest (paid) .......................................................................
Interest received ...................................................................
Taxes (paid) ..........................................................................
Net cash provided by operating activities............................
Cash flows from investing activities (including
discontinued operations):
Acquisition of subsidiaries, joint ventures and
associates, net of cash acquired ........................................
A.1.
Proceeds from disposal of subsidiaries and associates,
net of cash disposed ..........................................................
Purchase of intangible assets and licenses ...........................
Proceeds from sale of intangible assets................................
Purchase of property, plant and equipment ..........................
Proceeds from sale of property, plant and equipment ..........
Dividend received from joint ventures.................................
Settlement of derivative financial instruments.....................
Cash (used in) provided by other investing activities, net ...
Net cash used in investing activities .....................................
E.3.2., A.
3.2.
E.1.4.
E.2.3.
C.3.4.
A.2.2
D.1.2
99
129
(39)
91
373
(21)
830
176
51
227
416
(16)
879
109
(26)
83
397
(22)
932
(154)
(140)
(115)
(36)
22
30
136
40
(128)
2
69
(9)
(66)
(318)
20
(153)
792
(953)
176
(148)
—
(632)
154
243
(63)
24
(1,199)
(99)
22
—
85
(2)
5
16
(82)
—
(61)
(372)
16
(132)
820
(22)
22
(133)
4
(650)
179
203
—
31
(367)
19
14
—
49
(22)
102
19
(109)
—
12
(357)
19
(130)
878
—
147
(143)
6
(719)
6
143
—
8
(552)
Millicom International Cellular S.A.
Consolidated statement of cash flows
for the years ended December 31, 2018, 2017 and 2016
Notes
2018
2017 (i)
2016 (i)
Cash flows from financing activities (including
discontinued operations):
Proceeds from debt and other financing...............................
Repayment of debt and other financing ...............................
Advances for, and dividends paid to non-controlling
C.3.
C.3.
1,155
(546)
996
(1,195)
interests ............................................................................. A.1./A.2.
Dividends paid to non-controlling interests .........................
Dividends paid to owners of the Company ..........................
Net cash provided by (used in) financing activities ............
Exchange impact on cash and cash equivalents, net ............
Net (decrease) increase in cash and cash equivalents.........
Cash and cash equivalents at the beginning of the year .......
Effect of cash in disposal group held for sale ......................
Cash and cash equivalents at the end of the year ...............
C.2.
E.3.2
—
(2)
(266)
341
(33)
(98)
619
6
528
—
—
(265)
(464)
4
(8)
646
(19)
619
713
(821)
(68)
—
(265)
(441)
(8)
(123)
769
—
646
(i) Re-presented for discontinued operations (shown in note A.4. and E.3.2.). Not restated for the application of IFRS 15 and 9,
as the Group elected the modified retrospective approach for both standards.
The accompanying notes are an integral part of these consolidated financial statements.
100
Millicom International Cellular S.A.
Consolidated statement of changes in equity
for the years ended December 31, 2018, 2017 and 2016
Number of
shares
(000’s)
Number of
shares
held by
the Group
(000’s)
Share
capital(i)
Share
premium
Treasury
shares
Retained
profits(ii)
Other
reserves
(iii)
Non-
controlling
interests
Total
equity
Total
(US$ millions)
Balance on
January 1, 2016 .....................
101,739
(1,574)
153
486
(143)
3,513
(531)
3,477
251
3,728
Total comprehensive
income for the year ............
Dividends(iv) ..........................
Purchase of treasury shares .....
Share-based
compensation(v).................
Issuance of shares under
share-based payment
schemes ..............................
Balance on
—
—
—
—
—
—
—
(37)
—
216
—
—
—
—
—
—
—
—
—
(1)
—
—
(3)
—
23
(32)
(265)
—
—
(28)
—
—
14
(1)
(17)
(60)
(265)
(3)
14
4
(49)
—
—
—
—
(109)
(265)
(3)
14
4
December 31, 2016 ................
101,739
(1,395)
153
485
(123)
3,215
(562)
3,167
201
3,368
Total comprehensive
income for the year ............
Dividends(iv) ..........................
Purchase of treasury shares .....
Share-based
compensation(v).................
Issuance of shares under
share-based payment
schemes ..............................
Balance on
—
—
—
—
—
—
—
(32)
—
233
—
—
—
—
—
—
—
—
—
(1)
—
—
(3)
—
21
86
(265)
—
—
1
87
—
—
22
(18)
173
(265)
(3)
22
1
(15)
—
—
—
—
158
(265)
(3)
22
1
December 31, 2017 ................
101,739
(1,195)
153
484
(106)
3,035
(472)
3,096
185
3,281
Adjustment on adoption of
IFRS 15 and IFRS 9
(net of tax) (vi) ...................
Total comprehensive
income for the year ............
Dividends(iv) ..........................
Dividends to non-
controlling interests............
Purchase of treasury shares .....
Share-based
compensation(v).................
Issuance of shares under
share-based payment
schemes ..............................
Effect of change in
consolidation scope
(vii).....................................
Put option reserve(vii).............
Balance on
—
—
—
—
—
—
—
—
—
—
—
—
—
(70)
—
351
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(2)
—
—
—
—
—
—
(6)
—
31
—
—
10
(10)
(266)
—
—
—
—
(68)
—
—
—
22
(5)
(22)
10
(78)
(266)
—
(6)
22
2
—
(239)
—
—
—
(239)
(4)
(30)
—
(13)
—
—
—
111
—
5
(108)
(266)
(13)
(6)
22
2
111
(239)
December 31, 2018 ................
101,739
(913)
153
482
(81)
2,525
(538)
2,542
249
2,790
(i) Share capital and share premium – see note C.1.
(ii) Retained profits – includes profit for the year attributable to equity holders, of which $324 million (2017: $345 million;
2016: $321 million) are not distributable to equity holders.
(iii) Other reserves – see note C.1.
(iv) Dividends – see note C.2.
(v) Share-based compensation – see note C.1.
(vi) See below for details about changes in accounting policies.
(vii) Effect of the acquisition of Cable Onda S.A. See notes A.1.2. and C.6.3. for further details.
The accompanying notes are an integral part of these consolidated financial statements.
101
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018 and 2017
Introduction
Corporate Information
Millicom International Cellular S.A. (the “Company” or “MIC S.A.”), a Luxembourg Société Anonyme, and its
subsidiaries, joint ventures and associates (the “Group” or “Millicom”) is an international telecommunications and
media group providing digital lifestyle services in emerging markets, through mobile and fixed telephony, cable,
broadband, Pay-TV in Latin America (Latam) and Africa.
The Company’s shares are traded as Swedish Depositary Receipts on the Stockholm stock exchange under the
symbol TIGO SDB (formerly MIC SDB) and, since January 9, 2019, on the Nasdaq Stock Market in the U.S. under
the ticker symbol TIGO. The Company has its registered office at 2, Rue du Fort Bourbon, L-1249 Luxembourg,
Grand Duchy of Luxembourg and is registered with the Luxembourg Register of Commerce under the number RCS
B 40 630.
On February 28, 2019, the Board of Directors authorized these consolidated financial statements for issuance.
Business activities
Millicom operates its mobile businesses in Central America (El Salvador, Guatemala and Honduras) in South
America (Bolivia, Colombia and Paraguay), and in Africa (Chad, Ghana and Tanzania).
Millicom operates various cable and fixed line businesses in Latam (Colombia, Costa Rica, El Salvador,
Guatemala, Honduras, Nicaragua, Bolivia, Paraguay and Panama). Millicom also provides direct to home satellite
service in most of its Latam countries.
On December 31, 2015, Millicom deconsolidated its operations in Guatemala and Honduras which are, since
that date and for accounting purposes, under joint control.
Millicom has investments in online/e-commerce businesses in several countries in Latam and Africa,
investments in a tower holding company in Africa and various investments in start-up businesses providing e-
payments and content to its mobile and cable customers.
IFRS Consolidated Financial Statements
Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards
as issued by the IASB (IFRS). They are also compliant with International Financial Reporting Standards as adopted
by the European Union. This is in accordance with Regulation (EC) No 1606/2002 of the European Parliament and
of the Council of July 19, 2002, on the application of international accounting standards for listed companies
domiciled in the European Union.
The financial statements have been prepared on an historical cost basis, except for certain items including
derivative financial instruments and call options (measured at fair value), financial instruments that contain
obligations to purchase own equity instruments (measured at the present value of the redemption price), and
property, plant and equipment under finance leases (initially measured at the lower of fair value and present value of
the future minimum lease payments).
This section contains the Group’s significant accounting policies that relate to the financial statements as a
whole. Significant accounting policies specific to one note are included within that note. Accounting policies
relating to non-material items are not included in these financial statements.
102
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Consolidation
The consolidated financial statements of the Group comprise the financial statements of the Company and its
subsidiaries as of December 31 of each year. The financial statements of the subsidiaries are prepared for the same
reporting year as the Company, using consistent accounting policies.
All intra-group balances, transactions, income and expenses, and profits and losses resulting from intra-group
transactions are eliminated.
Foreign currency
Financial information in these financial statements are shown in the US dollar presentation currency of the
Group and rounded to the nearest million (US$ million) except where otherwise indicated. The financial statements
of each of the Group’s entities are measured using the currency of the primary economic environment in which each
entity operates (the functional currency). The functional currency of each subsidiary, joint venture and associate
reflects the economic substance of the underlying events and circumstances of these entities. Except for El Salvador
where the functional currency is US dollar, the functional currency in other countries is the local currency.
The results and financial position of all Group entities (none of which operate in an economy with a
hyperinflationary environment) with functional currency other than the US dollar presentation currency are
translated into the presentation currency as follows:
(i) Assets and liabilities are translated at the closing rate on the date of the statement of financial position;
(ii) Income and expenses are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the transactions); and
(iii) All resulting exchange differences are recognized as a separate component of equity (currency translation
reserve), in the caption “Other reserves”.
On consolidation, exchange differences arising from the translation of net investments in foreign operations,
and of borrowings and other currency instruments designated as hedges of such investments, are recorded in equity.
When the Group disposes of or loses control over a foreign operation, exchange differences that were recorded in
equity are recognized in the consolidated income statement as part of gain or loss on sale or loss of control.
Goodwill and fair value adjustments arising on acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated at the closing rate.
103
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
The following table presents functional currency translation rates for the Group’s locations to the US dollar on
December 31, 2018, 2017 and 2016 and the average rates for the years ended December 31, 2018, 2017 and 2016.
Exchange Rates to
Functional
the US Dollar
Currency
Bolivia ................. Boliviano
2018
Average
Rate
2018
Year-end
Rate
Change
%
2017
Average
Rate
2017
Year-end
Rate
Change
%
2016
Average
Rate
(BOB)
6.91
6.91
n/a
6.91
6.91
n/a
6.91
Chad ..................... CFA Franc
(XAF)
Colombia ............. Peso (COP)
Costa Rica ............ Costa Rican
Colon (CRC)
El Salvador........... US dollar
Ghana ................... Cedi (GHS)
Guatemala ............ Quetzal (GTQ)
Honduras.............. Lempira (HNL)
Luxembourg......... Euro (EUR)
Nicaragua ............. Cordoba (NIO)
Panama................. Balboa (B/.) (i)
Paraguay .............. Guarani (PYG)
Sweden................. Krona (SEK)
Tanzania............... Shilling (TZS)
United
Kingdom .......... Pound (GBP)
571
2,973
578
n/a
4.63
7.52
23.99
0.85
31.55
n/a
5,743
8.71
2,274
580
3,250
608
n/a
4.82
7.74
24.42
0.87
32.33
n/a
5,961
8.85
2,299
3.99%
8.91%
6.12%
n/a
9.12%
5.41%
3.19%
5.08%
5%
n/a
6.64%
8.23%
2.42%
588
2,961
571
n/a
4.36
7.36
23.58
0.89
30.05
n/a
5,626
8.53
2,233
558
2,984
573
n/a
4.42
7.34
23.67
0.83
30.79
n/a
5,590
8.18
2,245
12.00
1.00
(2.00)
n/a
(5.00)
2.00
—
12.00
(5.00)
n/a
3.00
10.00
(3.00)
600
3,049
551
n/a
3.92
7.61
22.92
0.91
28.62
n/a
5,686
8.58
2,183
0.75
0.78
5.93%
0.77
0.74
9.00
0.74
(i) the balboa is tied to the United States dollar at an exchange rate of 1:1.
New and amended IFRS accounting standards
The following changes to standards effective for annual periods starting on January 1, 2018 have been adopted
by the Group:
•
IFRS 15 “Contracts with customers” establishes a five-step model related to revenue recognition from
contracts with customers. Under IFRS 15, revenue is recognized at amounts that reflect the consideration that an
entity expects to be entitled to in exchange for transferring goods or services to a customer. The Group adopted
the accounting standard on January 1, 2018 using the modified retrospective method which had an immaterial
impact on its Group financial statements. IFRS 15 mainly affects the timing of recognition of revenue as it
introduces more differences between the billing and the recognition of the revenue and, in some cases, the
recognition of the revenue as a principal (gross) or as an agent (net). However, it does not affect the cash flows
generated by the Group.
As a consequence of adopting this Standard:
1) some revenue is recognized earlier, as a larger portion of the total consideration received in a bundled
contract is attributable to the component delivered at contract inception (i.e. typically a subsidized handset).
Therefore, this produces a shift from service revenue (which decreases) to the benefit of Telephone and
Equipment revenue. This results in the recognition of a Contract Asset on the statement of financial
position, as more revenue is recognized upfront, while the cash will be received throughout the subscription
period (which is usually between 12 to 36 months). Contract Assets (and liabilities) are reported on a
separate line in current assets / liabilities even if their realization period is longer than 12 months. This is
because they are realized / settled as part of the normal operating cycle of our core business.
104
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
2)
3)
the cost incurred to obtain a contract (mainly commissions) is now capitalized in the statement of financial
position and amortized over the average contract term. This results in the recognition of Contract Costs
being capitalized under non-current assets on the statement of financial position.
the Group recognizes revenue from its wholesale carrier business on a net basis as an agent rather than as a
principal under the modified retrospective IFRS 15 transition. Except for this effect, there were no other
material changes for the purpose of determining whether the Group acts as principal or an agent in the sale
of products.
4)
the presentation of certain material amounts in the consolidated statement of financial position has been
changed to reflect the terminology of IFRS 15:
a. Contract assets recognized in relation to service contracts.
b. Contract costs in relation to capitalized cost incurred to obtain a contract (mainly commissions).
c. Contract liabilities in relation to service contracts were previously included in trade and other payables.
The Group has adopted the standard using the modified retrospective method. Hence, the cumulative effect of
initially applying the Standard has been recognized as an adjustment to the opening balance of retained earnings
as at January 1, 2018 and comparative financial statements have not been restated in accordance with the
transitional provisions in IFRS 15. The impact on the opening balance of retained profits as at January 1, 2018
is summarized in the table set out at the end of this section.
Additionally, the Group has decided to take some of the practical expedients foreseen in the Standard, such as:
• No adjustment to the transaction price for the means of a financing component whenever the period
between the transfer of a promised good or service to a customer and the associated payment is one year or
less; when the period is more than one year the financing component is adjusted, if material.
• Disclosure in the Group Financial Statements the transaction price allocated to unsatisfied performance
obligations only for contracts that have an original expected duration of more than one year (e.g.
unsatisfied performance obligations for contracts that have an original duration of one year or less are not
disclosed).
• Application of the practical expedient not to disclose the price allocated to unsatisfied performance
obligations, if the consideration from a customer corresponds to the value of the entity’s performance
obligation to the customer (i.e, if billing corresponds to accounting revenue).
• Application of the practical expedient to recognize the incremental costs of obtaining a contract as an
expense when incurred if the amortization period of the asset that otherwise would have been recognized is
one year or less.
• Revenue recognition accounting principles are further described in Note B.1.1.
•
IFRS 9 “Financial Instruments” addresses the classification, measurement and recognition and impairments
of financial assets and financial liabilities as well as hedge accounting. It replaces the parts of IAS 39 that relate
to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified
into two measurement categories: those measured at fair value and those measured at amortized cost. The
determination is made at initial recognition. The classification depends on the Group’s business model for
managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial
liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair
value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is
recorded in other comprehensive income rather than the income statement, unless this creates an accounting
mismatch. A final standard on hedging (excluding macro-hedging) was issued in November 2013 which aligns
105
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
hedge accounting more closely with risk management and allows to continue hedge accounting under IAS 39.
IFRS 9 also clarifies the accounting for certain modifications and exchanges of financial liabilities measured at
amortized cost.
The application of IFRS 9 did not have an impact for the Group on classification, measurement and recognition
of financial assets and financial liabilities compared to IAS 39, but it has an impact on impairment of trade
receivables and contracts assets (IFRS 15) as well as on amounts due from joint ventures and related parties -
with the application of the expected credit loss model instead of the current incurred loss model. As permitted
under IFRS 9, the Group adopted the standard without restating comparatives for classification, measurement
and impairment. Hence, the cumulative effect of initially applying the Standard has been recognized as an
adjustment to the opening balance of retained profits at January 1, 2018. The impact on the opening balance of
retained profits at January 1, 2018 is summarized in the table set out at the end of this section. Additionally, the
Group continues applying IAS 39 rules with respect to hedge accounting. Finally, the clarification introduced by
IFRS 9 on the accounting for certain modifications and exchanges of financial liabilities measured at amortized
cost did not have an impact for the Group.
Financial instruments accounting principles are further described in Note C.6.
The application of IFRS 15 and IFRS 9 had the following impact on the Group financial statements at
January 1, 2018:
As at January
1, 2018 before
application
Effect of
adoption of
IFRS 15
Effect of
adoption of
IFRS 9
As at January
1, 2018 after
application
Reason for
the change
(US$ millions)
FINANCIAL POSITION
ASSETS
Investment in joint ventures (non-current).
Contract costs, net (non-current) NEW......
Deferred tax asset .......................................
Other non-current assets.............................
Trade receivables, net (current)..................
Contract assets, net (current) NEW............
LIABILITIES
Contract liabilities (current) NEW .............
Provisions and other current liabilities.......
Deferred tax liability (non-current) ............
EQUITY
Retained profits and loss for the year.........
Non-controlling interests............................
2,966
—
180
113
386
—
—
425
56
3,035
185
27
4
—
—
—
29
51
(46)
7
48
—
(4)
—
10
(1)
(47)
(1)
—
—
(1)
(38)
(5)
2,989
4
191
113
339
28
51
379
62
3,045
181
(i)
(ii)
(viii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(ix)
(i)
Impact of application of IFRS 15 and IFRS 9 for our joint ventures in Guatemala, Honduras and Ghana.
(ii) This mainly represents commissions capitalized and amortized over the average contract term.
(iii) Effect of the application of the expected credit losses required by IFRS 9 on amounts due from joint ventures.
(iv) Effect of the application of the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be
recognized from initial recognition of the receivables.
(v) Contract assets mainly represents subsidized handsets as more revenue is recognized upfront while the cash will be received
throughout the subscription period (which is usually between 12 to 36 months).
106
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
(vi) This mainly represents deferred revenue for goods and services not yet delivered to customers that will be recognized when
the goods are delivered and the services are provided to customers. The balance also comprises revenue from the billing of
subscription fees or ‘one-time’ fees at the inception of a contract that are deferred and will be recognized over the average
customer retention period or the contract term.
(vii) Reclassification of deferred revenue to contract liabilities - see previous paragraph.
(viii) Tax effects of the above adjustments.
(ix) Cumulative catch-up effect.
As of January 1, 2018, IFRS 9 and IFRS 15 implementations had no impact on the statement of cash flows or
on EPS.
The following summarizes the amount by which each financial statement line item is affected in the current
reporting year by the application of IFRS 15 as compared to previous standard and interpretations:
2018
Without
adoption of
IFRS 15
(US$ millions)
Effect of
Change
Higher/
(Lower)
Reason for
the change
As reported
INCOME STATEMENT
Total revenue......................................................................
Cost of sales .......................................................................
Operating expenses ............................................................
Share of profit in the joint ventures in Guatemala and
Honduras ............................................................................
Tax impact..........................................................................
4,074
(1,146)
(1,674)
154
(116)
4,151
(1,194)
(1,714)
152
(115)
(77)
48
40
2
(1)
(i)
(ii)
(ii)
(iii)
(iv)
(i) Mainly for adjustments for "principal vs agent" considerations under IFRS 15 for wholesale carrier business, as well as for
the shift in the timing of revenue recognition due to the reallocation of revenue from service (over time) to telephone and
equipment revenue (point in time).
(ii) Mainly for the reallocation of cost for selling devices due to shift from service revenue to telephone and equipment
revenue, for the capitalization and amortization of contract costs and for adjustments for "principal vs agent" under IFRS
15 for wholesale carrier business.
(iii)
Impact of IFRS 15 related to our share of profit in our joint ventures in Guatemala and Honduras.
(iv) Tax effects of the above adjustments.
107
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
FINANCIAL POSITION
ASSETS
Investment in joint ventures (non-current) ........................
Contract costs, net (non-current)........................................
Deferred tax assets .............................................................
Contract assets, net (current)..............................................
LIABILITIES
Contract liabilities (current)...............................................
Provisions and other current liabilities ..............................
Current income tax liabilities.............................................
Deferred tax liabilities (non-current) .................................
EQUITY
Retained profits and loss for the year ................................
Non-controlling interests ...................................................
2018
Without
adoption of
IFRS 15
(US$ millions)
Effect of
Change
Higher/
(Lower)
Reason for
the change
As reported
2,867
2,839
4
202
37
87
494
58
233
—
200
—
—
576
55
226
2,525
249
2,468
246
28
4
2
37
87
(82)
3
7
57
3
(i)
(ii)
(vi)
(iii)
(iv)
(v)
(vi)
(vi)
(vii)
(vii)
(i)
Impact of application of IFRS 15 for our joint ventures in Guatemala, Honduras and Ghana.
(ii) This mainly represents commissions capitalized and amortized over the average contract term.
(iii) Contract assets mainly represents subsidized handsets as more revenue is recognized upfront while the cash will be
received throughout the subscription period (which are usually between 12 to 36 months). Throughout the year ended
December 31, 2018 no material impairment loss has been recognized.
(iv) This mainly represents deferred revenue for goods and services not yet delivered to customers that will be recognized when
the goods are delivered and the services are provided to customers. The balance also comprises the revenue from the billing
of subscription fees or ‘one-time’ fees at the inception of a contract that are deferred and will be recognized over the
average customer retention period or the contract term.
(v) Reclassification of deferred revenue to contract liabilities - see previous paragraph.
(vi) Tax effects of the above adjustments.
(vii) Cumulative catch-up effect and IFRS 15 effect in the current year.
The application of the following new standards or interpretations applicable on January 1, 2018 did not have
an impact for the Group:
• Amendments to IFRS 2, ‘Share based payments’, on clarifying how to account for certain types of share-
based payment transactions.
• Amendments to IFRS 4, ‘Insurance contracts’ regarding the implementation of IFRS 9, ‘Financial
instruments’.
•
IFRIC 22 ‘Foreign currency transactions and advance consideration’ regarding foreign currency
transactions or parts of transactions where there is consideration that is denominated or priced in a foreign
currency.
• Annual improvements to IFRS Standards 2014-2016.
108
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
There are no other significant changes to standards effective for the annual year starting on January 1, 2018.
The following standard, which is expected to materially affect the Group, will be effective from January 1, 2019:
•
IFRS 16 “Leases” will primarily affect the accounting for the Group’s operating leases. These commitments
will result in the recognition of a right of use asset and a lease liability for future payments. The application of
this standard will affect the Group’s depreciation, debt and other financing and leverage ratios. The change in
presentation of operating lease expenses will result in a corresponding improvement in cash flows derived from
operating activities and a decline in cash flows from financing activities.
The Group will adopt the standard using the modified retrospective approach with the cumulative effect of applying
the new Standard recognized in retained profits as of January 1, 2019. Comparatives for the 2018 financial
statements will not be restated.
Short-term leases with a term not exceeding the 12 months as well as leases where the underlying asset is of low
value will not be capitalized: instead, Millicom will use the practical expedient and associated lease payments will
be recognized as an expense.
Furthermore, the Group has taken the additional following decisions to adopt the standard:
• Non-lease components will be capitalized (IFRS16.15)
Intangible assets are out of IFRS 16 scope (IFRS16.4)
•
At transition date, the Group will recognize lease liabilities in relation to leases which had previously been classified
as operating leases under the principles of IAS 17 Leases (such as site leases, land and buildings leases, etc). These
liabilities will be measured at the present value of the remaining lease payments, discounted using the lessee’s
incremental borrowing rate as of January 1, 2019. The right-of-use asset will be measured at an amount equal to
the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized
in the statement of financial position immediately before the date of initial application.
According to the new Standard, Millicom shall determine the lease term including any lessee's extension or
termination option that is deemed reasonably certain as well as lessors' extension or termination option. The
assessment of such options shall be performed at the commencement of a lease. This requires judgment by the
management of Millicom, which may have a significant impact on the lease liability recognized under IFRS 16.
Measuring the lease liability at the present value of the remaining lease payments requires using an appropriate
discount rate in accordance with IFRS 16. Millicom uses the interest rate implicit in the lease or if that cannot be
determined, the incremental borrowing rate at the date of the lease commencement. Millicom renders this judgment
in accordance with its accounting policy on leases. The incremental borrowing rate applied can have a significant
impact on the net present value of the lease liability recognized under IFRS 16.
Under the new Standard, the accounting of sale and leaseback transactions will change as the underlying sale
transaction needs to be firstly analyzed using the guidance of IFRS 15. The seller/lessee recognizes a right-of-use
asset in the amount of the proportional original carrying amount that relates to the right of use retained. Accordingly,
only the proportional amount of gain or loss from the sale must be recognized. The impact from sale and leaseback
transactions will not be material for Millicom Group as of the date of initial application.
While the Group is finalizing the implementation of the new Standard, as a preliminary result, it expects to
recognize additional lease liabilities of approximately $600 million. The impact on retained profits is expected to be
immaterial.
109
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Further changes to standards not yet effective and not early adopted by Millicom on January 1, 2018
Amendment to IFRS 9,
Financial instruments’, on
prepayment features with
negative compensation
IFRIC 23 Uncertainty over
income tax treatments
Annual improvements
2015-2017
Amendments to IAS 19,
‘Employee benefits’ on
plan amendment,
curtailment
or settlement’
This amendment confirms that when a financial liability
measured at amortized cost is modified without this
resulting in de-recognition, a gain or loss should be
recognized immediately in profit or loss. The gain or loss is
calculated as the difference between the original contractual
cash flows and the modified cash flows discounted at the
original effective interest rate. This means that the
difference cannot be spread over the remaining life of the
instrument which may be a change in practice from IAS 39.
The Group expects this amendment to have an impact in the
future on the consolidated financial statements in case of a
modification of a financial liability measured at amortized
cost.
IFRIC 23 clarifies how the recognition and measurement
requirements of IAS 12 Income taxes, are applied where
there is uncertainty over income tax treatments. The
interpretation is effective for annual periods beginning on or
after January 1, 2019. Earlier application is permitted. The
Group is currently assessing the impact of this interpretation
but does not expect any significant effect of applying it.
These amendments impact four standards: IFRS 3, Business
Combinations and IFRS 11 Joint Arrangements regarding
previously held interest in a joint operation. IAS 12, Income
Taxes regarding income tax consequences of payments on
financial instruments classified as equity. And finally, IAS
23, Borrowing Costs regarding eligibility for capitalization.
Again, the Group does not expect these improvements to
have a material impact on the consolidated financial
statements. These improvements have not been endorsed by
the EU yet.
These amendments require an entity to:
• use updated assumptions to determine current service cost
and net interest for the remainder of the period after a plan
amendment, curtailment or settlement; and
• recognize in profit or loss as part of past service cost, or a
gain or loss on settlement, any reduction in a surplus, even
if that surplus was not previously recognized because of the
impact of the asset ceiling.
The Group does not expect these amendments to have a
material impact on the consolidated financial statements.
These amendments have not been endorsed by the EU yet.
January 1, 2019
January 1, 2019
January 1, 2019
January 1, 2019
110
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Amendments to IFRS 3 –
definition of a business
Amendments to IAS 1,
‘Presentation of financial
statements’, and IAS 8,
‘Accounting policies, changes
in accounting estimates and
errors’
January 1, 2020
January 1, 2020
This amendment revises the definition of a business. The
Group does not expect these amendments to have a material
impact on the consolidated financial statements. These
amendments have not been endorsed by the EU yet.
These amendments to IAS 1, ‘Presentation of financial
statements’, and IAS 8, ‘Accounting policies, changes in
accounting estimates and errors’, and consequential
amendments to other IFRSs:
i) use a consistent definition of materiality throughout
IFRSs and the Conceptual Framework for Financial
Reporting; ii) clarify the explanation of the definition of
material; and iii) incorporate some of the guidance in IAS 1
about immaterial information.
The Group does not expect these amendments to have a
material impact on the consolidated financial statements.
These amendments have not been endorsed by the EU yet.
Judgments and critical estimates
The preparation of IFRS financial statements requires management to use judgment in applying accounting
policies. It also requires the use of certain critical accounting estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the reporting period. These estimates are based
on management's best knowledge of current events, actions and best estimates as of a specified date, and actual
results may ultimately differ from these estimates. Areas involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the financial statements are disclosed in each note and are
summarized below:
Judgments
Management apply judgment in accounting treatment and accounting policies in preparation of these financial
statements. In particular, a significant level of judgment is applied regarding the following items:
• Contingent liabilities – whether or not a provision should be recorded for any potential liabilities (see note
G.3.);
• Leases – whether the substance of leases meets the IFRS criteria for recognition as finance or operating
leases or services contracts, or elements of each (see notes E.2. and G.2.);
• Control – whether Millicom, through voting rights and potential voting rights attached to shares held, or by
way of shareholders’ agreements or other factors, has the ability to direct the relevant activities of the
subsidiaries it consolidates, or jointly direct the relevant activities of its joint ventures (see notes A.1., A.2.);
• Discontinued operations and assets held for sale – definition, classification and presentation (see notes
A.4., E.3.1.) as well as measurement of potential provisions related to indemnities;
• Deferred tax assets – recognition based on likely timing and level of future taxable profits together with
future tax planning strategies (see notes B.6.3. and G.3.2.);
• Acquisitions – measurement at fair value of existing and newly identified assets, including the
measurement of property, plant and equipment and intangible assets, liabilities and remaining goodwill; the
assessment of useful lives; as well as the accounting treatment for transaction costs (see notes A.1.2., E.
1.1., E.1.5., E.2.1.);
111
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
• Defined benefit obligations – key assumptions related to life expectancies, salary increases and leaving
rates, mainly related to UNE Colombia (see note B.4.3.);
•
Impairment testing – key assumptions related to future business performance, perpetual growth rates and
discount rates (see notes E.1.2., E.1.6., E.2.2.).
• Revenue recognition – whether or not the Group acts as principal or as an agent and when there is one or
several performance obligations (see note B.1.1.).
Estimates
Estimates are based on historical experience and other factors, including reasonable expectations of future
events. These factors are reviewed in preparation of the financial statements although, due to inherent uncertainties
in the evaluation process, actual results may differ from original estimates. Estimates are subject to change as new
information becomes available and may significantly affect future operating results. Significant estimates have been
applied in respect of the following items:
• Accounting for property, plant and equipment, and intangible assets in determining fair values at
acquisition dates, particularly for assets acquired in business combinations and sale and leaseback
transactions (see note E.2.1.);
• Useful lives of property, plant and equipment and intangible assets (see notes E.1.1., E.2.1.);
• Provisions, in particular provisions for asset retirement obligations, legal and tax risks (see note F.4.);
• Revenue recognition (see note B.1.1.);
•
Impairment testing including weighted average cost of capital (WACC) and long term growth rates (see
note E.1.6.);
• Estimates for defined benefit obligations (see note B.4.3.);
• Accounting for share-based compensation in particular estimates of forfeitures and future performance
criteria (see notes B.4.1., B.4.2.).
A. The Millicom Group
The Group comprises a number of holding companies, operating subsidiaries and joint ventures with various
combinations of mobile, fixed-line telephony, cable and wireless Pay TV, Internet and Mobile Financial Services
(MFS) businesses. The Group also holds investments in a tower holding company investing in Africa and in online
businesses in Latam and Africa.
A.1. Subsidiaries
Subsidiaries are all entities which Millicom controls. Millicom controls an entity when it is exposed to, or has
rights to variable returns from its investment in the entity, and has the ability to affect those returns through its
power over the subsidiary. Millicom has power over an entity when it has existing rights that give it the current
ability to direct the relevant activities, i.e. the activities that significantly affect the entity’s returns. Generally,
control accompanies a shareholding of more than half of the voting rights although certain other factors (including
contractual arrangements with other shareholders, voting and potential voting rights) are considered when assessing
whether Millicom controls an entity. For example, although Millicom holds less than 50% of the shares in its
Colombian businesses, it holds more than 50% of shares with voting rights. The contrary may also be true (e.g.
Guatemala and Honduras). In respect of the joint ventures in Guatemala and Honduras, shareholders’ agreements
112
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
require unanimous consents for decisions over the relevant activities of these entities (see also note A.2.2).
Therefore, the Group has joint control over these entities and accounts for them under the equity method.
Our main subsidiaries are as follows:
Entity
Latin America
Country
Activity
December 31,
2018
% holding
December 31,
2017
% holding
December 31,
2016
% holding
Telemovil El Salvador S.A. de
C.V................................................. El Salvador
Mobile, MFS, Cable, DTH,
PayTV
Navega.com SA, Sucursal El
Salvador......................................... El Salvador Cable, DTH
Cable Costa Rica S.A. ....................... Costa Rica
Cable, DTH
Telefonica Celular de Bolivia S.A..... Bolivia
Telefonica Celular del Paraguay
Mobile, DTH, MFS, Cable,
PayTV
S.A. ................................................ Paraguay
Mobile, MFS, Cable, PayTV
Cable Onda S.A (i). ........................... Panama
Cable, PayTV, Internet, DTH,
Fixed-line
100
100
100
100
100
80
100
100
100
100
100
—
100
100
100
100
100
—
Colombia Móvil S.A. E.S.P.(ii)......... Colombia
Mobile
50-1 share
50-1 share
50-1 share
UNE EPM Telecomunicaciones
S.A.(ii) ........................................... Colombia
Edatel S.A. E.S.P.(ii) ......................... Colombia
Africa
Fixed-line, Internet, PayTV,
Mobile
Fixed-line, Internet, PayTV,
Cable
50-1 share
50-1 share
50-1 share
50-1 share
50-1 share
50-1 share
Millicom Ghana Company
Limited(iii) .................................... Ghana
Mobile, MFS
Sentel GSM S.A.(iv) ......................... Senegal
Mobile, MFS
MIC Tanzania Public Limited
Company........................................ Tanzania
Mobile, MFS
Millicom Tchad S.A. ......................... Chad
Mobile, MFS
Millicom Rwanda Limited(iv)........... Rwanda
Mobile, MFS
Zanzibar Telecom Limited................. Tanzania
Unallocated
Mobile, MFS
Millicom International Operations
S.A. ................................................ Luxembourg Holding Company
Millicom International Operations
B.V................................................. Netherlands Holding Company
Millicom LIH S.A. ............................ Luxembourg Holding Company
MIC Latin America B.V. ................... Netherlands Holding Company
Millicom Africa B.V.......................... Netherlands Holding Company
Millicom Holding B.V....................... Netherlands Holding Company
Millicom Spain S.L. .......................... Spain
Holding Company
—
—
100
100
—
85
100
100
100
100
100
100
100
—
100
100
100
100
85
100
100
100
100
100
100
100
100
100
100
100
100
85
100
100
100
100
100
100
100
(i) Acquisition completed on December 13, 2018. Cable Onda S.A. is fully consolidated as Millicom has the majority of voting
shares to direct the relevant activities. See note A.1.2..
(ii) Fully consolidated as Millicom has the majority of voting shares to direct the relevant activities.
(iii) Merged with Airtel Ghana in October 2017 and classified as discontinued operations for the year then ended (see note E.
3.2.). Merged entity is accounted for as a joint venture as from merger date (see note A.2.2.).
(iv) See note A.1.3.
113
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
A.1.1. Accounting for subsidiaries and non-controlling interests
Subsidiaries are fully consolidated from the date on which control is transferred to Millicom. If facts and
circumstances indicate that there are changes to one or more of the elements of control, a reassessment is performed
to determine if control still exists. Subsidiaries are de-consolidated from the date that control ceases. Transactions
with non-controlling interests are accounted for as transactions with equity owners of the Group. Gains or losses on
disposals of non-controlling interests are recorded in equity. For purchases from non-controlling interests, the
difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the
subsidiary is also recorded in equity.
A.1.2. Acquisition of subsidiaries and increases in non-controlling interests in subsidiaries
On October 7, 2018, the Company entered into an agreement to acquire a controlling 80% stake in Cable Onda,
the largest cable and fixed telecommunications services provider in Panama. The transaction valued 100% of Cable
Onda at an enterprise value of $1,460 million. The selling shareholders retained a 20% equity stake in the company.
The transaction closed on December 13, 2018 after receipt of necessary approvals for a cash consideration of $956
million. In addition, Millicom assumed Cable Onda’s debt obligations. The Group funded the purchase price for this
acquisition by incurring additional indebtedness, including $250 million under the Bridge Facility and $500 million
aggregate principal amount of the 6.625% Notes (see note C.3.1) and with available resources. A final price
adjustment, per the terms of the agreement, is expected to occur in Q1 2019.
Millicom concluded that it controls Cable Onda since closing date and therefore fully consolidates it in its
financial statements with a 20% non-controlling interest. The deal also includes certain liquidity rights such as call
and put options. See note C.6.3. for further details on the accounting treatment of these options. The purchase
consideration also includes certain amounts under escrow in respect of final price adjustment and potential
indemnifications from the sellers (potential tax and litigations).
For the purchase accounting, Millicom determined the fair value of Cable Onda identifiable assets and liabilities
based on transaction and relative values. The non-controlling interest was measured based on the proportionate share
of the fair value of the net assets of Cable Onda. The purchase accounting is still provisional at December 31, 2018,
particularly in respect of the evaluation of certain tangible assets.
Intangible assets (excluding goodwill), net (i) .........................................................................................
Property, plant and equipment, net ...........................................................................................................
Current assets (excluding cash) (ii) (iii) ...................................................................................................
Cash and cash equivalents ........................................................................................................................
Total assets acquired...............................................................................................................................
Non-current liabilities (iv) ........................................................................................................................
Current liabilities (v).................................................................................................................................
Total liabilities assumed .........................................................................................................................
Fair value of assets acquired and liabilities assumed, net...................................................................
Transaction costs assumed by Cable Onda (vi) ........................................................................................
Fair value of non-controlling interest in Cable Onda (20%) ....................................................................
Millicom’s interest in the fair value of Cable Onda (80%) ......................................................................
Acquisition price.......................................................................................................................................
Provisional Goodwill ..............................................................................................................................
114
Provisional
Fair values
(100%)
(US$ millions)
673
348
54
12
1,088
422
141
563
525
30
111
444
956
512
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
(i)
Intangible assets not previously recognized (or partially recognized as a result of previous acquisitions) are trademarks for
an amount of $280 million, with estimated useful lives of 3 years, a customer list for an amount of $370 million, with
estimated useful life of 20 years and favorable content contracts for $19 million, with a useful life of 10 years.
(ii) Current assets include indemnification assets for tax contingencies at fair value for an amount of $4 million - see below.
(iii) The fair value of trade receivables acquired was $34 million.
(iv) Non-current liabilities include the deferred tax liability of $158 million resulting from the above adjustments.
(v) Current liabilities include the fair value of certain tax contingent liabilities of $5 million. These are partly covered by the
indemnification assets described in (ii) above.
(vi) Transaction costs of $30 million have been assumed and paid by Cable Onda before the acquisition or by Millicom on the
closing date. Because of their relationship with the acquisition, these costs have been accounted for as post-acquisition
costs in the Millicom Group statement of income. These, together with acquisition-related costs of $11 million, have been
recorded under operating expenses in the statement of income of the year.
The goodwill, which is not expected to be tax deductible, is attributable to Cable Onda’s strong market position and
profitability, as well as to the fair value of the assembled work force. From December 13, 2018 to December 31,
2018, Cable Onda contributed $17 million of revenue and a net loss of $7 million to the Group. If Cable Onda had
been acquired on 1 January 2018 incremental revenue for the 2018 year would have been $403 million and
incremental net loss for that period of $59 million, including amortization of assets not previously recognized of $85
million (net of tax).
During the year ended December 31, 2018, the Group also completed minor additional acquisitions for $9
million.
During the year ended December 31, 2017, Tigo Paraguay completed the acquisition of TV Cable Parana for a
total consideration of approximately $18 million, net of cash acquired. The purchase accounting was finalized in
March 2017. The purchase price has been mainly allocated to a customer list ($14 million) and to other tangible and
intangible fixed assets ($3 million). As a result, the final goodwill amounted to $1 million.
A.1.3. Disposal of subsidiaries and decreases in non-controlling interests of subsidiaries
Rwanda
On December 19, 2017, Millicom announced that it has signed an agreement for the sale of its Rwanda
operations to subsidiaries of Bharti Airtel Limited. The sale was subsequently completed on January 31, 2018. In
accordance with Group practices, Rwanda operations’ assets and liabilities were classified as held for sale on
January 23, 2018. Rwanda’s operations also represented a separate geographical area and did qualify for
discontinued operations presentation. As a result, the Group statements of income for the years ended December 31,
2016 and 2017 have been restated accordingly to show the results on a single line in the statements of income
(‘Profit (loss) for the year from discontinued operations, net of tax’). On January 31, 2018, the Group's operations in
Rwanda were deconsolidated and no material loss on disposal was recognized (its carrying value was aligned to its
fair value less costs of disposal as of December 31, 2017). However, a loss of $32 million was recognized in 2018
corresponding to the recycling of foreign currency exchange losses accumulated in equity since the creation of the
Company. This loss was recognized under ‘Profit (loss) for the year from discontinued operations, net of tax’. The
final sale consideration is still subject to adjustment under the terms of the sale and purchase agreement with Airtel.
Management does not expect any material deviation from the initial consideration. (see note E.3.)
Senegal
On July 28, 2017, Millicom announced that it had agreed to sell its Senegal business to a consortium consisting
of NJJ, Sofima (managed by the Axian Group) and Teylium Group, subject to customary closing conditions and
regulatory approvals. In accordance with Group practices, Senegal operations’ assets and liabilities were classified
as held for sale on February 2, 2017. Senegal’s operations also represented a separate geographical area and did
qualify for discontinued operations. On April 19, 2018, the President of Senegal issued an approval decree in respect
of the proposed sale by Millicom of its Tigo operation in Senegal to a consortium consisting of NJJ, Sofima (a
115
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
telecom investment vehicle managed by the Axian Group) and Teylium Group. The sale was completed on April 27,
2018. (see note E.3.)
Ghana merger
On March 3, 2017, Millicom and Bharti Airtel Limited (Airtel) announced that they had entered into an
agreement for Tigo Ghana Limited and Airtel Ghana Limited to combine their operations in Ghana. In accordance
with Group practices, Ghana operations’ assets and liabilities were classified as held for sale on September 30, 2017.
Ghana’s operations also represented a separate geographical area and did qualify for discontinued operations. As a
result, the Group statement of income for the year ended December 31, 2016 was restated accordingly to show the
results on a single line in the statements of income (‘Profit (loss) for the year from discontinued operations, net of
tax’). The transaction was completed on October 12, 2017 (see note E.3.).
DRC
On February 8, 2016, Millicom announced that it had signed an agreement for the sale of its businesses in the
Democratic Republic of Congo (DRC) to Orange S.A. (see note E.3.). In accordance with Group practices, DRC
operations’ assets and liabilities were classified as held for sale on February 8, 2016. DRC’s operations also
represented a separate geographical area and did qualify for discontinued operations. The sale was completed on
April 20, 2016.
Other disposals
For the years ended December 31, 2018, 2017 and 2016, Millicom did not dispose of any other significant
investments.
A.1.4. Summarized financial information relating to significant subsidiaries with non-controlling interests
At December 31, 2018 and 2017, Millicom’s subsidiaries with material non-controlling interests were the
Group’s operations in Colombia and Panama (2018 only).
Balance sheet – non-controlling interests
Colombia
Panama
Others
Total
Profit (loss) attributable to non-controlling interests
Colombia
Panama
Others
Total
December 31,
2018
2017
(US$ millions)
161
103
(16)
249
197
—
(11)
185
2018
2017
2016
(US$ millions)
(13)
—
(4)
(17)
(5)
(8)
(3)
(16)
(55)
—
(3)
(58)
The summarized financial information for material non-controlling interests in our operations in Colombia is
provided below. This information is based on amounts before inter-company eliminations. Detailed information on
Cable Onda has been voluntarily omitted here as all details are already disclosed in note A.1.2.
116
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Colombia
Revenue
Total operating expenses
Operating profit
Net (loss) for the year
50% non-controlling interest in net (loss)
Total assets (excluding goodwill)
Total liabilities
Net assets
50% non-controlling interest in net assets
Consolidation adjustments
Total non-controlling interest
Dividends and advances paid to non-controlling interest
Net cash from operating activities
Net cash from (used in) investing activities
Net cash from (used in) financing activities
Exchange impact on cash and cash equivalents, net
Net increase in cash and cash equivalents
A.2. Joint ventures
2018
2017
2016
(US$ millions)
1,739
(647)
106
(25)
(13)
2,193
1,771
422
211
(14)
197
—
331
(209)
(46)
3
80
1,661
(667)
147
(10)
(5)
1,966
1,620
346
173
(12)
161
(2)
348
(270)
(75)
(18)
(15)
1,717
(660)
40
(110)
(55)
2,221
1,776
445
223
(16)
207
(67)
366
(340)
(24)
1
3
Joint ventures are businesses over which Millicom exercises joint control as decisions over the relevant
activities of each 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 December 31, 2018, the equity accounted net assets of our joint ventures in Guatemala, Honduras and Ghana
totaled $3,405 million (December 31, 2017: $3,457 million for Guatemala and Honduras only). These net assets do
not necessarily represent statutory reserves available for distribution as these include consolidation adjustments
(such as goodwill and identified assets and assumed liabilities recognized as part of the purchase accounting). Out of
these reserves, $133 million (December 31, 2017: $123 million) represent statutory reserves that are unavailable to
be distributed to owners of the Company. During the year ended December 31, 2018, Millicom’s joint ventures paid
$243 million (December 31, 2017: $203 million) as dividends or dividend advances to the Company.
Our main joint ventures are as follows:
117
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Entity
Comunicaciones Celulares S.A(i).
Navega.com S.A.(i)
Telefonica Celular S.A(i).
Navega S.A. de CV(i)
Bharti Airtel Ghana Holdings B.V.
Country
Activity
Guatemala Mobile, MFS
Guatemala
Honduras
Honduras
Netherlands Mobile, MFS
Cable, DTH
Mobile, MFS
Cable
December
31, 2018
% holding
55
55
66.7
66.7
50
December
31, 2017 %
holding
55
55
66.7
66.7
50
(i) Millicom owns more than 50% of the shares in these entities and has the right to nominate a majority of the directors of each
of these entities. However, key decisions over the relevant activities must be taken by a supermajority vote. This effectively
gives either shareholder the ability to veto any decision and therefore neither shareholder has sole control over the entity.
Therefore, the operations of these joint ventures are accounted for under the equity method.
The carrying values of Millicom’s investments in joint ventures were as follows:
Carrying value of investments in joint ventures at December 31
Honduras operations(i)
Guatemala operations(i)
AirtelTigo Ghana operations
Total
%
2018
2017
66.7
55
50
(US$ millions)
730
2,104
32
2,867
726
2,145
96
2,966
(i)
Includes all the companies under the Honduras and Guatemala groups.
The table below summarizes the movements for the year in respect of the Group’s joint ventures carrying
values:
Opening balance at January 1, 2017
Change in scope
Results for the year 2017
Dividends declared during the year
Currency exchange differences
Closing balance at December 31, 2017
Adjustment on adoption of IFRS 15 and IFRS 9 (net of tax)
Capital increase
Results for the year 2018
Dividends declared during the year
Currency exchange differences
Closing balance at December 31, 2018
Guatemala(i)
Honduras (i)
Ghana(ii)
(US$ millions)
2,179
—
126
(168)
7
2,145
18
—
131
(177)
(14)
2,104
766
—
15
(46)
(9)
726
5
3
23
—
(26)
730
—
102
(6)
—
—
96
—
—
(68)
—
3
32
(i) Share of profit (loss) is recognized under ‘Share of profit in the joint ventures in Guatemala and Honduras’ in the statement
of income.
(ii) Share of profit (loss) is recognized under ‘Income (loss) from other joint ventures and associates, net’ in the statement of
income.
118
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
At December 31, 2018 and 2017 the Group had not incurred obligations, nor made payments on behalf of the
Guatemala, Honduras or Ghana operations.
A.2.1. Accounting for joint ventures
Joint ventures are accounted for using the equity method of accounting and are initially recognized at cost
(calculated at fair value if it was a subsidiary of the Group before becoming a joint venture). The Group’s
investments in joint ventures include goodwill (net of any accumulated impairment loss) on acquisition.
The Group’s share of post-acquisition profits or losses of joint ventures is recognized in the consolidated
statement of income and its share of post-acquisition movements in reserves is recognized in reserves. Cumulative
post-acquisition movements are adjusted against the carrying amount of the investments. When the Group’s share of
losses in a joint venture equals or exceeds its interest in the joint venture, including any other unsecured receivables,
the Group does not recognize further losses, unless the Group has incurred obligations or made payments on behalf
of the joint ventures.
Gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s
interest in the joint ventures. Losses are also eliminated unless the transaction provides evidence of an impairment of
the asset transferred. Accounting policies of joint ventures have been changed where necessary to ensure consistency
with the policies adopted by the Group. Dilution gains and losses arising in investments in joint ventures are
recognized in the statement of income.
After application of the equity method, including recognizing the joint ventures’ losses, the Group applies
IAS 39 to determine whether it is necessary to recognize any additional impairment loss with respect to its net
investment in the joint venture.
A.2.2. Material joint ventures – Guatemala, Honduras and Ghana operations
Summarized financial information for the years ended December 31, 2018, 2017 and 2016 of the Guatemala
and Honduras operations is as follows. This information is based on amounts before inter-company eliminations.
119
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Guatemala
Revenue .......................................................................................................................
Depreciation and amortization.....................................................................................
Operating profit(i) .....................................................................................................
Financial income (expenses), net.................................................................................
Profit before taxes ......................................................................................................
Charge for taxes, net ....................................................................................................
Profit for the year .......................................................................................................
Net profit for the year attributable to Millicom ......................................................
Dividends and advances paid to Millicom...................................................................
Total non-current assets (excluding goodwill).............................................................
Total non-current liabilities..........................................................................................
Total current assets.......................................................................................................
Total current liabilities .................................................................................................
Cash and cash equivalents ...........................................................................................
Debt and financing – non-current ................................................................................
Net cash from operating activities ...............................................................................
Net cash from (used in) investing activities.................................................................
Net cash from (used in) financing activities ................................................................
Exchange impact on cash and cash equivalents, net....................................................
Net (decrease) increase in cash and cash equivalents .............................................
2018
2017
2016
(US$ millions)
1,328
(295)
352
(60)
305
(74)
230
126
162
2,406
1,052
756
220
303
995
498
(171)
(315)
2
14
1,373
(283)
387
(56)
309
(69)
240
131
211
2,280
981
718
221
217
927
545
(173)
(455)
(3)
(86)
1,284
(281)
330
(73)
261
(67)
194
106
77
2,297
1,039
909
211
289
987
438
(174)
(127)
(3)
134
In 2016, operating profit included a provision for impairment of $24 million related to amounts receivable
(i)
from video surveillance contracts with the Civil National Police. In 2017, it also includes an additional impairment
of $10 million (2016: $18 million) on the fixed assets related to the same contracts.
120
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Honduras
2018
2017
2016
(US$ millions)
Revenue .......................................................................................................................
Depreciation and amortization .....................................................................................
Operating profit ..........................................................................................................
Financial income (expenses), net .................................................................................
Profit before taxes .......................................................................................................
Charge for taxes, net.....................................................................................................
Profit for the year .......................................................................................................
Net profit for the year attributable to Millicom ......................................................
Dividends and advances paid to Millicom ...................................................................
Total non-current assets (excluding goodwill) .............................................................
Total non-current liabilities ..........................................................................................
Total current assets .......................................................................................................
Total current liabilities..................................................................................................
Cash and cash equivalents............................................................................................
Debt and financing – non-current.................................................................................
Debt and financing – current ........................................................................................
Net cash from operating activities................................................................................
Net cash from (used in) investing activities .................................................................
Net cash from (used in) financing activities.................................................................
Net (decrease) increase in cash and cash equivalents .............................................
586
(133)
91
(29)
52
(19)
34
23
32
506
386
304
226
25
298
85
147
(87)
(50)
9
585
(156)
70
(27)
41
(18)
24
15
40
576
407
208
282
16
308
80
152
(74)
(74)
3
609
(160)
54
(27)
13
—
13
9
66
645
454
259
237
13
339
63
85
(17)
(69)
(1)
Ghana
As mentioned in note A.1.3., in 2017 Millicom and Airtel signed a Combination Agreement, whereby both
investors decided to combine their respective subsidiaries in Ghana, namely Tigo Ghana Limited and Airtel Ghana
Limited under an existing company – Bharti Airtel Ghana Holdings B.V. (the ‘JV’ or ‘AirtelTigo Ghana’) both
Millicom and Airtel each owning 50%. As part of the transaction, the government of Ghana retained an option to
acquire a 25% stake in the newly combined entity for a period of two years. In the event the government exercises
its option, Millicom’s stake may reduce to 37.5% or, in certain circumstances, be maintained at 50%.
On October 12, 2017, both parties announced the completion of the transaction. As consideration received, each
party owns 50% of the equity capital and voting rights of the JV, and Millicom holds a $40 million loan against Tigo
Ghana (the “Millicom Note”), which shall rank in priority to all other obligations of the joint venture owed to its
shareholders. The Millicom Note bears interest and is classified under ‘other non-current assets’ in the statement of
financial position.
Decisions about the relevant activities require the unanimous consent of the parties sharing control. Therefore,
based on IFRS 11, this agreement results in Millicom and Airtel having joint control over the combined entity, which
is a joint venture. Millicom therefore uses the equity method to account for its investment in the combined entity
since October 12, 2017.
On the same date, each investor agreed and committed to fund the operations of the JV in accordance with the
approved business plan on an equal basis and on the same terms. In this regard, both parties have agreed to provide,
on an equal basis, a committed credit facility in the total aggregate amount of $50 million, with Millicom providing
a commitment of $25 million and Airtel providing the same. The credit facility remains undrawn as of December
31, 2018 and 2017 and would bear interest and would be subordinated to the Millicom Note.
121
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
As a consequence, on October 12, 2017, Millicom deconsolidated its investments in Ghana operations and
accounted for its investment in the combined entity under the equity method, initially at fair value of $102 million,
resulting in a net gain on the deconsolidation of these operations amounting to $36 million, including recycling of
foreign currency exchange losses accumulated in equity of $79 million. The net gain has been recognized under
‘Profit (loss) for the year from discontinued operations, net of tax’. As of December 31, 2017, the purchase
accounting was still provisional and was completed in the first six months of 2018. Newly identified assets have
been recognized by the joint venture resulting in an additional depreciation of $3 million for the period from the
merger date to December 31, 2017. Comparative figures have not been restated for this depreciation charge given it
was immaterial for the Group. As a result, this charge was recorded in the 2018 statement of income.
Fair value has been determined using valuation techniques such as discounted cash flows and comparable
transaction multiples. As of December 31, 2018 and 2017 Millicom determined the fair value of the option granted
to the government to be immaterial.
AirtelTigo Ghana
2018
(US$
millions)
2017 (i)
(US$
millions)
Revenue ................................................................................................................................
Depreciation and amortization ..............................................................................................
Operating loss ......................................................................................................................
Financial income (expenses), net ..........................................................................................
Loss before taxes .................................................................................................................
Charge for taxes, net .............................................................................................................
Loss for the period ..............................................................................................................
Net loss for the period attributable to Millicom ...............................................................
Dividends and advances paid to Millicom ............................................................................
Total non-current assets (excluding goodwill)......................................................................
Total non-current liabilities...................................................................................................
Total current assets................................................................................................................
Total current liabilities ..........................................................................................................
Cash and cash equivalents.....................................................................................................
Debt and financing – non-current .........................................................................................
Debt and financing – current.................................................................................................
Net cash from operating activities ........................................................................................
Net cash from (used in) investing activities..........................................................................
Net cash from (used in) financing activities .........................................................................
Net increase in cash and cash equivalents .........................................................................
187
(110)
(100)
(42)
(135)
—
(135)
(68)
—
277
277
71
134
19
276
17
(19)
(8)
42
15
58
(11)
(1)
(10)
(12)
—
(12)
(6)
—
184
214
60
106
15
145
—
13
—
(3)
10
(i) From the date of merger (October 12, 2017) to December 31, 2017, for statement of income and cash flow
metrics.
A.2.3. Impairment of investment in joint ventures
While no impairment triggers were identified for the Group’s investments in joint ventures in 2018, according
to its policy, management have completed an impairment test for its joint ventures in Guatemala, Honduras and
Ghana.
The Group’s investments in Guatemala, Honduras and Ghana operations were tested for impairment by
assessing their recoverable amount (using a value in use model based on discounted cash flows) against their
carrying amounts. The cash flow projections used were extracted from financial budgets approved by management
122
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
and the Board covering a period of five years. In respect of Guatemala and Honduras, cash flows beyond this period
have been extrapolated using a perpetual growth rate of 3.2%–3.0% (2017: 3.1%–3.2%). Discount rates used in
determining recoverable amounts were 11.0% and 10.3%, respectively (2017: 9.3% and 10.2%). For Ghana,
management used a perpetual growth rate of 3.8% and a discount rate of 14.4%.
For the year ended December 31, 2018, and as a result of the impairment testing described above, management
concluded that none of the Group’s investments in joint ventures should be impaired.
Sensitivity analysis was performed on key assumptions within the impairment tests. The sensitivity analysis
determined that sufficient margin exists from realistic changes to the assumptions that would not impact the overall
results of the testing.
A.3. Investments in associates
Millicom’s investments in associates mainly represent its shareholding in Helios Towers Africa Ltd (HTA) and
its investments in the African online business (AIH). Millicom has significant influence over these companies
through its voting rights but not control or joint control.
The Group’s main associates are as follows:
Entity
Africa
Helios Towers Africa Ltd (HTA) ..................... Mauritius
Country
Africa Internet Holding GmbH (AIH) ............. Germany
December
31, 2018
December
31, 2017
Activity(ies)
% holding
% holding
Holding of Tower
infrastructure company
Online marketplace,
retail and services
22.83
22.83
10.15
10.15
9.1
9.1
West Indian Ocean Cable Company
Limited (WIOCC) ........................................
Republic of
Mauritius
Telecommunication
carriers’ carrier
Latin America
MKC Brilliant Holding GmbH (LIH).............. Germany
Online marketplace,
retail and services
35.0
35.0
Unallocated
Milvik AB ........................................................ Sweden
Other
12.3
12.3
At December 31, 2018 and 2017, the carrying value of Millicom’s main associates was as follows:
Carrying value of investments in associates at December 31
MKC Brilliant Holding GmbH (LIH) ...............................................................................
African Internet Holding GmbH (AIH) ............................................................................
Helios Tower Africa Ltd (HTA)........................................................................................
Milvik AB .........................................................................................................................
West Indian Ocean Cable Company Limited (WIOCC)...................................................
Total ..................................................................................................................................
—
38
105
13
14
169
—
61
149
16
14
241
2018
2017
(US$ millions)
123
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
The summarized financial information for the Group’s main material associates (i.e. HTA and AIH) is provided
below.
Summary of statement of financial position of associates at December 31,
Total current assets............................................................................................................
Total non-current assets.....................................................................................................
Total assets .......................................................................................................................
Total current liabilities ......................................................................................................
Total non-current liabilities...............................................................................................
Total liabilities .................................................................................................................
Total net assets.................................................................................................................
Millicom’s carrying value of its investment in HTA and AIH ..........................................
Millicom’s carrying value of its investment in other associates .......................................
Millicom’s carrying value of its investment in associates ................................................
Profit (loss) from other joint ventures and associates
2018
2017
(US$ millions)
473
717
1,190
343
627
969
221
142
27
169
409
766
1,176
268
602
870
306
211
30
241
2018
2017
2016
(US$ millions)
Revenue .....................................................................................................
Operating expenses....................................................................................
Operating profit (loss) ...............................................................................
Net loss for the year...................................................................................
Millicom’s share of results from HTA and AIH ........................................
Millicom’s share of results from other associates .....................................
Millicom’s share of results from other joint ventures (Ghana) .................
Millicom’s share of results from other joint ventures and
associates...............................................................................................
511
(459)
(214)
(327)
(66)
(2)
(68)
(136)
449
(321)
(148)
(220)
(34)
(45)
(6)
(85)
378
(302)
(167)
(228)
(39)
(10)
—
(49)
A.3.1. Accounting for investments in associates
The Group accounts for associates in the same way as it accounts for joint ventures.
A.3.2. Acquisitions and disposals of interests in associates
Africa Internet Holding GmbH (AIH)
AIH indirectly owns a number of companies that provide online services and online marketplaces in certain countries
in Africa mainly under the brand name of Jumia.
Early January 2019, Millicom has been further diluted in the capital of AIH following the entry of a new
investor. This triggered the recognition of a net dilution gain of $7 million in January 2019. In addition, on January 31,
2019, some changes in the company's governance became effective and Millicom relinquished its seat on the board of
directors, which resulted in the loss of the Group's significant influence over AIH. As a result, as from January 31,
2019, Millicom will stop equity accounting for its investment in AIH and start measuring it at fair value. This change
in accounting is expected to trigger the recognition of a gain at initial measurement.
124
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Other various shareholder funding rounds were signed in 2016 whereby Millicom's interest was diluted. At that
time, Millicom’s shareholding in AIH was reduced to 10%. This triggered the recognition of a net dilution gain of $43
million in the 2016 Group statement of income under 'Income (loss) from associates, net'.
Millicom investment in African towers company, Helios Towers Africa
Helios Towers Africa owns and operates telecommunications towers and passive infrastructure in four African
markets. The company's principal business lies in building, acquiring and operating telecommunications towers that
are capable of accommodating and powering the needs of multiple tenants.
During 2016, Millicom’s shareholding was diluted from 28.2% to 22.8% as a result of previous committed cash
calls and new investors’ funding. This resulted in Millicom recognizing a gain on dilution of $16 million. The gain was
recorded in the 2016 Group statement of income under 'Income (loss) from other joint ventures and associates, net'.
MKC Brilliant Holding GmbH (LIH)
During 2016, Millicom’s 35% investment in LIH had been impaired by $40 million mainly as a result of the
decrease in fair value of LIH’s investment in the Global Fashion Group.
In April 2017, LIH completed the disposal of its shareholding in Easy Taxi to Cabify. As a result, and ultimately,
LIH received cash and shares in Cabify. The transaction resulted in Millicom recognizing a loss of $11 million
(Millicom’s share). Additionally, as a result of the annual impairment test conducted in 2017, Management fully impaired
the remaining carrying value of its investment in LIH for $48 million. The impairment test performed in 2018 confirmed
this conclusion. These losses were recorded under the caption 'Income (loss) from other joint ventures and associates,
net' in the year ended December 31, 2017.
Milvik AB (BIMA)
On December 19, 2017, Millicom announced that it had sold a portion of its ownership stake in BIMA - a leading
emerging market insurance player - (from 20.4% to 12.0% – on a fully diluted basis) to Kinnevik and a new investor,
with the latter contributing $97 million in the micro-insurance business. As a result of the transaction, Millicom received
$24 million in cash and recognized a gain on disposal of $21 million. In addition, and as a consequence of the subsequent
capital increase made by the new investor, the Group recognized a gain on dilution of $11 million. Both gains have
been recorded under the caption "Income (loss) from other joint ventures and associates, net", in the statement of
income. Both transactions were carried out at the same fair value on an arm’s length basis.
A.4. Discontinued operations
A.4.1. Classification of discontinued operations
Discontinued operations are those which have identifiable operations and cash flows (for both operating and
management purposes) and represent a major line of business or geographic area which has been disposed of, or are
held for sale. Revenue and expenses associated with discontinued operations are presented retrospectively in a
separate line in the consolidated statement of income. Millicom determined that the loss of path to control of
operations by the termination of a contractual arrangement (e.g. termination without exercise of an unconditional
call option agreement giving path to control, as occurred with the Guatemala and Honduras operations) does not
require presentation as a discontinued operation.
125
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
A.4.2. Millicom’s discontinued operations
In accordance with IFRS 5, the Group’s businesses in Senegal, Tigo Ghana and Tigo Rwanda have been
classified as assets held for sale (respectively on February 2, 2017, September 28, 2017 and January 23, 2018) and
their results were showed as discontinued operations for all years presented in these financial statements. The
statement of income comparative figures presented in the notes to these consolidated financial statements have
therefore been restated accordingly and when necessary. For further details, refer to note E.3.
B. Performance
B.1. Revenue
Millicom’s revenue comprises sale of services from its mobile business (including Mobile Financial Services -
MFS) and its cable and other fixed services, as well as related devices and equipment. Recurring revenue consists of
monthly subscription fees, airtime and data usage fees, interconnection fees, roaming fees, TV services, B2B
contracts, MFS commissions and fees from other telecommunications services such as data services, short message
services and other value added services.
Revenue from continuing operations by category
Mobile ........................................................................................................
Cable and other fixed services ...................................................................
Other ..........................................................................................................
Service revenue.........................................................................................
Telephone and equipment and other ..........................................................
Total revenue ............................................................................................
Revenue from continuing operations by country or operation
2016
2018
2017
(US$ millions)
2,281
1,553
41
3,876
200
4,076
2,248
1,568
46
3,861
213
4,074
2,343
1,437
39
3,820
223
4,043
Colombia ...................................................................................................
Paraguay ....................................................................................................
Bolivia .......................................................................................................
El Salvador ................................................................................................
Tanzania (excluding Zantel) ......................................................................
Chad...........................................................................................................
Costa Rica..................................................................................................
Panama ......................................................................................................
Other operations ........................................................................................
Total ..........................................................................................................
2018
2017
2016
(US$ millions)
1,739
662
555
422
348
140
153
—
57
4,076
1,661
679
614
405
356
128
155
17
60
4,074
1,717
623
542
425
347
166
152
—
71
4,043
126
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
B.1.1. Accounting for revenue
Revenue recognition
Revenue is recognized at an amount that reflects the consideration to which the Group expects to be entitled in
exchange for transferring goods or services to a customer.
Post-paid connection fees are derived from the payment of a non-refundable / one-time fee charged to customer
to connect to the network (e.g. connection / installation fee). Usually, it does not represent a distinct good or service,
and therefore does not give rise to a separate performance obligation and revenue is recognized over the minimum
contract duration. However, if the fee is paid by a customer to get the right to receive goods or services without
having to pay this fee again over his tenure with the Group (e.g. the customer can readily extend his contract without
having to pay the same fee again), it is accounted for as a material right and revenue should be recognized over the
customer retention period.
Post-paid mobile / cable subscription fees are recognized over the relevant enforceable/subscribed service
period (recurring monthly access fees that do not vary based on usage). The service provision is usually considered
as a series of distinct services that have the same pattern of transfer to the customer. Remaining unrecognized
subscription fees, which are not refunded to the customers, are fully recognized once the customer has been
disconnected.
Prepaid scratch / SIM cards are services where customers purchase a specified amount of airtime or other credit
in advance. Revenue is recognized as the credit is used. Unused credit is carried in the statement of financial
position as a contract liability. Upon expiration of the validity period, the portion of the contract liability relating to
the expiring credit is recognized as revenue, since there is no longer an obligation to provide those services.
Telephone and equipment sales are recognized as revenue once the customer obtains control of the good. That
criteria is fulfilled when the customer has the ability to direct the use and obtain substantially all of the remaining
benefits from that good.
Revenue from provision of Mobile Financial Services (MFS) is recognized once the primary service has been
provided to the customer.
Customer premise equipment (CPE) are provided to customers as a prerequisite to receive the subscribed Home
services and shall be returned at the end of the contract duration. Since CPEs provided over the contract term do not
provide benefit to the customer on their own, they do not give rise to separate performance obligations and therefore
are accounted for as part of the service provided to the customers.
Bundled offers are considered arrangements with multiple deliverables or elements, which can lead to the
identification of separate performance obligations. Revenue is recognized in accordance with the transfer of goods
or services to customers in an amount that reflects the relative standalone selling price of the performance obligation
(e.g. sale of telecom services, revenue over time + sale of handset, revenue at a point in time).
Principal-Agent, some arrangements involve two or more unrelated parties that contribute to providing a
specified good or service to a customer. In these instances, the Group determines whether it has promised to provide
the specified good or service itself (as a principal) or to arrange for those specified goods or services to be provided
by another party (as an agent). For example, performance obligations relating to services provided by third-party
content providers (i.e., mobile Value Added Services or “VAS”) or service providers (i.e., wholesale international
traffic) where the Group neither controls a right to the provider’s service nor controls the underlying service itself
are presented net because the Group is acting as an agent. The Group generally acts as a principal for other types of
services where the Group is the primary obligor of the arrangement. In cases the Group determines that it acts as a
principal, revenue is recognized in the gross amount, whereas in cases the Group acts as an agent revenue is
recognized in the net amount.
127
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Revenue from the sale of cables, fiber, wavelength or capacity contracts, when part of the ordinary activities of
the operation, is recognized as recurring revenue. Revenue is recognized when the cable, fiber, wavelength or
capacity has been delivered to the customer, based on the amount expected to be received from the customer.
Revenue from operating lease of tower space is recognized over the period of the underlying lease contracts.
Finance leases revenue is apportioned between lease of tower space and interest income.
B.2. Expenses
The cost of sales and operating expenses incurred by the Group can be summarized as follows:
Cost of sales
Direct costs of services sold ......................................................................
Cost of telephone, equipment and other accessories .................................
Bad debt and obsolescence costs...............................................................
Cost of sales ..............................................................................................
2018
2017
2016
(US$ millions)
(829)
(230)
(87)
(1,146)
(913)
(219)
(72)
(1,205)
(857)
(254)
(63)
(1,175)
Operating expenses, net
Marketing expenses ...................................................................................
Site and network maintenance costs..........................................................
Employee related costs (B.4.)....................................................................
External and other services........................................................................
Rentals and operating leases......................................................................
Other operating expenses ..........................................................................
Operating expenses, net ..........................................................................
2018
2017
2016
(US$ millions)
(404)
(209)
(514)
(185)
(155)
(207)
(1,674)
(463)
(176)
(451)
(152)
(155)
(197)
(1,593)
(442)
(160)
(451)
(218)
(159)
(196)
(1,627)
The other operating income and expenses incurred by the Group can be summarized as follows:
Other operating income (expenses), net
Notes
2018
2017
2016
(US$ millions)
Income from tower deal transactions
Impairment of intangible assets and property, plant and
equipment .......................................................................
C.3.4.
E.1., E.2.
Gain (loss) on disposals of intangible assets and
property, plant and equipment........................................
Other income (expenses)....................................................
Other operating income (expenses), net.........................
65
(6)
8
9
76
63
(12)
1
16
68
—
(6)
(8)
—
(14)
128
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
B.2.1. Accounting for cost of sales and operating expenses
Cost of sales
Cost of sales is recorded on an accrual basis.
Customer acquisition costs
Specific customer acquisition costs, including dealer commissions and handset subsidies, are charged to
marketing expenses when the customer is activated.
Operating leases
Operating leases are all leases that do not qualify as finance leases. Operating lease payments are recognized as
expenses in the consolidated statement of income on a straight-line basis over the lease term.
B.3. Segmental information
Management determines operating and reportable segments based on information used by the chief operating
decision maker (CODM) to make strategic and operational decisions from both a business and geographic
perspective. The Group’s risks and rates of return are predominantly affected by operating in different geographical
regions. The Group has businesses in two main regions: Latin America ("Latam") and Africa. The Latam figures
below include Honduras and Guatemala as if they are fully consolidated by the Group, as this reflects the way
management reviews and uses internally reported information to make decisions. Honduras and Guatemala are
shown under the Latam segment. The joint venture in Ghana is not reported as if fully consolidated. As from
January 1, 2018, segment EBITDA includes inter-company management fees and incentive compensation paid to
local management teams. These items, were previously included in unallocated corporate costs. This change in
presentation has no impact on Group EBITDA. Accordingly, 2017 and 2016 have been represented. Revenue,
operating profit (loss), EBITDA and other segment information for the years ended December 31, 2018, 2017 and
2016, were as follows:
129
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Latin
America
Africa (vii)
Unallocated
Guatemala
and
Honduras(vii)
Eliminations
and
Transfers
Total
(US$ millions)
Year ended December 31, 2018
Mobile revenue .................................
Cable and other fixed services
revenue ..........................................
Other revenue ....................................
Service revenue (i) ............................
Telephone and equipment and
other revenue .................................
Revenue ............................................
Operating profit (loss).....................
Add back:
Depreciation and amortization ..........
Share of profit in joint ventures in
Guatemala and Honduras ..............
Other operating income
(expenses), net ...............................
EBITDA(ii) ......................................
EBITDA from discontinued
operations ......................................
EBITDA incl. discontinued
operations .....................................
Capex(iii) ..........................................
Changes in working capital and
others(iv)........................................
Taxes paid..........................................
Operating Free Cash Flow(v).........
Total Assets(vi).................................
Total Liabilities................................
3,214
1,808
48
5,069
415
5,485
995
1,133
—
(51)
2,077
—
2,077
(872)
(42)
(264)
899
11,754
6,132
510
12
3
526
1
526
40
107
—
(3)
143
3
146
(59)
28
(24)
91
839
905
—
—
—
—
—
—
(47)
5
—
(2)
(44)
—
(44)
(2)
13
(6)
(39)
2,752
2,953
(1,475)
(253)
(6)
(1,734)
(203)
(1,937)
(488)
(416)
—
—
—
—
—
—
154
2,248
1,568
46
3,861
213
4,074
655
830
—
(154)
(154)
(19)
(922)
—
(922)
225
(12)
142
(568)
(5,219)
(1,814)
—
—
—
—
—
—
—
—
190
(650)
(76)
1,254
3
1,257
(708)
(13)
(153)
383
10,316
7,526
130
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Latin
America
Africa (vii)
Unallocated
Guatemala
and
Honduras(vii)
Eliminations
and
Transfers
Total
(US$ millions)
Year ended December 31, 2017 (viii)
Mobile revenue ..........................................
Cable and other fixed services revenue .....
Other revenue.............................................
Service revenue (i) .....................................
Telephone and equipment and other
revenue ...................................................
Revenue.....................................................
Operating profit (loss) .............................
Add back:
Depreciation and amortization...................
3,283
1,755
40
5,078
363
5,441
899
1,174
Share of profit in joint ventures in
Guatemala and Honduras .......................
—
Other operating income (expenses), net.....
EBITDA(ii) ...............................................
EBITDA from discontinued operations .....
EBITDA incl. discontinued
operations..............................................
Capex(iii) ...................................................
Changes in working capital and
others(iv) ................................................
Taxes paid ..................................................
Operating Free Cash Flow(v) .................
Total Assets(vi)..........................................
Total liabilities ..........................................
(49)
2,024
—
2,024
(855)
(53)
(239)
877
509
12
5
524
2
526
41
110
—
(11)
140
73
213
(99)
(6)
(18)
90
—
—
—
—
—
—
(5)
6
—
10
11
—
11
(1)
(10)
1
1
598
1,465
(1,510)
(213)
(4)
(1,727)
(165)
(1,892)
(431)
—
—
—
—
—
—
140
2,281
1,553
41
3,876
200
4,076
645
(450)
—
841
—
(140)
(140)
(18)
(899)
—
(899)
237
27
124
(511)
(5,420)
(1,961)
—
—
—
—
—
—
—
—
2,393
(478)
(68)
1,278
73
1,351
(718)
(42)
(132)
459
9,464
6,183
10,411
5,484
1,482
1,673
131
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Latin
America
Africa
Unallocated
Guatemala
and
Honduras(vii)
Eliminations
and
Transfers
Total
(US$ millions)
Year ended December 31, 2016 (viii)
Mobile revenue..........................................
Cable and other fixed services revenue .....
Other revenue ............................................
Service revenue (i).....................................
Telephone and equipment and other
revenue...................................................
Revenue ....................................................
Operating profit (loss) .............................
Add back:
Depreciation and amortization ..................
Share of profit in joint ventures in
Guatemala and Honduras.......................
Other operating income (expenses), net ....
EBITDA(ii)...............................................
EBITDA from discontinued operations.....
EBITDA incl. discontinued
operations..............................................
Capex(iii)...................................................
Changes in working capital and
others(iv) ................................................
Taxes paid ..................................................
Operating Free Cash Flow(v) .................
Total Assets(vi) .........................................
Total liabilities..........................................
3,318
1,611
37
4,966
386
5,352
721
1,173
—
42
1,935
—
1,935
(886)
37
(233)
853
10,386
5,229
541
15
6
562
2
565
43
113
—
2
158
77
235
(161)
(2)
(33)
39
1,406
1,852
—
—
—
—
—
—
4
7
—
(6)
5
—
5
(6)
(33)
(9)
(43)
1,357
1,997
(1,514)
(191)
(4)
(1,709)
(165)
(1,875)
(394)
(441)
—
(24)
(859)
—
(859)
242
24
145
(448)
(5,589)
(1,942)
—
—
—
—
—
—
(115)
2,343
1,437
39
3,820
223
4,043
490
—
853
(115)
—
—
—
—
—
—
—
—
2,067
(877)
(115)
14
1,241
77
1,319
(811)
26
(130)
404
9,627
6,258
(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 recurrent 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) Cash spent for capex excluding spectrum and licenses of $61 million (2017: $53 million; 2016: $39 million) and cash received
on tower deals of $141 million (2017: $167 million; 2016: nil).
(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 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 Latam segment.
(viii) Restated as a result of classification of certain of our African operations as discontinued operations (see notes A.4. and E.3.).
132
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Revenue from contracts with customers from continuing operations:
Year ended December 31, 2018
$ millions
Mobile
Timing of
revenue
recognition
Over time
Mobile Financial Services
Point in time
Cable and other fixed services
Over time
Other
Service Revenue
Telephone and equipment
Revenue from contracts with
customers
Over time
Point in time
Latin
America
Africa
Total Group
1,701
37
1,556
42
3,336
212
3,548
401
109
12
3
526
1
526
2,102
147
1,568
46
3,861
213
4,074
B.4. People
Number of permanent employees
Continuing operations(i)............................................................................
Joint ventures (Guatemala, Honduras and Ghana – for 2018 and
2017) ......................................................................................................
Discontinued operations ............................................................................
Total ..........................................................................................................
2018
16,987
2017
14,404
2016
13,211
4,416
—
21,403
4,326
397
19,127
4,023
751
17,985
(i) Emtelco headcount are excluded from this report and any internal reporting because their costs are classified as direct costs
and not employee related costs.
Notes
2018
2017
2016
Wages and salaries .............................................................
Social security....................................................................
Share based compensation .................................................
Pension and other long-term benefit costs .........................
Other employee related costs .............................................
Total...................................................................................
B.4.1.
B.4.2.
(US$ millions)
(356)
(61)
(21)
(7)
(70)
(514)
(320)
(57)
(22)
(8)
(45)
(451)
(290)
(67)
(14)
(6)
(74)
(451)
B.4.1. Share-based compensation
Millicom shares granted to management and key employees includes share-based compensation in the form of
long-term share incentive plans. Up until 2015, Millicom had two types of annual plan, a future performance plan
and a deferred share plan. In 2015, Millicom issued four different types of plans; a deferred share plan, a
performance share plan, an executive share plan and the sign-on CEO share plan (a one-off plan). Since 2016,
Millicom has two types of annual plans, a performance share plan and a deferred share plan. The different plans are
further detailed below.
133
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Cost of share based compensation
2014 incentive plans
2015 incentive plans
2016 incentive plans
2017 incentive plans
2018 incentive plans
Total share-based compensation
2018
2017
2016
(US$ millions)
—
—
(4)
(8)
(11)
(21)
—
(3)
(6)
(12)
—
(22)
(1)
(3)
(10)
—
—
(14)
Deferred share plan (unchanged since 2014)
For the deferred awards plan, participants are granted shares based on past performance, with 16.5% of the
shares vesting on January 1 of each of year one and two, and the remaining 67% on 1 January of year three. Vesting
is conditional upon the participant remaining employed with Millicom at each vesting date. The cost of this long-
term incentive plan, which is not conditional on performance conditions, is calculated as follows:
Fair value (share price) of Millicom’s shares at grant date x number of shares expected to vest.
Sign-on CEO share plan (issued in 2015 – one off)
As part of his employment contract Millicom CEO (from April 1, 2015) received a sign-on grant of 77,344
shares. Vesting is conditional, among other conditions, on the CEO not being dismissed for cause. The cost of this
long-term incentive plan, which is not conditional on market conditions, is calculated in the same way as the
deferred share plan above. The expense for this plan has been taken in full during 2015.
Performance share plan (issued in 2015)
Under this plan, shares granted did vest in full in 2018, subject to performance conditions, 62.5% based on
Absolute Total Shareholder Return (TSR) and 37.5% based on actual vs budgeted EBITDA minus CAPEX minus
Change in Working Capital (Free Cash Flow). As the TSR measure is a market condition, the fair value of the shares
in the performance share plan requires consideration of potential adjustments for future market-based conditions at
grant date.
For this, a specific valuation had been performed at grant date based on the probability of the TSR conditions
being met (and to which extent) and the expected payout based upon leaving conditions.
The Free Cash Flows (FCF) condition is a non-market measure which had been considered together with the
leaving estimate and based initially on a 100% fulfillment expectation. The reference share price for 2015
performance share plan is the same share price as the share price for the deferred share plan.
Executive share plan (issued in 2015 – one off)
Under this plan, shares were granted to the CEO and CFO based on an allocated holding of 3,333 (CEO) and
2,000 (CFO) shares for which vesting occurs based on three components at multipliers based on market conditions
(a TSR for component A and B) and performance conditions (on actual vs budgeted FCF for component C). The
maximum number of shares that could vest under the plan was 26,664 (CEO) and 14,000 (CFO). The plan vested in
2018 at the end of a three-year period.
Similarly to the performance share plan, a specific valuation had been performed based on the probability of the
TSR conditions being met (and to which extent) and the expected payout based upon leaving conditions. The FCF
condition being a non-market measure, it had been considered together with the leaving estimate and based initially
134
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
on a 100% fulfillment expectation. Therefore, the reference share price is the share price on the date that the CEO
and the CFO agreed to the executive share plan.
Performance share plan (for plans issued in 2016 and 2017)
Shares granted under this performance share plan vest at the end of the three-year period, subject to
performance conditions, 25% based on Positive Absolute Total Shareholder Return (Absolute TSR), 25% based on
Relative Total Shareholder Return (Relative TSR) and 50% based on budgeted Earnings Before Interest Tax
Depreciation and Amortization (EBITDA) minus Capital Expenditure (Capex) minus Change in Working Capital
(CWC) (Free Cash Flow).
This performance share plan is measured similarly to the performance share plan issued in 2015, see above.
Performance share plan (for plan issued in 2018)
Shares granted under this performance share plan vest at the end of the three-year period, subject to
performance conditions, 25% based on Relative Total Shareholder Return (“Relative TSR”), 25% based on the
achievement of the Service Revenue target measured on a 3-year CAGRs from years 2018 to 2020 (“Service
Revenue”) and 50% based on the achievement of the Operating Free Cash Flow (“Operating Free Cash Flow”)
target measured on a 3-year CAGRs from years 2018 to 2020.
For the performance share plans and the executive share plan, and in order to calculate the fair value of the TSR
portion of those plans, it is necessary to make a number of assumptions which are set out below. The assumptions
have been set based on an analysis of historical data as at grant date.
Assumptions and fair value of the shares under the TSR portion
Risk-free
rate %
Dividend
yield %
Share price
volatility(i)
%
Award term
(years)
Share fair
value (in US
$)
Performance share plan 2018 (Relative TSR) ....
Performance share plan 2017 (Relative TSR) ....
Performance share plan 2017 (Absolute TSR) ...
Performance share plan 2016 (Relative TSR) ....
Performance share plan 2016 (Absolute TSR) ...
Performance share plan 2015 (Absolute TSR) ...
Executive share plan 2015 – Component A........
Executive share plan 2015 – Component B........
(0.39)
(0.40)
(0.40)
(0.65)
(0.65)
(0.32)
(0.32)
(0.32)
3.21
3.80
3.80
3.49
3.49
2.78
N/A
N/A
30.27
22.50
22.50
30.00
30.00
23.00
23.00
23.00
(i) Historical volatility retained was determined on the basis of a three-year historic average.
2.93
2.92
2.92
2.61
2.61
2.57
2.57
2.57
57.70
27.06
29.16
43.35
45.94
32.87
53.74
29.53
The cost of the long-term incentive plans which are conditional on market conditions is calculated as follows:
Fair value (market value) of shares at grant date (as calculated above) x number of shares expected to vest.
The cost of these plans is recognized, together with a corresponding increase in equity (share compensation
reserve), over the period in which the performance and/or employment conditions are fulfilled, ending on the date on
which the relevant employees become fully entitled to the award. Adjustments are made to the expense recorded for
forfeitures, mainly due to management and employees leaving Millicom. Non-market performance conditions are
not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions
being met is assessed as part of the Group’s best estimate of the number of equity instruments that will ultimately
vest.
No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional
upon a market condition. These are treated as vested, regardless of whether or not the market conditions are
satisfied, provided that all other performance conditions are satisfied. Where the terms of an equity-settled award are
135
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
modified, as a minimum an expense is recognized as if the terms had not been modified. In addition, an expense is
recognized for any modification that increases the total fair value of the share based payment arrangement, or is
otherwise beneficial to the employee as measured at the date of modification.
Plan awards and shares expected to vest
2018 plans
2017 plans
2016 plans
2015 plans
Performa
nce plan
Deferred
plan
Performa
nce plan
Deferred
plan
Performa
nce plan
Deferred
plan
Performa
nce plan
Executive
plan
CEO plan
Deferred
plan
(number of shares)
Initial shares granted
237,196
262,317
279,807
438,505
200,617
287,316
98,137
40,664
77,344
237,620
Additional shares
granted(i)
Revision for
forfeitures
Revision for
cancellations
Total before
issuances
Shares issued in
2016
Shares issued in
2017
Shares issued in
2018
Performance
conditions
Shares still expected
to vest
Estimated cost over
the vesting period
(US$ millions)
—
3,290
2,868
29,406
—
—
—
(13,531)
(18,086)
(34,556)
(74,325)
(49,164)
(77,924)
(37,452)
(4,728)
—
—
—
—
—
—
—
—
—
3,537
—
—
—
(68,121)
—
218,927
247,521
248,119
393,586
151,453
209,392
60,685
40,664
80,881
169,499
—
—
—
—
—
—
—
(1,214)
(1,733)
(771)
(2,686)
(752)
(43,579)
(357)
—
—
(25,781)
(38,745)
(28,139)
(30,124)
(97)
(18,747)
(2,724)
(99,399)
(2,050)
(46,039)
(27,619)
(19,022)
(26,961)
(100,630)
—
—
—
—
—
—
(31,938)
(21,642)
218,830
228,774
245,395
291,501
147,437
118,041
12
14
9
20
8
12
—
4
—
2
—
—
6
—
—
12
(i) Additional shares granted represent grants made for new joiners and/or as per CEO contractual arrangements.
B.4.2. Pension and other long-term employee benefit plans
Pension plans
The pension plans apply to employees who meet certain criteria (including years of service, age and
participation in collective agreements).
Pension and other similar employee related obligations can result from either defined contribution plans or
defined benefit plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions
into a separate entity. No further payment obligations exist once the contributions have been paid. The contributions
are recognized as employee benefit expenses when they are due. Prepaid contributions are recognized as assets to
the extent that a cash refund or a reduction in future payments is available.
Defined benefit pension plans define an amount of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years of service and compensation. The liability recognized in
the statement of financial position in respect of the defined benefit pension plan is the present value of the defined
benefit obligation at the statement of financial position date less the fair value of plan assets, together with
adjustments for unrecognized actuarial gains or losses and past service costs. The defined benefit obligation is
calculated annually by independent actuaries. The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows, using an appropriate discount rate based on maturities of the related
pension liability.
Re-measurement of net defined benefit liabilities are recognized in other comprehensive income and not
reclassified to the statement of income in subsequent years.
Past service costs are recognized in the statement of income on the earlier of the date of the plan amendment or
curtailment, and the date that the Group recognizes related restructuring costs.
136
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Net interest is calculated by applying the discount rate to the net defined benefit asset/liability.
Long-service plans
Long-service plans apply for Colombian subsidiary UNE employees with more than five years of service
whereby additional bonuses are paid to employees that reach each incremental length of service milestone (from five
to 40 years).
Termination plans
In addition, UNE has a number of employee defined benefit plans. The level of benefits provided under the
plans depends on collective employment agreements and Colombian labor regulations. There are no defined assets
related to the plans, and UNE make payments to settle obligations under the plans out of available cash balances.
At December 31, 2018, the defined benefit obligation liability amounted to $60 million (2017: $66 million) and
payments expected in the plans in future years totals $111 million (2017: $87 million). The average duration of the
defined benefit obligation at December 31, 2018 is 7 years (2017: 7 years). The termination plans apply to
employees that joined UNE prior to December 30, 1996. The level of payments depends on the number of years in
which the employee has worked before retirement or termination of their contract with UNE.
Except for the UNE pension plan described above, there are no other significant defined benefits plans in the
Group.
B.4.3. Directors and executive management
The remuneration of the members of the Board of Directors comprises an annual fee and shares. Director
remuneration is proposed by the Nomination Committee and approved by the shareholders at their Annual General
Meeting (AGM).
Remuneration charge for the Board (gross of withholding tax)
Chairperson................................................................................................
Other members of the Board .....................................................................
Total (i)......................................................................................................
169
774
943
233
889
1,122
243
900
1,143
2018
2017
(US$ ’000)
2016
(i) Cash compensation converted from SEK to USD at exchange rates on payment dates each year. Share based compensation
based on the market value of Millicom shares on the corresponding AGM date (2018: in total 6,591 shares; 2017: in total
8,731 shares; 2016: in total 8,002 shares). Net remuneration comprised 51% in shares and 49% in cash (SEK) (2017: 52% in
shares and 48% in cash; 2016: 50% in shares and 50% in cash).
Shares beneficially owned by the Directors
Chairperson .......................................................................................................................
Other members of the Board .............................................................................................
Total ..................................................................................................................................
2018
2017
(number of shares)
8,554
15,333
23,887
7,000
20,067
27,067
The remuneration of executive management of Millicom comprises an annual base salary, an annual bonus,
share based compensation, social security contributions, pension contributions and other benefits. Bonus and share
based compensation plans (see note B.4.1.) are based on actual and future performance. Share based compensation
is granted once a year by the Compensation Committee of the Board.
137
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
If the employment of Millicom’s senior executives is terminated, severance of up to 12 months’ salary is
potentially payable.
The annual base salary and other benefits of the Chief Executive Officer (CEO) and the Executive Vice
Presidents (Executive team) are proposed by the Compensation Committee and approved by the Board.
Remuneration charge for the Executive Team
2018
Base salary.................................................................................................
Bonus.........................................................................................................
Pension ......................................................................................................
Other benefits ............................................................................................
Termination benefits..................................................................................
Total before share based compensation .................................................
Share based compensation(i)(ii) in respect of 2018 LTIP .........................
Total ..........................................................................................................
Remuneration charge for the Executive Team
2017
Base salary.................................................................................................
Bonus.........................................................................................................
Pension ......................................................................................................
Other benefits ............................................................................................
Total before share based compensation .................................................
Share based compensation(i)(ii) in respect of 2017 LTIP .........................
Total ..........................................................................................................
CEO
CFO
(US$ ’000)
Executive
Team (9
members)(iii)
1,112
1,492
247
66
—
2,918
5,027
7,945
673
557
101
63
—
1,393
1,567
2,960
3,930
2,445
962
805
301
8,444
4,957
13,401
CEO
CFO
(US$ ’000)
Executive
Team (9
members)
1,000
707
150
64
1,921
2,783
4,704
648
455
97
15
1,215
1,492
2,707
3,822
1,590
629
1,193
7,233
5,202
12,435
138
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Remuneration charge for the Executive team
2016
Base salary.................................................................................................
Bonus.........................................................................................................
Pension ......................................................................................................
Other benefits ............................................................................................
Total before share based compensation .................................................
Share based compensation(i)(ii) in respect of 2016 LTIP .........................
Total ..........................................................................................................
CEO
CFO
(US$ ’000)
Executive
team
(9 members)
1,000
660
150
48
1,858
2,660
4,518
599
450
82
18
1,149
1,481
2,630
3,797
1,411
513
720
6,441
4,031
10,472
(i) See note B.4.1.
(ii) Share awards of 80,264 and 112,472 were granted in 2018 under the 2018 LTIPs to the CEO, and Executive Team (2017:
61,724 and 167,371, respectively; 2016: 49,171 and 104,573, respectively).
(iii) Other Executives’ compensation includes Daniel Loria, former CHRO and Rodrigo Diehl, EVP Strategy.
Share ownership and unvested share awards granted from Company equity plans to the Executive team
2018
Share ownership (vested from equity plans and otherwise acquired) .......
Share awards not vested ............................................................................
2017
Share ownership (vested from equity plans and otherwise acquired) .......
Share awards not vested ............................................................................
B.5. Other non-operating (expenses) income, net
CEO
Executive
team
Total
(number of shares)
122,310
172,485
80,159
148,324
84,782
339,726
55,888
299,067
207,092
512,211
136,047
447,391
Non-operating items mainly comprise changes in fair value of derivatives and the impact of foreign exchange
fluctuations on the results of the Group.
Change in fair value of derivatives (see note D.1.2.)
Exchange gain (loss), net
Other non-operating income (expenses), net
Total
Foreign exchange gains and losses
Year ended December 31,
2018
2017
2016
(US$ millions)
(1)
(41)
2
(40)
(22)
18
0
(4)
3
25
(9)
20
Transactions denominated in a currency other than the functional currency are translated into the functional
currency using exchange rates prevailing at the transaction dates. Foreign exchange gains and losses resulting from
the settlement of such transactions, and on translation of monetary assets and liabilities denominated in currencies
139
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
other than the functional currency at year-end exchange rates, are recognized in the consolidated statement of
income, except when deferred in equity as qualifying cash flow hedges.
B.6. Taxation
B.6.1. Income tax expense
Tax mainly comprises income taxes of subsidiaries and withholding taxes on intragroup dividends and royalties
for use of Millicom trademarks and brands. Millicom operations are in jurisdictions with income tax rates of 10% to
40% levied on either revenue or profit before income tax (2017: 10% to 40%; 2016: 10% to 40%). Income tax
relating to items recognized directly in equity is recognized in equity and not in the consolidated statement of
income.
Income tax charge
Income tax (charge) credit
Withholding tax .........................................................................................
Other income tax relating to the current year............................................
Adjustments in respect of prior years........................................................
Deferred tax (charge) credit
Origination and reversal of temporary differences....................................
Effect of change in tax rates ......................................................................
Tax income (expense) before valuation allowances..................................
Effect of valuation allowances ..................................................................
Adjustments in respect of prior years........................................................
Tax (charge) credit on continuing operations ............................................
Tax (charge) credit on discontinuing operations .......................................
Total tax (charge) credit..........................................................................
2018
2017
2016
(US$ millions)
(64)
(86)
(150)
1
(149)
32
(10)
22
(8)
14
19
33
(116)
—
(116)
(74)
(85)
(159)
(12)
(171)
15
19
34
(30)
4
9
13
(158)
—
(158)
(44)
(74)
(118)
(26)
(144)
45
1
46
(88)
(42)
7
(35)
(179)
6
(173)
140
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Reconciliation between the tax expense and tax at the weighted average statutory tax rate is as follows:
Income tax calculation
2018
Discontinue
d
operations
Continuing
operations
Total
Continuing
operations
Profit before tax ....................
129
(39)
2017
Discontinue
d
operations
(US $ millions)
51
(10)
0
0
7
0
0
0
Total
Continuing
operations
2016
Discontinue
d
operations
Total
227
109
(26)
(22)
(11)
19
(59)
(73)
17
1
9
13
1
(65)
(43)
29
(16)
6
0
0
8
0
0
0
83
15
13
1
(57)
(43)
29
(16)
90
(1)
7
(10)
(61)
(64)
5
(2)
176
(12)
(11)
19
(66)
(73)
17
1
4
—
—
(2)
—
—
—
(2)
(10)
(31)
(10)
(41)
(105)
(15)
(120)
—
—
—
—
20
(116)
1
(3)
(158)
13
0
0
14
17
(3)
(158)
(19)
(179)
0
7
6
17
(12)
(173)
Tax at the weighted
average statutory rate........
(5)
Effect of:
Items taxed at a different
rate ....................................
7
Change in tax rates on
deferred tax balances ........
(10)
Expenditure not
deductible and income
not taxable ........................
Unrelieved withholding
tax .....................................
Accounting for associates
and joint ventures .............
Movement in deferred tax
on unremitted earnings .....
Unrecognized deferred
tax assets...........................
Recognition of previously
unrecognized deferred
tax assets...........................
Adjustments in respect of
prior years.........................
(59)
(64)
5
(2)
(8)
—
20
Total tax (charge) credit .....
(116)
Weighted average
statutory tax rate ...............
3.9%
1.1%
6.82%
9.69%
(8.26)%
(17.90)%
Effective tax rate ...................
89.9%
128.9%
89.77%
69.60% 164.22 %
207.10 %
B.6.2. Current tax assets and liabilities
Current tax assets and liabilities for current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rate and tax laws used to compute the amount are those
enacted or substantively enacted by the statement of financial position date.
B.6.3. Deferred tax
Deferred tax is calculated using the liability method on temporary differences at the statement of financial
position date between the tax base of assets and liabilities and their carrying amount for financial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences, except where the deferred tax
liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither accounting, nor taxable profit or loss.
Deferred tax assets are recognized for all temporary differences including unused tax credits and tax losses, to
the extent that it is probable that taxable profit will be available against which the deductible temporary differences
can be utilized, except where the deferred tax assets relate to deductible temporary differences from initial
recognition of an asset or liability in a transaction that is not a business combination, and, at the time of the
transaction, affects neither accounting, nor taxable profit or loss. It is probable that taxable profit will be available
141
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
when there are sufficient taxable temporary differences relating to the same tax authority and the same taxable entity
which are expected to reverse in the same period as the expected reversal of the deductible temporary difference.
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to utilize them. Unrecognized
deferred tax assets are reassessed at each statement of financial position date and are recognized to the extent it is
probable that future taxable profit will enable the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rate expected to apply in the year when the assets are
realized or liabilities settled, based on tax rates and tax laws that have been enacted or substantively enacted at the
statement of financial position date. Deferred tax assets and deferred tax liabilities are offset where legally
enforceable set off rights exist and the deferred taxes relate to the same taxable entity and the same taxation
authority.
Deferred tax
Balance at December
31, 2016...........................
(Charge)/credit to
statement of income ........
Exchange differences..........
Balance at December
31, 2017
Deferred tax assets..............
Deferred tax liabilities ........
Balance at December
31, 2017...........................
(Charge)/credit to
statement of income ........
Change in scope..................
Accounting policy
changes............................
Exchange differences..........
Balance at December
31, 2018
Deferred tax assets..............
Deferred tax liabilities ........
Balance at December
31, 2018...........................
Fixed assets
Unused tax
losses
Unremitted
earnings
Other
Offset
Total
(US$ millions)
(23)
53
2
32
88
(56)
32
(18)
(190)
—
—
(176)
76
(252)
(176)
113
(61)
—
52
52
—
52
(3)
—
—
(5)
44
44
—
44
(32)
1
(1)
(32)
—
(32)
(32)
(2)
—
—
—
(34)
—
(34)
(34)
51
20
1
72
79
(7)
72
56
9
4
(6)
135
134
1
135
—
—
—
—
(39)
39
—
—
—
—
—
—
(52)
52
—
109
13
2
124
180
(56)
124
33
(181)
4
(11)
(31)
202
(233)
(31)
Deferred tax assets have not been recognized in respect of the following deductible temporary differences:
Deductible temporary differences
At December 31, 2018 .......................................................
At December 31, 2017 .......................................................
92
68
(US$ millions)
4,886
4,844
134
162
5,112
5,074
Fixed assets
Unused tax
losses
Other
Total
142
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Unrecognized loss carryforwards expire as follows:
Unrecognized tax losses related to continuing operations
Expiry:
Within one year .........................................................................................
Within one to five years.............................................................................
After five years ..........................................................................................
No expiry ...................................................................................................
Total ..........................................................................................................
2018
2017
2016
(US$ millions)
—
3
493
4,390
4,886
39
494
—
4,311
4,844
27
493
—
3,981
4,501
With effect from 2017, Luxembourg tax losses incurred may be carried forward for a maximum of 17 years.
Losses incurred before 2017 may be carried forward without limitation of time.
At December 31, 2018, Millicom had $584 million of unremitted earnings of Millicom operating subsidiaries
for which no deferred tax liabilities were recognized (2017: $842 million; 2016: $873 million). Except for
intragroup dividends to be paid out of 2018 profits in 2019 for which deferred tax of $34 million (2017: $32 million;
2016 $32 million) has been provided, it is anticipated that intragroup dividends paid in future periods will be made
out of profits of future periods.
B.7. Earnings per share
Basic earnings (loss) per share are calculated by dividing net profit for the year attributable to equity holders of
the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings (loss) per share are calculated by dividing the net profit for the year attributable to equity
holders of the Company by the weighted average number of ordinary shares outstanding during the year, plus the
weighted average number of dilutive potential shares.
Net profit/(loss) used in the earnings (loss) per share computation
Basic and diluted:
Net profit/(loss) attributable to equity holders from continuing
operations...............................................................................................
Net profit/(loss) attributable to equity holders from discontinued
operations...............................................................................................
Net profit/(loss) attributable to all equity holders to determine
the basic earnings (loss) per share ......................................................
2018
2017
2016
(US$ millions)
29
(39)
(10)
36
51
86
(12)
(20)
(32)
143
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Weighted average number of shares in the earnings (loss) per share computation
Weighted average number of ordinary shares (excluding treasury
shares) for basic earnings (loss) per share .............................................
Potential incremental shares as a result of share options ..........................
Weighted average number of ordinary shares (excluding treasury
shares) adjusted for the effect of dilution ..........................................
C. Capital structure and financing
C.1. Share capital, share premium and reserves
2018
2017
2016
(thousands of shares)
100,793
—
100,384
—
100,337
—
100,793
100,384
100,337
Common shares are classified as equity. Incremental costs directly attributable to the issue of new shares are
shown in equity as a deduction from the proceeds.
Where any Group company purchases the Company’s share capital, the consideration paid, including any
directly attributable incremental costs, is shown under Treasury shares and deducted from equity attributable to the
Company’s equity holders until the shares are canceled, reissued or disposed of. Where such shares are subsequently
sold or reissued, any consideration received, net of any directly attributable incremental costs and the related income
tax effects is included in equity attributable to the Company’s equity holders.
Share capital, share premium
Authorized and registered share capital (number of shares).......................................... 133,333,200
Subscribed and fully paid up share capital (number of shares) ..................................... 101,739,217
1.50
Par value per share .........................................................................................................
153
Share capital (US$ millions)..........................................................................................
482
Share premium (US$ millions) ......................................................................................
Total (US$ millions) .....................................................................................................
635
2018
2017
133,333,200
101,739,217
1.50
153
484
637
144
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Other equity reserves
As of January 1, 2016 ...................
Share based compensation..............
Issuance of shares – 2013, 2014,
2015 LTIPs..................................
Remeasurements of post-
employment benefit
obligations ...................................
Cash flow hedge reserve
movement....................................
Currency translation movement......
As of December 31, 2016 ..............
Share based compensation..............
Issuance of shares – 2014, 2015,
2016 LTIPs..................................
Remeasurements of post-
employment benefit
obligations ...................................
Cash flow hedge reserve
movement....................................
Currency translation movement......
As of December 31, 2017 ..............
Share based compensation..............
Issuance of shares –2015, 2016,
2017 LTIPs..................................
Currency translation movement......
As of December 31, 2018 ..............
C.1.1. Legal reserve
Equity
settled
transaction
reserve
Legal
reserve
Hedge
reserve
Currency
translation
reserve
Pension
obligation
reserve
Total
(US$ millions)
16
—
—
—
—
—
16
—
—
—
—
—
16
—
—
—
16
46
14
(17)
—
—
—
43
22
(18)
—
—
—
47
22
(22)
—
47
(1)
—
—
—
(3)
—
(4)
—
—
—
4
—
—
—
—
—
—
(593)
—
—
—
—
(23)
(616)
—
—
—
—
85
(531)
—
—
(68)
(599)
1
—
—
(2)
—
—
(1)
—
—
(2)
—
—
(3)
—
—
—
(3)
(531)
14
(17)
(2)
(3)
(23)
(562)
22
(18)
(2)
4
85
(472)
22
(22)
(68)
(538)
If Millicom International Cellular S.A. reports an annual net profit on a non-consolidated basis, Luxembourg
law requires appropriation of an amount equal to at least 5% of the annual net profit to a legal reserve until such
reserve equals 10% of the issued share capital. This reserve is not available for dividend distribution. No
appropriation was required in 2017 or 2018 as the 10% minimum level was reached in 2011 and maintained each
subsequent year.
C.1.2. Equity settled transaction reserve
The cost of LTIPs is recognized as an increase in the equity-settled transaction reserve over the period in which
the performance and/or service conditions are rendered. When shares under the LTIPs vest and are issued the
corresponding reserve is transferred to share premium.
C.1.3. Hedge reserve
The effective portions of changes in value of cash flow hedges are recorded in the hedge reserve (see note C.1.).
145
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
C.1.4. Currency translation reserve
In the financial statements, the relevant captions in the statements of financial position of subsidiaries without
US dollar functional currencies are translated to US dollars using the closing exchange rate. Statements of income or
statement of income captions (including those of joint ventures and associates) are translated to US dollars at
monthly average exchange rates during the year. The currency translation reserve includes foreign exchange gains
and losses arising from these translations.
C.2. Dividend distributions
On May 17, 2018, a dividend distribution of $2.64 per share from Millicom’s retained profits at December 31,
2017, was approved by the shareholders at the AGM and paid in equal portions in May and November 2018.
On May 4, 2017, a dividend distribution of $2.64 per share from Millicom’s retained profits at December 31,
2016, was approved by the shareholders at the AGM and distributed in May 2017.
On May 17, 2016, a dividend distribution of $2.64 per share from Millicom’s retained profits at December 31,
2015, was approved by the shareholders at the AGM and distributed in May 2016.
The ability of the Company to make dividend payments is subject to, among other things, the terms of
indebtedness, legal restrictions and the ability to repatriate funds from Millicom’s various operations. At December
31, 2018, $324 million (December 31, 2017: $345 million; December 31, 2016: $321 million) of Millicom’s
retained profits represent statutory reserves that are unavailable to be distributed to owners of the Company.
C.3. Debt and financing
Debt and financing by type (i)
Note
2018
2017
(US$ millions)
Debt and financing due after more than one year
Bonds.........................................................................................................
Banks .........................................................................................................
Finance leases............................................................................................
Other financing(ii)............................................................................................................
Total non-current financing .......................................................................
Less: portion payable within one year.......................................................
Total non-current financing due after more than one year ........................
Debt and financing due within one year
Bonds.........................................................................................................
Banks .........................................................................................................
Finance leases............................................................................................
Other financing..........................................................................................
Total current debt and financing............................................................
Add: portion of non-current debt payable within one year .......................
Total ..........................................................................................................
Total debt and financing .........................................................................
C.3.1.
C.3.2.
C.3.4.
C.3.1.
C.3.2.
C.3.4.
(i) See note D.1.1 for further details on maturity profile of the Group debt and financing.
146
2,501
1,324
353
113
4,291
(168)
4,123
—
289
—
—
289
168
458
4,580
2,147
1,158
362
74
3,742
(142)
3,600
—
40
3
—
43
142
185
3,785
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
(ii) In July 2018, the Company issued a COP144,054.5 million /$50 million bilateral facility with IIC (Inter-American
Development Bank) for a USD indexed to COP Note. The note bears interest at 9.45% p.a.. This COP Note is used as net
investment hedge of the net assets of our operations in Colombia.
Debt and financing by location
Millicom International Cellular S.A. (Luxembourg) ........................................................
Colombia ...........................................................................................................................
Paraguay............................................................................................................................
Bolivia ...............................................................................................................................
Panama ..............................................................................................................................
Tanzania ............................................................................................................................
Rwanda..............................................................................................................................
Chad ..................................................................................................................................
Costa Rica .........................................................................................................................
El Salvador ........................................................................................................................
Total debt and financing .................................................................................................
2018
2017
(US$ millions)
1,770
1,016
504
317
261
201
—
64
148
299
4,580
1,255
1,130
488
352
—
217
50
70
76
147
3,785
Debt and financings are initially recognized at fair value, net of directly attributable transaction costs. They are
subsequently measured at amortized cost using the effective interest rate method or at fair value. Amortized cost is
calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral
part of the effective interest rate. Any difference between the initial amount and the maturity amount is recognized in
the consolidated statement of income over the period of the borrowing. Borrowings are classified as current
liabilities, unless the Group has an unconditional right to defer settlement of the liability for at least 12 months from
the statement of financial position date.
147
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
C.3.1. Bond financing
Bond financing
SEK Senior Unsecured Variable
Rate Notes ................................
USD 6.625% Senior Notes ..........
USD 6% Senior Notes .................
USD 6.625% Senior Notes ..........
USD 5.125% Senior Notes ..........
USD 6.75% Senior Notes ............
BOB 4.75% Notes........................
BOB 4.05% Notes........................
BOB 4.85% Notes........................
BOB 3.95% Notes........................
BOB 4.30% Notes........................
BOB 4.30% Notes........................
BOB 4.70% Notes........................
BOB 5.30% Notes........................
UNE Bond 1 (tranches A and B)..
UNE Bond 2 (tranches A and B)..
UNE Bond 3 (tranche A)..............
UNE Bond 3 (tranche B)..............
UNE Bond 3 (tranche C)..............
Cable Onda Bonds .......................
Total bond financing ..................
Note
Country
Final
Maturity
Interest Rate %
2018
2017
(US$ millions)
1 Luxembourg
2 Luxembourg
3 Luxembourg
4 Luxembourg
5 Luxembourg
6 Paraguay
7 Bolivia
7 Bolivia
7 Bolivia
7 Bolivia
7 Bolivia
7 Bolivia
7 Bolivia
7 Bolivia
8 Colombia
8 Colombia
8 Colombia
8 Colombia
8 Colombia
9 Panama
2019
2026
2025
2021
2028
2022
2020
2020
2023
2024
2029
2022
2024
2026
2020
2023
2024
2026
2036
2025
STIBOR +3.3(i)
6.625
6
6.625
5.125
6.75
4.75
4.05
4.85
3.95
4.3
4.3
4.7
5.3
CPI + 5.10
CPI + 4.76
9.35
CPI+4.15
CPI+4.89
5.75
—
495
491
—
493
297
59
7
71
43
23
30
35
13
46
46
49
78
39
184
2,501
243
—
496
—
494
296
86
11
85
50
25
30
35
13
50
50
54
85
43
—
2,147
(i) STIBOR – Swedish Interbank Offered Rate.
(1) SEK Senior Unsecured Notes
In August 2018, the Company redeemed all of the aggregate principal amount of the outstanding SEK Senior
Unsecured Notes due 2019 ($227 million). The early redemption fees amounting to $3 million and $1 million of
related unamortized costs have been expensed in August 2018 under interest and other financial expenses. As of
September 30, 2018, the notes have been fully redeemed.
(2) USD 6.625% Senior Notes
On October 16, 2018, the Company issued $500 million aggregate principal amount of 6.625% Senior Notes
due 2026. The Notes bear interest at 6.625% p.a., payable semiannually in arrears on each interest payment date.
Proceeds were used to finance Cable Onda’s acquisition (Note A.1.2.). Costs of issuance of $6 million are amortized
over the eight-year life of the notes (the effective interest rate is 6.75%).
148
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
(3) USD 6% Senior Notes
On March 11, 2015, Millicom issued a $500 million 6% fixed interest rate bond repayable in ten years, to repay
the El Salvador 8% Senior Notes and for general corporate purposes. The bond was issued at 100% of the principal
and has an effective interest rate of 6.132%. $8.6 million of withheld and upfront costs are being amortized over the
ten-year life of the bond.
(4) USD 6.625% Senior Notes
In December 2016, the Company confirmed that it had accepted for purchase $142 million of principal of its
6.625% Senior Notes due 2021. The early redemption fees amounting to $8 million and $2 million of related
unamortized costs had been expensed in December 2016 under interest and other financial expenses.
On September 11, 2017, the Group made a tender offer for the outstanding 6.625% Senior Notes. On September
20, 2017, MIC S.A. repurchased $186 million in principal amount in the tender offer using the proceeds of the issue
of the 5.125% Notes – see below. Also on September 11, 2017, the Group delivered a redemption notice for the
6.625% Senior Notes. MIC S.A. redeemed the remaining $473 million in principal amount on October 15, 2017.
The total early redemption fees amounting to $22 million and $6 million of related unamortized costs have been
expensed in September 2017 under interest and other financial expenses. At December 31, 2017, there are no 2021
Notes outstanding.
(5) USD 5.125% Senior Notes
On September 20, 2017, MIC S.A. issued a $500 million, ten-year bond with an interest rate of 5.125% at an
issue price of 100% (the 5.125% Notes) and will mature in 2028. Costs of issuance of $7 million are amortized over
the seven-year life of the notes (effective interest rate is 5.24%).
(6) USD 6.75% Senior Notes
On December 7, 2012, Telefónica Cellular del Paraguay S.A., Millicom’s fully owned subsidiary in Paraguay
issued $300 million of notes at 100% of the aggregate principal amount. Distribution and other transaction fees of $7
million reduced the total proceeds from issuance to $293 million. The 6.75% Senior Notes have a 6.75% per annum
coupon with interest payable semi-annually in arrears on June 13 and 13 December. The effective interest rate is
7.12%.
The 6.75% Senior Notes are general unsecured obligations of Telefónica Celular del Paraguay S.A. and rank
equal in right of payment with all future unsecured and unsubordinated obligations of Telefónica Celular del
Paraguay S.A. The 6.75% Senior Notes are unguaranteed.
(7) BOB Notes
In May 2012, Telecel Bolivia issued Boliviano (BOB) 1.36 billion of notes repayable in installments until April
2, 2020. Distribution and other transaction fees of BOB5 million reduced the total proceeds from issuance to BOB
1.32 billion ($191 million). The bond has a 4.75% per annum coupon with interest payable semi-annually in arrears
in May and November each year. The effective interest rate is 4.79%.
In November 2015, Telecel Bolivia issued BOB696 million (approximately $100 million) of notes in two series,
A for BOB104.4 million (approximately $15 million), with a fixed annual interest rate of 4.05%, maturing in August
2020 and series B for BOB591.6 million (approximately $85 million) with a fixed annual interest rate of 4.85%,
maturing in August 2023. The bond has coupon with interest payable semi-annually in arrears in March and
September during the first two years, thereafter each February and August. The effective interest rate is 4.84%. In
the placement, the final interest rate was reduced as Telecel Bolivia took advantage of strong demand for the bonds
resulting in a reduction of the average interest rate to 4.55%. Telecel Bolivia received BOB4.59 million in excess of
the BOB696 million issued (upfront premium).
On August 11, 2016, the operation in Bolivia issued a new bond for a total amount of BOB522 million
consisting of two tranches (approximately $50 million and $25 million, respectively). Tranche A and B bear fixed
interest at 3.95% and 4.30%, and will mature in June 2024 and June 2029, respectively.
149
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
On October 12, 2017, Tigo Bolivia placed approximately $80 million of local currency debt in three tranches,
which will mature in 2022, 2024 and 2026 and bear an average interest rate of 4.66%.
(8) UNE Bonds
In March 2010, UNE issued a COP300 billion (approximately $126 million) bond consisting of two tranches
with five and ten-year maturities. Interest rates are either fixed or variable depending on the tranche. Tranche A
bears variable interest, based on CPI, in Colombian peso and paid in Colombian peso. Tranche B bears variable
interest, based on fixed term deposits, in Colombian peso and paid in Colombian peso. UNE applied the proceeds to
finance its investment plan. Tranche A matured in March 2015 and tranche B will mature in March 2020.
In May 2011, UNE issued a COP300 billion (approximately $126 million) bond consisting of two equal
tranches with five and twelve-year maturities. Interest rates are variable and depend on the tranche. Tranche A bears
variable interest, based on CPI, in Colombian peso and paid in Colombian peso. Tranche B bears variable interest,
based on fixed term deposits, in Colombian peso and paid in Colombian peso. UNE applied the proceeds to finance
its investment plan. Tranche A matured in October 2016 and tranche B will mature in October 2023.
In May 2016, UNE issued a COP540 billion bond (approximately $176 million) consisting of three tranches
(approximately $52 million, $83 million and $41 million respectively). Interest rates are either fixed or variable
depending on the tranche. Tranche A bears fixed interest at 9.35%, while tranche B and C bear variable interest,
based on CPI, (respective margins of CPI + 4.15% and CPI + 4.89%), in Colombian peso. UNE applied the proceeds
to finance its investment plan and repay one bond (COP150 billion tranche). Tranches A, B and C will mature in
May 2024, May 2026 and May 2036, respectively.
(9) Cable Onda Bonds
On August 4, 2015, Cable Onda issued public bonds in Panama for a total amount of $185 million. These bonds
bear a fixed annual interest of 5.75% and are due on August 4, 2025. The bonds have been assumed by Millicom as
part of the acquisition of the company. See note A.1.2. for further details on the acquisition.
150
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
C.3.2. Bank and Development Financial Institution financing
Note Country
Maturity
Interest rate %
2018
2017
(US$ millions)
Fixed rate loans
PYG Long-term loan ...........................
PYG Long-term loan ...........................
PYG Long-term loan ...........................
PYG Long-term loan
USD - Long-term loans
USD - Long-term loans
BOB Long-term loans
BOB Long-term loans
Paraguay
1 Paraguay
Paraguay
Paraguay
Panama
Panama
Bolivia
Bolivia
Variable rate loans
USD Long-term loans..........................
USD Long-term loans..........................
USD Long-term loans..........................
USD Long-term loans..........................
USD Short-term loans .........................
2 Costa Rica
Chad
3 Rwanda
Tanzania
(Zantel)
4 Luxembourg
2020/2023/2025
2022
2023
2025
2019
2019
2025
2025
2021
2019
2019
2020
2019
9.00
10.10
10.25
8.90
4.00
3.80
4.30
4.30
3.5 variable
4 variable
2.9 variable
3.75 variable
Libor + 1.50
4.1+IBR
variable(i)
5 Colombia (UNE)
2025/2030
5 Colombia (Tigo)
2021/2022
LIBOR + 2.5
6 El Salvador
2021
LIBOR + 3.0
6 El Salvador
El Salvador
6 El Salvador
6 El Salvador
Various
2021 LIBOR + 2.25
2022 LIBOR + 3.15
2023 LIBOR + 2.55
2023
LIBOR + 3
Various
COP Long-term loans..........................
USD Long-term loans..........................
USD Senior Unsecured Term Loan
Facility.................................................
USD Credit Facility.............................
USD Credit Facility.............................
USD Credit Facility
USD Credit Facility
Other Long-term loans ........................
Total Bank and Development
Financial Institution financing.............
(i)
IBR – Colombia Interbank Rate.
1. Paraguay
90
61
9
19
15
9
10
10
148
1
—
90
250
277
298
50
24
50
100
50
51
106
65
—
—
—
—
—
—
76
3
40
96
—
363
297
50
29
50
—
—
25
1,613
1,198
On July 4, 2017, the Paraguayan subsidiary signed a five-year loan agreement with the IPS (Instituto de
Prevision Social) and the Inter-American Development Bank for a total amount of PYG $367,000 million
(approximately $66 million). The loan, denominated in local currency carries a 10.10% interest rate per annum and
start amortizing in Q4 2019. This facility is guaranteed by the Company.
2. Costa Rica
In April 2018, Millicom Cable Costa Rica S.A. entered into a $150 million variable rate loan with Citibank as
agent. Simultaneously, the outstanding loan balance of $72 million was repaid in full with the proceeds from this
loan.
151
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
In June 2018, Millicom Cable Costa Rica S.A. entered into a cross currency swap to hedge part of the principal
of the loan against interest rate and currency risks. Interest rate and currency swap agreements had been made on
$35 million of the principal amount and interest rate swaps for an additional $35 million.
3. Rwanda
In January 2018, the Group repaid the remaining $40 million loan due by Rwanda to different banks.
4. Luxembourg
MIC S.A. Bridge Facility
In October 2018, the Company entered into a $1 billion term loan facility agreement with a consortium of banks
(the “Bridge Facility”), subsequently reduced to $250 million in December 2018. The Bridge Facility matures in
October 2019 (unless extended for a period not exceeding six months). Interest on amounts drawn under the Bridge
Facility is payable at LIBOR plus a variable margin. At December 31, 2018, $250 million have been drawn under
this facility to finance Cable Onda’s acquisition (note 3).
MIC S.A. revolving credit facility
On January 30, 2017, the Company announced the closing of a new $600 million, five years revolving credit
facility (RCF) and notified the lenders in the 2014 RCF of the formal cancellation of the commitments outstanding
under the 2014 RCF (none of which were drawn at such date).
Interest on amounts drawn under the revolving credit facility is payable at LIBOR or EURIBOR, as applicable,
plus an initial margin of 1.5%. As of December 31, 2018, the committed facility was fully undrawn.
MIC S.A. term loan facility
In July 2016, MIC S.A. entered into a $50 million term loan facility agreement, of which half was repaid in
2017 and in January 2018 the remaining outstanding amount was fully repaid. The facility bears variable interest
rate at six-month LIBOR + 2.25% per annum.
5. Colombia
In June 2017, Colombia Movil completed a $300 million syndicated loan. The loan, denominated in US dollars,
which carries an interest rate of LIBOR + 2.50% will be repaid in three tranches of $100 million in June and
December 2021 for the two first tranches, and in June 2022 for the last tranche. Proceeds have been used to repay an
inter-company loan from Millicom, which used the funds to reduce holding company debt (see note C.3.1.) and for
general corporate purposes.
In March 2018, TigoUne prepaid $34 million equivalent in COP on bank financing debt.
6. El Salvador
On April 15, 2016, Telemovil El Salvador, S.A. de C.V. entered into a Senior Unsecured Term Loan Facility up
to $50 million maturing in April 2021 and bearing variable interest at LIBOR + 3.0% per annum, which was
restated and amended as of May 30, 2017, for a second tranche of $50 million and bearing an interest rate at LIBOR
+ 3% per annum. This facility is guaranteed by the Company.
On June 6, 2016, Telemovil El Salvador, S.A. de C.V. entered into a $30 million Credit Facility for general
corporate purposes maturing in June 2021 and bearing variable interest rate at LIBOR + 2.25% per annum. The
facility is guaranteed by the Company.
In January 2018, Telemovil El Salvador entered into an amended and restated the 2017 agreement with
Scotiabank for a $50 million variable rate loan, with a 5-year bullet repayment.
In March 2018, Telemovil El Salvador entered into a $100 million variable rate facility with DNB and Nordea
with a 5-year bullet repayment. The remaining $50 million of the facility was disbursed during 2018. In addition,
152
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Telemovil El Salvador entered into an interest rate swap with Scotiabank to fix interest rates for up to $100 million
of the outstanding debt.
Right of set-off and derecognition
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement
of financial position if there is a currently enforceable legal right to offset the recognized amounts and an intention
to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
A financial asset (or a part of a financial asset or part of a group of similar financial assets) is derecognized
when:
• Rights to receive cash flows from the asset have expired; or
• Rights to receive cash flows from the asset or obligations to pay the received cash flows in full without
material delay have been transferred to a third party under a “pass-through” arrangement; and the Group
has either transferred substantially all the risks and rewards of the asset or the control of the asset.
When rights to receive cash flows from an asset have been transferred or a pass-through arrangement
concluded, an evaluation is made if and to what extent the risks and rewards of ownership have been retained. When
the Group has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred
control of the asset, the asset is recognized to the extent of the Group’s continuing involvement in the asset. In that
case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured
on a basis that reflects the rights and obligations that the Group has retained. Continuing involvement that takes the
form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset
and the maximum amount of consideration that the Group could be required to repay.
A financial liability is derecognized when the obligation under the liability is discharged or canceled, or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognized in the statement of income.
C.3.3. Interest and other financial expenses
The Group’s interest and other financial expenses comprised the following:
Year ended December 31,
2018
2017
(US$ millions)
2016
Interest expense on bonds and bank financing ..........................................
Interest expense on finance leases.............................................................
Early redemption charges ..........................................................................
Others ........................................................................................................
Total interest and other financial expenses ...........................................
(234)
(92)
(4)
(41)
(371)
(246)
(65)
(43)
(41)
(396)
(262)
(48)
(25)
(36)
(372)
C.3.4. Finance leases
Millicom’s finance leases mainly consist of long-term lease of tower space from tower companies or
competitors on which Millicom locates its network equipment.
Finance lease liabilities
153
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Leases which transfer substantially all risks and benefits incidental to ownership of the leased item to the lessee
are capitalized at the inception of the lease. The amount capitalized is the lower of the fair value of the asset or the
present value of the minimum lease payments.
Lease payments are allocated between finance charges (interest) and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recorded as interest
expenses in the statement of income.
The sale and leaseback of towers and related site operating leases and service contracts are accounted for in
accordance with the underlying characteristics of the assets, and the terms and conditions of the lease agreements.
When sale and leaseback agreements are concluded, the portions of assets that will not be leased back by Millicom
are classified as assets held for sale as completion of their sale is highly probable. Asset retirement obligations
related to the towers are classified as liabilities directly associated with assets held for sale. On transfer to the tower
companies, the portion of the towers leased back are accounted for as operating leases or finance leases according to
the criteria set out above. The portion of towers being leased back represents the dedicated part of each tower on
which Millicom’s equipment is located and was derived from the average technical capacity of the towers. Rights to
use the land on which the towers are located are accounted for as operating leases, and costs of services for the
towers are recorded as operating expenses. The gain on disposal is recognized upfront for the portion of towers that
is not leased back, and is deferred and recognized over the term of the lease for the portion leased back.
Finance lease liabilities
Country
Maturity
2018
2017
(US$ millions)
Lease of tower space................................................. Tanzania
Lease of tower space................................................. Colombia Movil
Lease of poles ........................................................... Colombia (UNE)
Lease of tower space................................................. Paraguay
Lease of tower space................................................. El Salvador
Other finance lease liabilities.................................... various
Total finance lease liabilities ..................................
2029/2030
2032
2032
2030
2026
various
112
83
99
27
26
6
353
121
87
100
21
20
17
365
Tower Sale and Leaseback
In 2017 and 2018, the Group announced agreements to sell and leaseback wireless communications towers in
Paraguay, Colombia and El Salvador. The table below summarizes the main aspects of these deals and impacts on
the Group financial statements:
Agreement date ..............................................................................................
Total number of towers expected to be sold ..................................................
Total number of towers transferred as of December 31, 2018.......................
Expected total cash proceeds ($ millions) .....................................................
Cash proceeds received in 2017 ($ millions).................................................
Cash proceeds received in 2018 ($ millions).................................................
Upfront gain on sale recognized in 2017 ($ millions) (Note B.2) .................
Upfront gain on sale recognized in 2018 ($ millions) (Note B.2) .................
Paraguay
Colombia
April 26,
2017
1,410
1,276
125
75
41
26
19
July 18,
2017
1,207
902
147
86
26
37
13
El Salvador
February
6, 2018
811
496
145
—
73
—
33
154
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
C.3.5. Guarantees and pledged assets
Guarantees
Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to
reimburse the holder for a loss it incurs because the specified debtor fails to make payment when due in accordance
with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value,
adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability
is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the
reporting date and the amount recognized, less cumulative amortization.
Liabilities to which guarantees are related are recorded in the consolidated statement of financial position under
Debt and financing, and liabilities covered by supplier guarantees are recorded under Trade payables or Debt and
financing, depending on the underlying terms and conditions.
Maturity of guarantees
Term
At December 31, 2018
At December 31, 2017
Outstanding
exposure(i)
Maximum
exposure(ii)
Outstanding
exposure(i)
Maximum
exposure(ii)
0–1 year..............................................................................
1–3 years ............................................................................
3–5 years ............................................................................
Total guarantees ...............................................................
133
281
212
626
(US$ millions)
133
281
212
626
159
368
144
671
159
368
144
671
(i) The outstanding exposure represents the carrying amount of the related liability at December 31.
(ii) The maximum exposure represents the total amount of the Guarantee at December 31.
Pledged assets
The Group’s share of total debt and financing secured by either pledged assets, pledged deposits issued to cover
letters of credit, or guarantees issued by the Company at December 31, 2018, was $626 million (2017: $671
million), out of this, assets pledged by the Group over this debt and financing at the same date amounted to $2
million (2017: $1 million). The remainder represented primarily guarantees issued by Millicom S.A. to guarantee
financings raised by other Group operating entities.
C.3.6. Covenants
Millicom’s financing facilities are subject to a number of covenants including net leverage ratio, debt service
coverage ratios, debt to earnings ratios, and cash levels. In addition, certain of its financings contain restrictions on
sale of businesses or significant assets within the businesses. At December 31, 2018, there were no breaches in
financial covenants.
C.4. Cash and deposits
C.4.1. Cash and cash equivalents
Cash and cash equivalents in USD ...................................................................................
Cash and cash equivalents in other currencies..................................................................
Total cash and cash equivalents .....................................................................................
2018
2017
(US$ millions)
229
299
528
302
317
619
155
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly
liquid investments with original maturities of three months or less.
Cash deposits with bank with maturities of more than three months that generally earn interest at market rates
are classified as time deposits.
C.4.2. Restricted cash
Mobile Financial Services.................................................................................................
Others ................................................................................................................................
Restricted cash.................................................................................................................
2018
2017
(US$ millions)
155
3
158
143
2
145
Cash held with banks related to MFS which is restricted in use due to local regulations is denoted as restricted
cash.
C.4.3. Pledged deposits
Pledged deposits represent contracted cash deposits with banks that are held as security for debts at corporate or
operational entity level. Millicom is unable to access these funds until either the relevant debt is repaid or alternative
security is arranged with the lender.
At December 31, 2018, there were no non-current pledged deposits (2017: $nil).
At December 31, 2018, current pledged deposits amounted to $2 million (2017: $1 million).
C.5. Net debt
Net debt (i)
Total debt and financing....................................................................................................
Less:
Cash and cash equivalents.................................................................................................
Pledged deposits................................................................................................................
Time deposits related to bank borrowings ........................................................................
Net debt at the end of the year .......................................................................................
Add (less) derivatives related to debt (SEK currency swap) ............................................
Net debt including derivatives related to debt..............................................................
2018
2017
(US$ millions)
4,580
3,785
(528)
(2)
—
4,051
—
4,051
(619)
(1)
—
3,164
56
3,220
(i) As from 2018, the Group has excluded 'restricted cash' from its definition of Net debt. 2017 figures have been represented
accordingly. The effect of the change is a $145 million increase in 2017 net debt.
156
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Assets
Liabilities from financing
activities
Cash and
cash
equivalents
646
10
(22)
—
4
(19)
—
—
619
(72)
—
7
—
(33)
6
—
—
528
Bond and
bank debt
and
financing
3,606
(177)
3
8
34
(49)
10
(14)
3,420
621
—
267
11
(84)
9
3
(19)
4,227
Finance
lease
liabilities
295
(22)
195
(1)
(2)
(13)
—
(86)
365
(17)
44
—
—
(21)
(8)
(11)
—
353
Other
4
(1)
—
—
—
(2)
—
—
2
—
—
—
—
—
—
—
—
2
Total
3,250
(209)
220
7
28
(42)
9
(101)
3,164
676
44
260
11
(72)
(4)
(9)
(19)
4,051
Net debt as at January 1, 2017.................
Cash flows ..................................................
Additions / acquisitions ..............................
Interest accretion.........................................
Foreign exchange movements ....................
Transfers (to)/from assets held for sale.......
Transfers .....................................................
Other non-cash movements ........................
Net debt as at December 31, 2017............
Cash flows ..................................................
Additions.....................................................
Scope changes.............................................
Interest accretion.........................................
Foreign exchange movements ....................
Transfers (to)/from assets held for sale.......
Transfers .....................................................
Other non-cash movements ........................
Net debt as at December 31, 2018............
C.6. Financial instruments
i) Equity and debt instruments
Classification
From January 1, 2018, and the application of IFRS 9, the Group classifies its financial assets in the following
measurement categories:
•
those to be measured subsequently at fair value either through Other Comprehensive Income (OCI), or
through profit or loss, and
•
those to be measured at amortized cost.
The classification depends on the Group’s business model for managing the financial assets and the contractual
terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For
investments in equity instruments that are not held for trading, this will depend on whether the Group has made an
irrevocable election at the time of initial recognition to account for the equity investment at fair value through other
comprehensive income (FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those assets
changes.
157
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash
flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset
and the cash flow characteristics of the asset. There are three measurement categories into which the group classifies
its debt instruments:
• Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortized cost. Interest income
from these financial assets is included in finance income using the effective interest rate method. Any
gain or loss arising on derecognition is recognized directly in profit or loss and presented in other
gains / (losses), together with foreign exchange gains and losses. Impairment losses are presented as a
separate line item in the consolidated statement of income.
•
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets,
where the assets’ cash flows represent solely payments of principal and interest, are measured at
FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of
impairment gains or losses, interest revenue and foreign exchange gains and losses which are
recognized in profit or loss. When the financial asset is derecognised, the cumulative gain or loss
previously recognized in OCI is reclassified from equity to profit or loss and recognized in ‘Other non-
operating (expenses) income, net’. Interest income from these financial assets is included in finance
income using the effective interest rate method. Foreign exchange gains and losses and impairment
expenses are presented as ‘Other non-operating (expenses) income, net’ in the consolidated statement
of income.
•
FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL. A gain
or loss on a debt investment that is subsequently measured at FVPL is recognized in profit or loss and
presented net within ‘Other non-operating (expenses) income, net’ in the period in which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value. The Group does not hold Equity
instruments for trading. Where the Group’s management has elected to present fair value gains and losses on equity
investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following
the derecognition of the investment. Dividends from such investments continue to be recognized in profit or loss as
other income when the Group’s right to receive payments is established.
Otherwise, changes in the fair value of financial assets at FVPL are recognized in ‘Other non-operating
(expenses) income, net’ in the consolidated statement of income as applicable. Impairment losses (and reversal of
impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair
value.
Impairment
From January 1, 2018, the Group assesses on a forward looking basis the expected credit losses associated with
its financial assets carried at amortized cost and FVOCI. The impairment methodology applied depends on whether
there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognized from initial recognition of the trade receivables.
158
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
The provision is recognized in the consolidated statement of income within Cost of sales.
ii) Derivative financial instruments and hedging activities
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are
subsequently re-measured at fair value at each subsequent closing date. The method of recognizing the resulting gain
or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item
being hedged. The Group designates certain derivatives as either:
a) Hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedge); or
b) Hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast
transaction (cash flow hedge).
For transactions designated and qualifying for hedge accounting, at the inception of the transaction, the Group
documents the relationship between hedging instruments and hedged items, as well as its risk management
objectives and strategy for undertaking various hedging transactions. This is done in reference to the Group
Financial Risk Management Policy as last updated and approved by the Audit Committee in late 2018. The Group
also documents its assessment, both at hedge inception and on an ongoing basis (quarterly), of whether the
derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash
flows of hedged items.
The full fair value of a hedging instrument is classified as a non-current asset or liability when the period to
maturity of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity
of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability when the
remaining period to maturity of the hedged item is less than 12 months.
The change in fair value of hedging instruments that are designed and qualify as fair value hedges is recognized
in the statement of income as finance costs or income. The change in fair value of the hedged item attributable to the
risk hedged is recorded as part of the carrying value of the hedged item and is also recognized in the statement of
income as finance costs or income.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognized in other comprehensive income. Gains or loss relating to any ineffective portion is recognized
immediately in the statement of income within Other non-operating (expenses) income, net. Amounts accumulated
in equity are reclassified to the statement of income in the periods when the hedged item affects profit or loss.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time is recycled to the statement of income within
Other non-operating (expenses) income, net.
When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in
equity is immediately transferred to the statement of income within Other non-operating (expenses) income, net.
C.6.1. Fair value measurement hierarchy
Millicom uses the following fair value measurement hierarchy:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3 – Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs).
The Group enters into derivative financial instruments with various counterparties, principally financial
institutions with investment grade ratings. Interest rate swaps and foreign exchange forward contracts are valued
159
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
using valuation techniques, which employ the use of markets observable data. The most frequently applied valuation
techniques include forward pricing and swap models using present value calculations. The models incorporate
various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, yield curves of
the respective currencies, interest rate curves and forward curves.
C.6.2. Fair value of financial instruments
The fair value of Millicom’s financial instruments are shown at amounts at which the instruments could be
exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The fair value
of all financial assets and all financial liabilities, except debt and financing approximate their carrying value largely
due to the short-term maturities of these instruments. The fair values of all debt and financing have been estimated
by the Group, based on discounted future cash flows at market interest rates.
Fair values of financial instruments at December 31,
Carrying value
Fair value(i)
Note
2018
2017
2018
2017
(US$ millions)
G.5.
C.4.2.
C.4.1.
—
87
343
73
129
25
127
158
528
1,470
1,344
126
—
73
386
77
145
18
90
145
619
1,553
1,440
113
—
87
343
73
129
25
127
158
528
1,470
1,344
126
—
73
386
77
145
18
90
145
619
1,553
1,440
113
C.3.
4,580
3,785
4,418
3,971
282
335
—
239
483
383
402
6,704
2,335
4,370
288
304
56
—
420
353
371
5,577
1,753
3,824
282
335
—
239
483
383
402
6,542
2,335
4,207
288
304
56
—
420
353
371
5,763
1,753
4,010
Financial assets
Derivative financial instruments ................
Other non-current assets.............................
Trade receivables, net.................................
Amounts due from non-controlling
interests, associates and joint venture
partners .......................................................
Prepayments and accrued income ..............
Supplier advances for capital expenditures
Other current assets ....................................
Restricted cash............................................
Cash and cash equivalents..........................
Total financial assets ..................................
Current........................................................
Non-current ................................................
Financial liabilities
Debt and financing(i) .................................
Trade payables............................................
Payables and accruals for capital
expenditure .................................................
Derivative financial instruments ................
Put option liability......................................
Amounts due to non-controlling interests,
associates and joint venture partners ..........
C.6.3.
G.5.
Accrued interest and other expenses ..........
Other liabilities...........................................
Total financial liabilities.............................
Current........................................................
Non-current ................................................
(i) Fair values are measured with reference to Level 1 (for listed bonds) or 2.
160
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
C.6.3. Call and put options
Cable Onda put and call options
As part of the acquisition of Cable Onda, shareholders agreed on certain put and call options.
The put option to acquire the remaining 20% non-controlling interest in Cable Onda becomes exercisable 42
months after the closing date (December 13, 2018) or earlier upon the occurrence of certain events. In that respect,
Millicom determined that, as the put option could be exercised under certain change of control events which could
be outside the control of Millicom, the option meets the criteria under IAS 32 for recognition as a liability and
corresponding equity decrease. The put option liability is payable in Millicom's shares or in cash at the discretion of
the partner. Therefore, Millicom has recorded a liability for the put option at acquisition completion date of $239
million representing the present value of the redemption amount. As of December 31, 2018, the redemption price
has been valued as being 20% of the equity value implied by the transaction. Any future change in the redemption
price will be recorded in the Group's statement of income.
Millicom also received an unconditional call option which becomes exercisable either 42 months after
December 13, 2018 closing date or if Millicom's partners’ shareholdings fall below 10%. The call option exercise
price is at fair market value. Finally, Millicom received an unconditional call option exercisable until December 13,
2019, at a price equal to the purchase price in the transaction, plus interest at 10% per annum. The fair values of both
call options have been assessed as not material at December 31, 2018.
D. Financial risk management
Exposure to interest rate, foreign currency, non-repatriation, liquidity, capital management and credit risks arise
in the normal course of Millicom’s business. Each year Group Treasury revisits and presents to the Audit committee
updated Treasury and Financial Risks Management policies. The Group analyzes each of these financial risks
individually as well as on an interconnected basis and defines and implements strategies to manage the economic
impact on the Group’s performance in line with its Financial Risk Management policy. These policies were last
reviewed in late 2018. As part of the annual review of the above mentioned risks, the Group agrees to a strategy over
the use of derivatives and natural hedging instruments ranging from raising debt in local currency (where the
Company targets to reach 40% of debt in local currency over the medium term) to maintain a 70/30% mix between
fixed and floating rate debt or agreeing to cover up to six months forward of operating costs and capex denominated
in non-functional currencies through a rolling and layering strategy. Millicom’s risk management strategies may
include the use of derivatives to the extent a market would exist in the jurisdictions where the Group operates.
Millicom’s policy prohibits the use of such derivatives in the context of speculative trading.
Accounting policies for derivatives is further detailed in note C.6. On December 31, 2018 and 2017 fair value of
derivatives held by the Group can be summarized as follows:
Derivatives
Cash flow hedge derivatives .............................................................................................
Net derivative asset (liability).........................................................................................
2018
2017
(US$ millions)
—
—
(56)
(56)
D.1. Interest rate risk
Debt and financing issued at floating interest rates expose the Group to cash flow interest rate risk. Debt and
financing issued at fixed rates expose the Group to fair value interest rate risk. The Group’s exposure to risk of
changes in market interest rates relate to both of the above. To manage this risk, the Group’s policy is to maintain a
combination of fixed and floating rate debt with target for the debt to be distributed between fixed (up to 70%) and
variable (up to 30%) rates. The Group actively monitors borrowings against this target. The target mix between fixed
and floating rate debt is reviewed periodically. The purpose of Millicom’s policy is to achieve an optimal balance
161
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
between cost of funding and volatility of financial results, while taking into account market conditions as well as our
overall business strategy. At December 31, 2018, approximately 68% of the Group’s borrowings are at a fixed rate of
interest or for which variable rates have been swapped for fixed rates with interest rate swaps (2017: 65%).
D.1.1. Fixed and floating rate debt
Financing at December 31, 2018
Amounts due within:
1 year
1–2 years
2–3 years
3–4 years
4–5 years
>5 years
Total
140
6.35%
162
137
436
204
2,036
3,115
6.59%
6.64%
6.61%
4.10%
6.47%
6.34%
(US$ millions)
319
175
266
133
263
309
1,465
10.28%
5.89%
2.73%
0.49%
4.41%
1.13%
1.98%
458
9.08%
337
6.23%
403
4.06%
569
5.18%
468
4.28%
2,345
4,580
5.76%
4.95%
Fixed rate financing ................
Weighted average nominal
interest rate ..........................
Floating rate financing ............
Weighted average nominal
interest rate ..........................
Total ........................................
Weighted average nominal
interest rate ..........................
Financing at December 31, 2017
Fixed rate financing ................
Weighted average nominal
interest rate ..........................
Floating rate financing ............
Weighted average nominal
interest rate ..........................
Total ........................................
Weighted average nominal
interest rate ..........................
1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
Amounts due within:
87
365
141
104
396
1,369
2,462
(US$ millions)
7.17%
5.52%
8.28%
9.92%
7.73%
7.68%
7.48%
98
134
206
327
188
370
1,323
4.24%
2.37%
8.40%
12.20%
1.98%
2.25%
3.06%
185
500
347
431
584
1,738
3,785
5.61%
4.68%
8.35%
11.65%
5.88%
6.52%
5.94%
A 100 basis point fall or rise in market interest rates for all currencies in which the Group had borrowings at
December 31, 2018 would increase or reduce profit before tax from continuing operations for the year by
approximately $15 million (2017: $13 million).
D.1.2. Interest rate swap contracts
From time to time, Millicom enters into currency and interest rate swap contracts to manage its exposure to
fluctuations in interest rates and currency fluctuations in accordance with its Financial Risk Management policy.
Details of these arrangements are provided below.
Interest rate and currency swaps on SEK denominated debt
These swaps matured in April 2018 and were settled against a cash payment of $63 million. Interest rate and
currency swaps on SEK denominated debt were measured with reference to Level 2 of the fair value hierarchy.
162
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Interest rate and currency swaps on Euro-denominated debt
In June 2013, Millicom entered into interest rate and currency swaps whereby Millicom will sell Euros and
receive USD to hedge against exchange rate fluctuations on an intercompany seven-year Euro 134 million principal
and related interest financing of its operation in Senegal. The outstanding 2020 Notes were repaid in August 2017
and as a result these swaps have been settled. The year-to-date 2017 revaluation of the swap resulted in a $22
million loss. The Millicom Group finally received $10 million in cash on settlement date.
The above hedge was considered ineffective, with fluctuations in the fair value of the hedge recorded through
the statement of income.
No other financial instruments have a significant fair value at December 31, 2018 and 2017.
D.2. Foreign currency risks
The Group is exposed to foreign exchange risk arising from various currency exposures in the countries in
which it operates. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities
and net investments in foreign operations.
Millicom seeks to reduce its foreign currency exposure through a policy of matching, as far as possible, assets
and liabilities denominated in foreign currencies, or entering into agreements that limit the risk of exposure to
currency fluctuations against the US dollar reporting currency. In some cases, Millicom may also borrow in US
dollars where it is either commercially more advantageous for joint ventures and subsidiaries to incur debt
obligations in US dollars or where US dollar denominated borrowing is the only funding source available to a joint
venture or subsidiary. In these circumstances, Millicom accepts the remaining currency risk associated with
financing its joint ventures and subsidiaries, principally because of the relatively high cost of forward cover, when
available, in the currencies in which the Group operates.
D.2.1. Debt denominated in US dollars and other currencies
Debt denomination at December 31
Debt denominated in US dollars .......................................................................................
Debt denominated in currencies of the following countries:
Colombia ...........................................................................................................................
Chad ..................................................................................................................................
Tanzania ............................................................................................................................
Bolivia ...............................................................................................................................
Paraguay............................................................................................................................
Luxembourg (SEK denominated) .....................................................................................
Other..................................................................................................................................
Total debt denominated in other currencies .................................................................
Total debt .........................................................................................................................
2018
2017
(US$ millions)
3,132
718
62
112
306
207
43
—
1,448
4,580
1,983
834
61
121
337
191
243
15
1,802
3,785
At December 31, 2018, if the US dollar had weakened/strengthened by 10% against the other functional
currencies of our operations and all other variables held constant, then profit before tax from continuing operations
would have increased/decreased by $53 million and $(53) million respectively (2017: $104 million and $(104)
million respectively). This increase/decrease in profit before tax would have mainly been as a result of the
conversion of the USD-denominated net debts in our operations with functional currencies other than the US dollar.
163
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
D.2.2. Foreign currency swaps
See note D.1.2. Interest rate swap contracts.
D.3. Non-repatriation risk
Most of Millicom’s operating subsidiaries and joint ventures generate most of the revenue of the Group and in
the currency of the countries in which they operate. Millicom is therefore dependent on the ability of its subsidiaries
and joint venture operations to transfer funds to the Company.
Although foreign exchange controls exist in some of the countries in which Millicom Group companies operate,
none of these controls currently significantly restrict the ability of these operations to pay interest, dividends,
technical service fees, royalties or repay loans by exporting cash, instruments of credit or securities in foreign
currencies. However, existing foreign exchange controls may be strengthened in countries where the Group
operates, or foreign exchange controls may be introduced in countries where the Group operates that do not
currently impose such restrictions. If such events were to occur, the Company’s ability to receive funds from the
operations could be subsequently restricted, which would impact the Company’s ability to make payments on its
interest and loans and, or pay dividends to its shareholders. As a policy, all operations which do not face restrictions
to deposit funds offshore and in hard currencies should do so for the surplus cash generated on a weekly basis. The
Company and its subsidiaries make use of notional and physical cash pooling arrangements in hard currencies to the
extent permitted.
In addition, in some countries it may be difficult to convert large amounts of local currency into foreign
currency because of limited foreign exchange markets. The practical effects of this may be time delays in
accumulating significant amounts of foreign currency and exchange risk, which could have an adverse effect on the
Group. This is a relatively rare case for the countries in which the Group operates.
Lastly, repatriation most often gives raise to taxation, which is evidenced in the amount of taxes paid by the
Group relative to the Corporate Income Tax reported in its statement of income.
D.4. Credit and counterparty risk
Financial instruments that subject the Group to credit risk include cash and cash equivalents, pledged deposits,
letters of credit, trade receivables, amounts due from joint venture partners and associates, supplier advances and
other current assets and derivatives. Counterparties to agreements relating to the Group’s cash and cash equivalents,
pledged deposits and letters of credit are significant financial institutions with investment grade ratings.
Management does not believe there are significant risks of non-performance by these counterparties and maintain a
diversified portfolio of banking partners. Allocation of deposits across banks are managed such that the Group’s
counterparty risk with a given bank stays within limits which have been set, based on each bank’s credit rating.
A large portion of revenue of the Group is comprised of prepaid products and services. For postpaid customers,
the Group follows risk control procedures to assess the credit quality of the customer, taking into account its
financial position, past experience and other factors. Accounts receivable also comprise balances due from other
telecom operators. Credit risk of other telecom operators is limited due to the regulatory nature of the telecom
industry, in which licenses are normally only issued to credit-worthy companies. The Group maintains a provision
for expected credit losses of trade receivables based on its historical credit loss experience.
As the Group has a large number of internationally dispersed customers, there is generally no significant
concentration of credit risk with respect to trade receivables, except for certain B2B customers (mainly
governments). See note F.1.
164
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
D.5. Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial
liabilities. The Group has significant indebtedness but also has significant cash balances. Millicom evaluates its
ability to meet its obligations on an ongoing basis using a recurring liquidity planning tool. This tool considers the
operating net cash flows generated from its operations and the future cash needs for borrowing, interest payments,
dividend payments and capital and operating expenditures required in maintaining and developing its operating
businesses.
The Group manages its liquidity risk through use of bank overdrafts, bank loans, bonds, vendor financing,
Export Credit Agencies and Development Finance Institutions (DFI) loans. Millicom believes that there is sufficient
liquidity available in the markets to meet ongoing liquidity needs. Additionally, Millicom is able to arrange offshore
funding. Millicom has a diversified financing portfolio with commercial banks representing about 34% of its gross
financing (2017: 30%), bonds 54% (2017: 57%), Development Finance Institutions 4% (2017: 3%) and finance
leases 8% (2017: 10%).
Maturity profile of net financial liabilities at December 31, 2018 (i)
Total debt and financing.....................................................
Cash and cash equivalents .................................................
Pledged deposits (related to bank borrowings)..................
Derivative financial instruments (SEK currency swap).....
Net cash (debt) including derivatives related to debt ...
Future interest commitments..............................................
Trade payables (excluding accruals)..................................
Other financial liabilities (including accruals)...................
Put Option liability.............................................................
Trade receivables ...............................................................
Other financial assets .........................................................
Net financial liabilities .....................................................
Less than
1 year
1 to 5 years
> 5 years
Total
(US$ millions)
(458)
528
2
—
72
(248)
(478)
(1,217)
(239)
343
184
(1,583)
(1,778)
—
—
—
(1,778)
(786)
—
(135)
—
—
126
(2,573)
(2,345)
—
—
—
(2,345)
(77)
—
—
—
—
—
(2,422)
(4,580)
528
2
—
(4,051)
(1,111)
(478)
(1,352)
(239)
343
310
(6,578)
(i) As from 2018, the Group has excluded 'restricted cash' from its definition of Net debt. 2017 figures have been re-presented
accordingly.
165
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Maturity profile of net financial liabilities at December 31, 2017
Total debt and financing.....................................................
Cash and cash equivalents .................................................
Pledged deposits (related to bank borrowings)..................
Derivative financial instruments (SEK currency swap).....
Net cash (debt) including derivatives related to debt ...
Future interest commitments..............................................
Trade payables (excluding accruals)..................................
Other financial liabilities (including accruals)...................
Trade receivables ...............................................................
Other financial assets .........................................................
Net financial liabilities .....................................................
D.6. Capital management
Less than
1 year
1 to 5 years
> 5 years
Total
(US$ millions)
(185)
619
1
(56)
380
(255)
(427)
(1,094)
386
144
(866)
(1,862)
—
—
—
(1,862)
(785)
—
(124)
—
113
(2,658)
(1,738)
—
—
—
(1,738)
(68)
—
—
—
—
(1,806)
(3,785)
619
1
(56)
(3,220)
(1,108)
(427)
(1,218)
386
257
(5,330)
The primary objective of the Group’s capital management is to ensure a strong credit rating and solid capital
ratios in order to support its business and maximize shareholder value.
The Group manages its capital structure with reference to local economic conditions and imposed restrictions
such as debt covenants. To maintain or adjust its capital structure, the Group may make dividend payments to
shareholders, return capital to shareholders through share repurchases or issue new shares. At December 31, 2018,
Millicom is rated at one notch below investment grade by the independent rating agencies Moody’s (Ba1 negative)
and Fitch (BB+ stable). The Group primarily monitors capital using net debt to EBITDA.
The Group reviews its gearing ratio (net debt divided by total capital plus net debt) periodically. Net debt
includes interest bearing loans and borrowings, less cash and cash equivalents (included restricted cash) and pledged
and time deposits related to bank borrowings. Capital represents equity attributable to the equity holders of the
parent.
Net debt to EBITDA
Net debt .....................................................................................................
EBITDA.....................................................................................................
Net debt to EBITDA (i) .............................................................................
Note
C.5.
B.3.
2018
2017
(US$ millions)
4,051
1,254
3.23
3,164
1,278
2.48
(i) Ratio is above 3x on an IFRS basis. However, covenants are calculated on proportionate net debt/EBITDA,
including Guatemala and Honduras, which show results below 3x.
166
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Gearing ratio
Net debt .....................................................................................................
Equity ........................................................................................................
Net debt and equity....................................................................................
Gearing ratio..............................................................................................
Note
C.5.
C.1.
2018
2017
(US$ millions)
4,051
2,542
6,593
0.61
3,164
3,096
6,260
0.51
E. Long-term assets
E.1. Intangible assets
Millicom’s intangible assets mainly consist of goodwill arising from acquisitions, customer lists acquired
through acquisitions, licenses and rights to operate and use spectrum.
E.1.1. Accounting for intangible assets
Intangible assets acquired in business acquisitions are initially measured at fair value at the date of acquisition,
and those which are acquired separately are measured at cost. Internally generated intangible assets, excluding
capitalized development costs, are not capitalized but expensed to the statement of income in the expense category
consistent with the function of the intangible assets. Subsequently intangible assets are carried at cost, less any
accumulated amortization and any accumulated impairment losses.
Intangible assets with finite useful lives are amortized over their estimated useful economic lives using the
straight-line method and assessed for impairment whenever there is an indication that the intangible asset may be
impaired. The amortization period and the amortization method for intangible assets with finite useful lives are
reviewed at least at each financial year end. Changes in expected useful lives or the expected beneficial use of the
assets are accounted for by changing the amortization period or method, as appropriate, and treated as changes in
accounting estimates.
Amortization expense on intangible assets with finite lives is recognized in the consolidated statement of
income in the expense category consistent with the function of the intangible assets.
Goodwill
Goodwill represents the excess of cost of an acquisition over the Group’s share in the fair value of identifiable
assets less liabilities and contingent liabilities of the acquired subsidiary, at the date of the acquisition. If the fair
value or the cost of the acquisition can only be determined provisionally, then goodwill is initially accounted for
using provisional values. Within 12 months of the acquisition date, any adjustments to the provisional values are
recognized. This is done when the fair values and the cost of the acquisition have been finally determined.
Adjustments to provisional fair values are made as if the adjusted fair values had been recognized from the
acquisition date. Goodwill on acquisition of subsidiaries is included in intangible assets, net. Goodwill on
acquisition of joint ventures or associates is included in investments in joint ventures and associates. Following
initial recognition, goodwill is measured at cost, less any accumulated impairment losses. Gains or losses on the
disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Where goodwill forms part of a cash-generating unit (or group of cash-generating units) and part of the
operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the
carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed of in this
manner is measured, based on the relative values of the operation disposed and the portion of the cash-generating
unit retained.
167
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Licenses
Licenses are recorded at either historical cost or, if acquired in a business combination, at fair value at the date
of acquisition. Cost includes cost of acquisition and other costs directly related to acquisition and retention of
licenses over the license period. These costs may include estimates related to fulfillment of terms and conditions
related to the licenses such as service or coverage obligations, and may include up-front and deferred payments.
Licenses have a finite useful life and are carried at cost less accumulated amortization and any accumulated
impairment losses. Amortization is calculated using the straight-line method to allocate the cost of the licenses over
their estimated useful lives.
The terms of licenses, which have been awarded for various periods, are subject to periodic review for, among
other things, rate setting, frequency allocation and technical standards. Licenses are initially measured at cost and
are amortized from the date the network is available for use on a straight-line basis over the license period. Licenses
held, subject to certain conditions, are usually renewable and generally non-exclusive. When estimating useful lives
of licenses, renewal periods are included only if there is evidence to support renewal by the Group without
significant cost.
Trademarks and customer lists
Trademarks and customer bases are recognized as intangible assets only when acquired or gained in a business
combination. Their cost represents fair value at the date of acquisition. Trademarks and customer bases have
indefinite or finite useful lives. Indefinite useful life trademarks are tested for impairment annually. Finite useful life
trademarks are carried at cost, less accumulated amortization. Amortization is calculated using the straight-line
method to allocate the cost of the trademarks and customer bases over their estimated useful lives. The estimated
useful lives for trademarks and customer bases are based on specific characteristics of the market in which they
exist. Trademarks and customer bases are included in Intangible assets, net.
Estimated useful lives are:
Estimated useful lives
Trademarks ...............................................................................................................................................
Customer lists ...........................................................................................................................................
Years
1 to 15
4 to 20
Programming and content rights
Programming and content master rights which are purchased or acquired in business combinations which meet
certain criteria are recorded at cost as intangible assets. The rights must be exclusive, related to specific assets which
are sufficiently developed, and probable to bring future economic benefits and have validity for more than one year.
Cost includes consideration paid or payable and other costs directly related to the acquisition of the rights, and are
recognized at the earlier of payment or commencement of the broadcasting period to which the rights relate.
Programming and content rights capitalized as intangible assets have a finite useful life and are carried at cost,
less accumulated amortization and any accumulated impairment losses. Amortization is calculated using the straight-
line method to allocate the cost of the rights over their estimated useful lives.
Non-exclusive and programming and content rights for periods less than one year are expensed over the period
of the rights.
Indefeasible rights of use
There is no universally-accepted definition of an indefeasible rights of use (IRU). These agreements come in
many forms. However, the key characteristics of a typical arrangement include:
• The right to use specified network infrastructure or capacity;
168
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
•
For a specified term (often the majority of the useful life of the relevant assets);
• Legal title is not transferred;
• A number of associated service agreements including operations and maintenance (O&M) and co-location
agreements. These are typically for the same term as the IRU; and
• Any payments are usually made in advance.
IRUs are accounted for either as a lease, or service contract based on the substance of the underlying agreement.
IRU arrangements will qualify as a lease if, and when:
• The purchaser has an exclusive right for a specified period and has the ability to resell (or sublet) the
capacity; and
• The capacity is physically limited and defined; and
• The purchaser bears all costs related to the capacity (directly or not) including costs of operation,
administration and maintenance; and
• The purchaser bears the risk of obsolescence during the contract term.
If all of these criteria are not met, the IRU is treated as a service contract.
If an IRU is determined to be a lease, the following indicators need to be present in order for the capitalization
of an IRU as a finance lease to be considered:
• The Group will be consuming the major part of the useful economic life of the asset (generally considered
to be 75% of the total remaining useful economic life of the asset). The Group assumes that the useful
economic life of a new fiber cable is 15 years;
•
Substantially, all of the risks and rewards of ownership are transferred to the Group (e.g. Millicom can
sublease excess capacity on the cables to other operators; Millicom is responsible for maintaining the
cables during the contract period);
• Neither party has the right to terminate the contract early (other than for “force majeure”);
• The contract price is not subject to renegotiation or change (other than for inflationary increases);
• The minimum contractual payments are for substantially all of the fair value of the asset (generally
considered to be greater or equal to 90% of the fair value of the leased asset);
• The Group can determine the fair value of the leased asset;
• The Group has physical access rights to the cable.
Otherwise the IRU will be considered as an operating lease.
A finance lease of an IRU of network infrastructure (cables or fiber) is accounted for as a tangible asset. A
finance lease of a capacity IRU (wavelength) is accounted for as an intangible asset.
Estimated useful lives of finance leases of capacity IRUs are between 12 and 15 years, or shorter if the
estimated useful life of the underlying cable is shorter.
The costs of an IRU recognized as operating lease is recognized as prepayment and amortized in the statement
of income on a straight-line basis over the lease term.
The costs of an IRU recognized as service contract is recognized as prepayment and amortized in the statement
of income as incurred over the duration of the contract.
169
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
E.1.2. Impairment of non-financial assets
At each reporting date Millicom assesses whether there is an indication that a non-financial asset may be
impaired. If any such indication exists, or when annual impairment testing for a non-financial asset is required, an
estimate of the asset’s recoverable amount is made. The recoverable amount is determined based on the higher of its
fair value less cost to sell, and its value in use, for individual assets, unless the asset does not generate cash inflows
that are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. Where no comparable market information is available, the fair value, less
cost to sell, is determined based on the estimated future cash flows discounted to their present value using a discount
rate that reflects current market conditions for the time value of money and risks specific to the asset. The foregoing
analysis also evaluates the appropriateness of the expected useful lives of the assets. Impairment losses of continuing
operations are recognized in the consolidated statement of income in expense categories consistent with the function
of the impaired asset.
At each reporting date an assessment is made as to whether there is any indication that previously recognized
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. Other than for goodwill, a previously recognized impairment loss is reversed if there has been a change in
the estimate used to determine the asset’s recoverable amount since the last impairment loss was recognized. If so,
the carrying amount of the asset is increased to its recoverable amount. The increased amount cannot exceed the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for
the asset in prior years. Such reversal is recognized in profit or loss.
After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining useful life.
E.1.3. Movements in intangible assets
Movements in intangible assets in 2018
Goodwill
Licenses
Customer
lists
IRUs
Trademarks
Other(i)
Total
Opening balance, net.............
Change in scope (ii) ................
Additions .................................
Amortization charge................
Impairment ..............................
Disposals, net ..........................
Transfers..................................
Transfers to/from assets
held for sale (see note E.
3.).........................................
Exchange rate movements ......
Closing balance, net ..............
Cost or valuation .....................
Accumulated amortization
and impairment....................
Net...........................................
599
512
—
—
(6)
—
—
—
(28)
1,077
1,077
—
1,077
(US$ millions)
105
—
2
(14)
—
—
—
—
(5)
89
176
(87)
89
324
—
66
(48)
—
—
—
(12)
(12)
318
646
33
370
—
(11)
—
—
—
—
(1)
391
581
(328)
318
(190)
391
170
10
280
—
(8)
—
—
—
—
—
282
325
(43)
282
194
23
91
(65)
—
—
(16)
—
(9)
218
646
1,265
1,185
158
(144)
(6)
—
(16)
(12)
(55)
2,374
3,451
(428)
218
(1,077)
2,374
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Movements in intangible assets in 2017
Goodwill
Licenses
Customer
lists
IRUs
Trademarks
Other(i)
Total
(US$ millions)
Opening balance, net.............
Change in scope (ii) ................
Additions .................................
Amortization charge................
Impairment ..............................
Disposals, net ..........................
Transfers..................................
Transfers to/from assets
held for sale (see note E.
3.).........................................
Exchange rate movements ......
Closing balance, net ..............
Cost or valuation .....................
Accumulated amortization
and impairment....................
Net...........................................
615
3
—
—
(7)
—
(2)
(8)
(1)
599
599
—
599
380
—
40
(49)
(8)
—
3
(50)
7
324
650
(327)
324
32
15
—
(15)
—
—
—
(1)
1
33
225
(192)
33
114
—
(2)
(14)
—
—
8
—
—
105
181
(76)
105
18
—
—
(8)
—
—
—
—
—
10
49
200
1
92
(67)
—
(1)
(28)
(5)
2
194
584
1,359
20
130
(153)
(15)
(1)
(19)
(64)
9
1,265
2,288
(39)
10
(389)
194
(1,022)
1,265
(i)
(ii)
Other includes mainly software costs
See note A.1.2.
E.1.4. Cash used for the purchase of intangible assets
Cash used for intangible asset additions
Additions ...........................................................................................................................
Change in accruals and payables for intangibles ..............................................................
Cash used for additions ..................................................................................................
2018
2017
(US$ millions)
158
(10)
148
130
3
133
171
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
E.1.5. Goodwill
Allocation of Goodwill to cash generating units (CGUs), net of exchange rate movements and after
impairment
Panama (see note A.1.2.)...................................................................................................
El Salvador ........................................................................................................................
Costa Rica .........................................................................................................................
Paraguay............................................................................................................................
Colombia ...........................................................................................................................
Tanzania (Zantel) (see note E.1.6.) ...................................................................................
Other..................................................................................................................................
Total ..................................................................................................................................
2018
2017
(US$ millions)
512
194
116
54
183
4
15
1,077
—
194
123
57
199
10
16
599
E.1.6. Impairment testing of goodwill
Goodwill from CGUs is tested for impairment at least each year and more frequently if events or changes in
circumstances indicate that the carrying value may be impaired. Impairment losses on goodwill are not reversed.
Goodwill arising on business combinations is allocated to each of the Group’s CGUs or groups of CGUs that
are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the
Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is allocated:
• Represents the lowest level within the Group at which the goodwill is monitored for internal management
purposes; and
•
Is not larger than an operating segment.
Impairment is determined by assessing the value-in-use and, if appropriate, the fair value less costs to sell of the
CGU (or group of CGUs), to which goodwill relates.
Impairment testing at December 31, 2018
Goodwill was tested for impairment by assessing the recoverable amount against the carrying amount of the
CGU based on discounted cash flows. The cash flow projections used (adjusted operating profit margins, income
tax, working capital, capex and license renewal cost) are extracted from financial budgets approved by management
and the Board usually covering a period of five years. This planning horizon reflects industry practice in the
countries where the Group operates and stage of development or redevelopment of the business in those countries.
Cash flows beyond this period are extrapolated using a perpetual growth rate of 1.6%–4.6% (2017: 1.1%–3.8%).
When value-in-use model resulted in the carrying values of the CGUs being higher than their recoverable amount,
management has determined the fair value less cost of disposal (FVLCD) of the CGUs. Fair value less cost of
disposal has been determined by using recent offers received from third parties (Level 1).
For the year ended December 31, 2018, and as a result of the annual impairment testing, management concluded
that the Zantel CGU, part of the Africa segment, should be impaired. Hence, in accordance with IAS 36, an
impairment loss of $6 million has been allocated to the amount of goodwill allocated to Zantel to reduce the carrying
amount of our operations in Zantel to its value in use. The impairment has been classified within the caption "Other
operating income (expenses), net", in the Group’s statement of income.
For the year ended December 31, 2017, and as a result of the annual impairment testing the Group recognised
an impairment loss of $15 million related mainly to our operations in Rwanda and on an investment in Guatemala.
172
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Given the recent acquisition date, the goodwill recognized for Cable Onda has not been tested for impairment in
2018. In addition, no triggering event have occurred that would make us believe that the goodwill should be tested
for impairment.
Sensitivity analysis was performed on key assumptions within the impairment tests. The sensitivity analysis
determined that sufficient margin exists from realistic changes to the assumptions that would not impact the overall
results of the testing.
Discount rates used in determining recoverable amount
Discount rate after tax (%)
2018
2017
Bolivia ...............................................................................................................................
Chad ..................................................................................................................................
Colombia ...........................................................................................................................
Costa Rica .........................................................................................................................
El Salvador ........................................................................................................................
Paraguay............................................................................................................................
Rwanda (See note A.1.3.)..................................................................................................
Tanzania ............................................................................................................................
10.2
14.8
8.9
10.2
11.7
9.8
n/a
14.4
11.2
15.8
9.9
11.9
13.2
10.2
14.7
14.6
E.2. Property, plant and equipment
E.2.1. Accounting for property, plant and equipment
Items of property, plant and equipment are stated at either historical cost, or the lower of fair value and present
value of the future minimum lease payments for assets under finance leases, less accumulated depreciation and
accumulated impairment. Historical cost includes expenditure that is directly attributable to acquisition of items. The
carrying amount of replaced parts is derecognized.
Depreciation is calculated using the straight-line method over the shorter of the estimated useful life of the asset
and the remaining life of the license associated with the assets, unless the renewal of the license is contractually
possible.
Estimated useful lives
Buildings ..........................................................................
Networks (including civil works).....................................
Other.................................................................................
Duration
40 years or lease period, if shorter
5 to 15 years or lease period, if shorter
2 to 7 years
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable. The assets’ residual value and useful life is
reviewed, and adjusted if appropriate, at each statement of financial position date. An asset’s carrying amount is
written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable
amount.
Construction in progress consists of the cost of assets, labor and other direct costs associated with property,
plant and equipment being constructed by the Group, or purchased assets which have yet to be deployed. When the
assets become operational, the related costs are transferred from construction in progress to the appropriate asset
category and depreciation commences.
173
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate,
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. Ongoing routine repairs and maintenance are charged to the statement of income in
the financial period in which they are incurred.
Costs of major inspections and overhauls are added to the carrying value of property, plant and equipment and
the carrying amount of previous major inspections and overhauls is derecognized.
Equipment installed on customer premises which is not sold to customers is capitalized and amortized over the
customer contract period.
A liability for the present value of the cost to remove an asset on both owned and leased sites (for example cell
towers) and for assets installed on customer premises (for example set-top boxes), is recognized when a present
obligation for the removal exists. The corresponding cost of the obligation is included in the cost of the asset and
depreciated over the useful life of the asset, or lease period if shorter.
Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are
capitalized as part of the cost of that asset when it is probable that such costs will contribute to future economic
benefits for the Group and the costs can be measured reliably.
E.2.2. Movements in tangible assets
Movements in tangible assets in 2018
Network
equipment(ii)
Land and
buildings
Opening balance, net................................
Change in scope (see note A.1.2.) ..............
Additions ....................................................
Impairments/reversal of impairment,net ....
Disposals, net .............................................
Depreciation charge....................................
Asset retirement obligations.......................
Transfers.....................................................
Transfers from/(to) assets held for sale
(see note E.3.) .........................................
Exchange rate movements..........................
Closing balance, net..................................
Cost or valuation ........................................
Accumulated amortization and
impairment..............................................
Net at December 31, 2018 ........................
2,399
276
63
1
(24)
(631)
14
551
(45)
(124)
2,480
6,802
(4,322)
2,480
147
46
1
—
(2)
(11)
1
9
(3)
(8)
181
252
(71)
181
Construction
in progress
(US$ millions)
206
32
626
—
(2)
—
—
(568)
(2)
(8)
284
284
—
284
Other(i)
Total
128
—
7
—
—
(43)
—
14
(2)
(7)
97
409
(312)
97
2,880
354
698
1
(29)
(685)
15
6
(52)
(147)
3,041
7,747
(4,706)
3,041
174
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Movements in tangible assets in 2017
Network
equipment(ii)
Land and
buildings
Opening balance, net................................
Change in scope .........................................
Additions ....................................................
Impairments/reversal of impairment,net ....
Disposals, net .............................................
Depreciation charge....................................
Asset retirement obligations.......................
Transfers.....................................................
Transfers from/(to) assets held for sale
(see note E.3.) .........................................
Exchange rate movements..........................
Closing balance, net..................................
Cost or valuation ........................................
Accumulated amortization and
impairment..............................................
Net at December 31, 2017 ........................
2,525
2
201
(6)
(115)
(663)
18
613
(184)
9
2,399
6,164
(3,764)
2,399
147
1
—
—
—
(9)
2
7
(3)
2
147
191
(44)
147
Construction
in progress
(US$ millions)
250
—
616
1
3
—
—
(650)
(16)
3
206
206
—
206
Other(i)
Total
135
—
7
(2)
(1)
(53)
—
48
(8)
1
128
477
(349)
128
3,057
3
824
(8)
(114)
(725)
20
19
(211)
15
2,880
7,038
(4,158)
2,880
(i) Other mainly includes office equipment and motor vehicles.
(ii) The net carrying amount of network equipment under finance leases at December 31, 2018, was $307 million (2017: $329
million).
Borrowing costs capitalized for the years ended December 31, 2018, 2017 and 2016 were not significant.
E.2.3. Cash used for the purchase of tangible assets
Cash used for property, plant and equipment additions
Additions ...................................................................................................
Change in advances to suppliers................................................................
Change in accruals and payables for property, plant and equipment ........
Finance leases............................................................................................
Cash used for additions...........................................................................
2018
2017
2016
(US$ millions)
824
(8)
26
(192)
650
698
2
(25)
(43)
632
683
(16)
51
1
719
E.3. Assets held for sale
If Millicom decides to sell subsidiaries, investments in joint ventures or associates, or specific non-current
assets in its businesses, these items qualify as assets held for sale if certain conditions are met.
E.3.1. Classification of assets held for sale
Non-current assets (or disposal groups) are classified as assets held for sale and stated at the lower of carrying
amount and fair value less costs to sell if their carrying amount is expected to be recovered principally through sale,
not through continuing use. Liabilities of disposal groups are classified as Liabilities directly associated with assets
held for sale.
175
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
E.3.2. Millicom’s assets held for sale
The following table summarizes the nature of the assets and liabilities reported under assets held for sale and
liabilities directly associated with assets held for sale as at December 31, 2018 and 2017:
Assets and liabilities reclassified as held for sale
Senegal operations ............................................................................................................
Towers Paraguay (see note C.3.4.)....................................................................................
Towers Colombia (see note C.3.4.)...................................................................................
Towers El Salvador (see note C.3.4.)................................................................................
Other..................................................................................................................................
Total assets of held for sale .............................................................................................
Senegal operations ............................................................................................................
Towers Paraguay ...............................................................................................................
Total liabilities directly associated with assets held for sale........................................
Net assets held for sale / book value ..............................................................................
As at December 31,
2018
2017
(US$ millions)
—
2
—
1
—
3
—
—
—
3
223
7
1
—
2
233
77
2
79
154
Ghana merger
As mentioned in note A.2.2., on March 3, 2017, Millicom and Bharti Airtel Limited (Airtel) announced that
they have entered into an agreement for Tigo Ghana Limited and Airtel Ghana Limited to combine their operations
in Ghana. As per the agreement, Millicom and Airtel have equal ownership and governance rights in the combined
entity. Necessary regulatory approvals were received in the course of September 2017. As a result, Millicom's
operations in Ghana have been classified as assets held for sale and discontinued operations as from September 28,
2017. The merger was completed on October 12, 2017.
The assets and liabilities deconsolidated as a result of the Ghana merger were as follows:
Assets and liabilities reclassified as held for sale – Ghana
Intangible assets, net.................................................................................................................................
Property, plant and equipment, net ...........................................................................................................
Current assets............................................................................................................................................
Cash and cash equivalents ........................................................................................................................
Total assets of disposal group held for sale...........................................................................................
Non-current financial liabilities................................................................................................................
Current liabilities ......................................................................................................................................
Total liabilities of disposal group held for sale .....................................................................................
Net assets / book value............................................................................................................................
October 12,
2017
(US$ millions)
12
77
29
8
126
51
50
102
24
For further details on the effect of the deconsolidation of the operations in Ghana, refer to note A.2.3.
Senegal
As mentioned in note A.1.3. Millicom announced that it had agreed to sell its Senegal business to a consortium
consisting of NJJ, Sofima (managed by the Axian Group) and Teylium Group, subject to customary closing
conditions and regulatory approvals. The sale was completed on April 27, 2018 and the operations in Senegal have
176
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
been deconsolidated resulting in a net gain on disposal of $6 million, including the recycling of foreign currency
exchange losses accumulated in equity since the creation of the local operations. This gain has been recognized
under ‘Profit (loss) for the year from discontinued operations, net of tax’.
The assets and liabilities were transferred to assets held for sale in relation to our operations in Senegal as at
February 7, 2017 and therefore classified as held for sale as at December 31, 2017.
The table below shows the assets and liabilities deconsolidated at the date of the disposal:
Assets and liabilities disposed of in respect of our operations in Senegal
Intangible assets, net.................................................................................................................................
Property, plant and equipment, net ...........................................................................................................
Other non-current assets ...........................................................................................................................
Current assets............................................................................................................................................
Cash and cash equivalents ........................................................................................................................
Total assets of disposal group held for sale...........................................................................................
Non-current financial liabilities................................................................................................................
Current liabilities ......................................................................................................................................
Total liabilities of disposal group held for sale.........................................................................................
Net assets held for sale / book value ......................................................................................................
April 27, 2018
(US$ millions)
40
126
2
56
3
227
8
73
81
146
Rwanda
As mentioned in note A.1.3. on December 19, 2017, Millicom announced that it has signed an agreement for the
sale of its Rwanda operations to subsidiaries of Bharti Airtel Limited. The total consideration of the transaction is
approximately 6x 2017 adjusted EBITDA of the Rwandan operation, payable over two years, consisting of a mix of
cash, vendor loan note and earn out.
The Group received regulatory approvals on January 23, 2018 and the sale was subsequently completed on
January 31, 2018. On January 31, 2018, Millicom's operations in Rwanda have been deconsolidated and no material
loss on disposal was recognized (its carrying value was aligned to its fair value less costs of disposal as of December
31, 2017). However, a loss of $32 million has been recognized in 2018 corresponding to the recycling of foreign
currency exchange losses accumulated in equity since the creation of the local operation. This loss has been
recognized under ‘Profit (loss) for the year from discontinued operations, net of tax’. The final sale consideration is
still subject to adjustment under the terms of the sale and purchase agreement with Airtel. Management does not
expect any material deviation from the initial consideration.
177
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
The table below shows the assets and liabilities deconsolidated at the date of the disposal:
Assets and liabilities disposed of in respect of our operations in Rwanda
Intangible assets, net.................................................................................................................................
Property, plant and equipment, net ...........................................................................................................
Other non-current assets ...........................................................................................................................
Current assets............................................................................................................................................
Cash and cash equivalents ........................................................................................................................
Total assets of disposal group held for sale...........................................................................................
Non-current financial liabilities................................................................................................................
Current liabilities ......................................................................................................................................
Total liabilities of disposal group held for sale.........................................................................................
Net assets held for sale / book value ......................................................................................................
January 31,
2018
(US$ millions)
12
53
4
14
2
85
11
28
40
46
In accordance with IFRS 5, the Group’s businesses in Rwanda (Q1 2018), Ghana (Q3 2017) and Senegal (Q1
2017) had been classified as assets held for sale and their results were classified as discontinued operations.
Comparative figures of the statement of income have therefore been represented accordingly. Financial information
relating to the discontinued operations for the year ended December 31, 2018, 2017 and 2016 is set out below.
Figures shown below are after intercompany eliminations.
Results from discontinued operations
Revenue .....................................................................................................
Cost of sales...............................................................................................
Operating expenses....................................................................................
Depreciation and amortization ..................................................................
Other operating income (expenses), net ....................................................
Gain on disposal of discontinued operations.............................................
Other expenses linked to the disposal of discontinued operations ............
Operating profit (loss) .............................................................................
Interest income (expense), net...................................................................
Other non-operating (expenses) income, net.............................................
Profit (loss) before taxes..........................................................................
Credit (charge) for taxes, net .....................................................................
Net profit (loss) from discontinued operations .....................................
Year ended December 31,
2018
2017
2016
(US$ millions)
299
(95)
(131)
(37)
(4)
39
(7)
64
(20)
6
51
—
51
62
(23)
(26)
—
(10)
(29)
(10)
(36)
(3)
—
(39)
—
(39)
371
(119)
(174)
(79)
(6)
32
(19)
6
(23)
(10)
(26)
6
(20)
178
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Cash flows from discontinued operations
Cash from (used in) operating activities, net
Cash from (used in) investing activities, net
Cash from (used in) financing activities, net
4G spectrum (UNE)
Year ended December 31,
2018
2017
2016
(US$ millions)
26
(33)
(22)
(4)
(6)
—
10
(53)
18
A depreciation catch-up has been recorded in 2016 for $11 million on the 4G spectrum in Colombia. In October
2016, the date on which UNE stopped rendering 4G services, the 4G spectrum was fully depreciated.
F. Other assets and liabilities
F.1. Trade receivables
Millicom’s trade receivables mainly comprise interconnect receivables from other operators, postpaid mobile
and residential cable subscribers, as well as B2B customers. The nominal value of receivables adjusted for
impairment approximates the fair value of trade receivables.
Gross trade receivables .....................................................................................................
Less: provisions for expected credit losses .......................................................................
Trade receivables, net .....................................................................................................
2018
2017
(US$ millions)
592
(249)
343
597
(211)
386
Aging of trade receivables
Neither past due
nor impaired
Past due (net of impairments)
30–90 days
>90 days
Total
(US$ millions)
2018:
Telecom operators .......................................................
Own customers............................................................
Others ..........................................................................
Total............................................................................
2017:
Telecom operators .......................................................
Own customers............................................................
Others ..........................................................................
Total ............................................................................
17
158
36
210
29
186
43
259
9
69
17
95
16
52
16
83
14
19
5
37
4
34
5
43
39
246
58
343
49
273
64
386
Trade receivables are initially recognized at fair value and subsequently measured at amortized cost using the
effective interest method, less provision for expected credit losses. The Group recognizes an allowance for expected
credit losses (ECLs) applying a simplified approach in calculating the ECLs. Therefore, the Group does not track
changes in credit risk, but instead recognizes a loss allowance based on lifetime of ECLs at each reporting date. The
179
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-
looking factors specific to the debtors and the economic environment. The provision for expected credit losses is
recognized in the consolidated statement of income within Cost of sales.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for those maturing more than 12 months after
the end of the reporting period. These are classified within non-current assets. Loans and receivables are carried at
amortized cost using the effective interest method. Gains and losses are recognized in the statement of income when
the loans and receivables are derecognized or impaired, as well as through the amortization process.
F.2. Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out
method. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable
selling expenses.
Inventories
Telephone and equipment .................................................................................................
SIM cards ..........................................................................................................................
IRUs ..................................................................................................................................
Other..................................................................................................................................
Inventory at December 31, .............................................................................................
26
4
3
6
39
28
6
3
9
45
2018
2017
(US$ millions)
F.3. Trade payables
Trade payables are initially recognized at fair value and subsequently measured at amortized cost using the
effective interest method where the effect of the passage of time is material.
From time to time, the Group enters into agreements to extend payment terms with various suppliers, and with
factoring companies when such payments are discounted. The corresponding amount pending payment as of
December 31, 2018, is recognized in Trade payables for an amount of $26 million (2017: $25 million).
F.4. Current and non-current provisions and other liabilities
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past
event, if it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all
of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a
separate asset, but only when the reimbursement is virtually certain.
180
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
The expense relating to any provision is presented in the statement of income net of any reimbursement. If the
effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects,
where appropriate, risks specific to the liability. Where discounting is used, increases in the provision due to the
passage of time are recognized as interest expenses.
F.4.1. Current provisions and other liabilities
Current
2018
2017
(US$ millions)
Deferred revenue(i) ...........................................................................................................
Customer deposits .............................................................................................................
Current legal provisions ....................................................................................................
Tax payables......................................................................................................................
Customer and MFS distributor cash balances...................................................................
Withholding tax on payments to third parties ...................................................................
Other provisions ................................................................................................................
Other current liabilities(ii) ................................................................................................
Total ..................................................................................................................................
85
15
27
68
147
17
7
128
494
86
13
24
57
144
17
1
83
425
(i) Deferred revenue has partly been reclassified to Contract Liabilities as a result of the adoption of IFRS 15. See the
'Accounting Policy Changes' note.
(ii) In the caption "Other current liabilities", for 2018 $38 million of provision for tax risk not related to income tax is included.
F.4.2. Non-current provisions and other liabilities
Non-current
Non-current legal provisions.............................................................................................
Long-term portion of asset retirement obligations............................................................
Long-term portion of deferred income on tower sale and leasebacks ..............................
Long-term employment obligations..................................................................................
Accruals and payables in respect of spectrum and license acquisitions ...........................
Other non-current liabilities ..............................................................................................
Total ..................................................................................................................................
8
77
85
68
41
71
351
15
69
73
76
31
70
335
2018
2017
(US$ millions)
F.5. Assets and liabilities related to contract with customers
Contract assets, net
Long-term portion.....................................................................................................................................
Short-term portion ....................................................................................................................................
Less: provisions for expected credit losses...............................................................................................
Total..........................................................................................................................................................
Contract liabilities
181
2018
(US$ millions)
3
35
(1)
37
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Long-term portion.....................................................................................................................................
Short-term portion ....................................................................................................................................
Total..........................................................................................................................................................
2018
(US$ millions)
1
86
87
The Group recognised revenue for $45 million in 2018 that was included in the contract liability balance at the
beginning of the year.
The transaction price allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as
at December 31, 2018 is $42 million ($41 million is expected to be recognized as revenue in the 2020 financial year
and the remaining $1 million in the 2021 financial year or later) (i).
(i) This amount does not consider contracts that have an original expected duration of one year or less, neither contracts in
which consideration from a customer corresponds to the value of the entity’s performance obligation to the customer (i.e.
billing corresponds to accounting revenue).
Contract costs, net (i)
Net at January 1......................................................................................................................................
Contract costs capitalized .........................................................................................................................
Amortization of contract costs..................................................................................................................
Net at December 31.................................................................................................................................
(i)
Incremental costs of obtaining a contract are expensed when incurred if the amortization period of the asset that Millicom
otherwise would have recognized is one year or less.
2018
(US$ millions)
4
4
(4)
4
G. Additional disclosure items
G.1 Fees to auditors
Audit fees...................................................................................................
Audit related fees.......................................................................................
Tax fees......................................................................................................
Other fees...................................................................................................
Total ..........................................................................................................
G.2. Capital and operational commitments
182
2018
2017
2016
(US$ millions)
4.7
0.3
0.2
0.7
5.9
6.7
0.4
0.2
0.6
7.7
4.3
0.3
0.2
1.8
6.6
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Millicom has a number of capital and operational commitments to suppliers and service providers in the normal
course of its business. These commitments are mainly contracts for acquiring network and other equipment, and
leases for towers and other operational equipment.
G.2.1. Capital commitments
At December 31, 2018, the Company and its subsidiaries and joint ventures had fixed commitments to purchase
network equipment, land and buildings, other fixed assets and intangible assets of $154 million of which $126
million are due within one year (December 31, 2017: $194 million of which $182 million were due within one year).
Out of these commitments, respectively $66 million and $56 million related to Millicom’s share in joint ventures.
(December 31, 2017: $25 million of which $23 million were due within one year).
G.2.2 Lease commitments
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement and involves an assessment of whether the fulfillment of the arrangement is dependent on the use of a
specific asset or assets and whether or not the arrangement conveys a right to use the asset. The sale and leaseback
of towers and related site operating leases and service contracts are accounted for in accordance with the underlying
characteristics of the assets, and the terms and conditions of the lease agreements. On transfer to the tower
companies, the portion of the towers leased back are accounted for as operating leases or finance leases according to
the criteria set out above. The portion of towers being leased back represents the dedicated part of each tower on
which Millicom’s equipment is located and was derived from the average technical capacity of the towers. Rights to
use the land on which the towers are located are accounted for as operating leases, and costs of services for the
towers are recorded as operating expenses.
Operating leases
Operating leases are all other leases that are not finance leases. Operating lease payments are recognized as
expenses in the consolidated statement of income on a straight-line basis over the lease term.
Operating leases mainly comprise land in which cell towers are located (including those related to towers sold
and leased back) and buildings. Total operating lease expense from continuing operations for the year ended
December 31, 2018, was $155 million (2017: $155 million; 2016: $159 million – see note B.2.).
Annual operating lease commitments from continuing operations
Within one year .................................................................................................................
Between one and five years ..............................................................................................
After five years..................................................................................................................
Total ..................................................................................................................................
2018 (i)
2017 (i)
(US$ millions)
127
412
262
800
130
372
258
759
(i) The Group’s share in joint ventures operating lease commitments amount to US$312 million (2017: US$194 million; 2016:
US$210 million) and are excluded from the table above.
Finance leases
Finance leases, which transfer substantially all risks and benefits incidental to ownership of the leased item to
the lessee, are capitalized at the inception of the lease at the fair value of the leased asset or, if lower, at the present
value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of
the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are charged directly against income. Where a finance lease results from a sale and leaseback transaction, any
183
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
excess of sales proceeds over the carrying amount of the assets is deferred and amortized over the lease term.
Capitalized leased assets are depreciated over the shorter of the estimated useful lives of the assets, or the lease term
if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.
Finance leases mainly comprise lease of tower space in El Salvador, Paraguay, Tanzania and Colombia (see note
C.3.4.), lease of poles in Colombia and tower sharing in other countries. Other financial leases mainly consist of
lease agreements relating to vehicles and IT equipment.
Annual minimum finance lease commitments from continuing operations
Within one year .................................................................................................................
Between one and five years ..............................................................................................
After five years..................................................................................................................
Total ..................................................................................................................................
99
400
415
914
97
404
477
978
2018 (i)
2017 (i)
(US$ millions)
(i) The Group’s share in joint ventures finance lease commitments amount to $1 million (2017: $5 million) and are excluded
from the table above.
The corresponding finance lease liabilities at December 31, 2018, were $353 million (2017: $365 million).
Interest expense on finance lease liabilities amounted to $92 million for the year 2018 (2017: $65 million).
G.3. Contingent liabilities
G.3.1. Litigation and legal risks
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 December 31, 2018, the total amount of
claims and litigation risks against Millicom and its operations was $687 million, of which $5 million related to its
share in joint ventures (December 31, 2017: $438 million, of which $5 million related to its share in joint ventures).
As at December 31, 2018, $26 million has been provided for these risks in the consolidated statement of
financial position (December 31, 2017: $29 million). The Group’s share of provisions made by the joint ventures
was $4 million (December 31, 2017: $2 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.
Improper filling of shareholding in MIC Tanzania Public Limited Company
In June 2016, Millicom was served with claims by a third party seeking to exert rights as a shareholder of MIC
Tanzania Public Limited Company. In June 2015, Millicom identified that an incorrect filing related to MIC
Tanzania Public Limited Company had been made in the commercial register, causing the register to incorrectly
indicate that shares in the local subsidiary were owned by this third party. On July 26, 2018, the Court of Appeal of
Tanzania, the country’s highest court, reaffirmed in a ruling that MIC Tanzania Public Limited Company remains
owned and controlled by Millicom. Late 2018, the opposite party has filed a review of the ruling by the same Court
of Appeals, which already ruled in Millicom's favor. Millicom considers the success of this review as remote and
therefore continues to control and fully consolidate MIC Tanzania Public Limited Company.
Ongoing investigation by the International Commission Against Impunity in Guatemala (CICIG)
On July 14, 2017, the CICIG disclosed an ongoing investigation into alleged illegal campaign financing that
includes a competitor of Comcel, our Guatemalan joint venture. The CICIG further indicated that the investigation
184
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
would include Comcel. On November 23 and 24, 2017, Guatemala's attorney general and CICIG executed search
warrants on the offices of Comcel. As at December 31, 2018, the matter is still under investigation, and
Management has not been able to assess the potential impact on these consolidated financial statements of any
remedial actions that may need to be taken as a result of the investigations, or penalties that may be imposed by law
enforcement authorities. Accordingly, no provision has been recorded as of December 31, 2018.
Other
At December 31, 2018, Millicom has various other less significant claims which are not disclosed separately in
these consolidated financial statements because they are either not material or the related risk is remote.
G.3.2. Tax related risks and uncertain tax position
The Group operates in developing countries where the tax systems, regulations and enforcement processes have
varying stages of development creating uncertainty regarding the application of the tax law and interpretation of tax
treatments. The Group is also subject to regular tax audits in the countries where it operates. When there is
uncertainty over whether the taxation authority will accept a specific tax treatment under the local tax law, that tax
treatment is therefore uncertain. The resolution of tax positions taken by the Group, through negotiations with
relevant tax authorities or through litigation, can take several years to complete and, in some cases, it is difficult to
predict the ultimate outcome. Therefore, judgment is required to determine provisions for taxes.
In assessing whether and how an uncertain tax treatment affects the determination of taxable profit (tax loss),
tax bases, unused tax losses, unused tax credits and tax rates, the Group assumes that a taxation authority with the
right to examine amounts reported to it will examine those amounts and have full knowledge of all relevant
information when making those examinations.
The Group has a process in place to identify its uncertain tax positions. Management then considers whether or
not it is probable that a taxation authority will accept an uncertain tax treatment. On that basis, the identified risks
are split into three categories (i) remote risks (risk of outflow of tax payments are up to 20%), (ii) possible risks (risk
of outflow of tax payments assessed from 21% to 49%) and probable risks (risk of outflow is more than 50%). The
process is repeated every quarter by the Group.
If the Group concludes that it is probable or certain that the taxation authority will accept the tax treatment, the
risks are categorized either as possible or remote, and it determines the taxable profit (tax loss), tax bases, unused
tax losses, unused tax credits or tax rates consistently with the tax treatment used or planned to be used in its income
tax filings. The risks considered as possible are not provisioned but disclosed as tax contingencies in the Group
consolidated financial statements while remote risks are neither provisioned nor disclosed.
If the Group concludes that it is probable that the taxation authority will not accept the Group’s interpretation of
the uncertain tax treatment, the risks are categorized as probable, and are presented to reflect the effect of
uncertainty in determining the related taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax
rates by generally using the most likely amount method – the single most likely amount in a range of possible
outcomes.
If an uncertain tax treatment affects both deferred tax and current tax, the Group makes consistent estimates and
judgments for both. For example, an uncertain tax treatment may affect both taxable profits used to determine the
current tax and tax bases used to determine deferred tax.
If facts and circumstances change, the Group reassesses the judgments and estimates regarding the uncertain tax
position taken.
At December 31, 2018, potential tax risks estimated by the Group amount to $254 million, of which provisions
of $47 million have been recorded representing the probable amount of eventual claims and required payments
related to those risks (2017: $313 million of which provisions of $53 million were recorded). Out of these potential
claims and provisions, respectively $29 million (2017: $38 million) and $2 million (2017: $2 million) related to
Millicom’s share in these joint ventures.
185
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
G.4. Non-cash investing and financing activities
Non-cash investing and financing activities from continuing operations
Note
2018
2017
2016
(US$ millions)
Investing activities
Acquisition of property, plant and equipment,
including finance leases .................................................
Asset retirement obligations ..............................................
Acquisition of subsidiaries, joint ventures and
associates, net of cash acquired......................................
Financing activities
Finance leases ....................................................................
Share based compensation .................................................
E.2.2.
E.2.2.
A.1.2.
G.2.2.
B.4.1.
(66)
15
30
(43)
22
(174)
(20)
—
192
22
34
(17)
—
1
14
G.5. Related party balances and transactions
The Group’s significant related parties are:
• Kinnevik AB (Kinnevik) and subsidiaries, Millicom’s principal shareholder;
• Helios Towers Africa Ltd (HTA), in which Millicom holds a direct or indirect equity interest (see note A.
3.2.);
• EPM and subsidiaries (EPM), the non-controlling shareholder in our Colombian operations (see note A.
1.4.);
• Miffin Associates Corp and subsidiaries (Miffin), our joint venture partner in Guatemala.
• Cable Onda partners and subsidiaries, the non-controlling shareholders in our Panama operations (see
note A.1.2.).
Kinnevik
Millicom’s principal shareholder is Kinnevik. Kinnevik is a Swedish holding company with interests in the
telecommunications, media, publishing, paper and financial services industries. At December 31, 2018, Kinnevik
owned approximately 37% of Millicom (2017: 37%). During 2018, 2017 and 2016, Kinnevik did not purchase any
Millicom shares. There are no significant loans made by Millicom to or for the benefit of Kinnevik or Kinnevik
controlled entities.
During 2018, 2017 and 2016, the Company purchased services from Kinnevik subsidiaries including fraud
detection, procurement and professional services. Transactions and balances with Kinnevik Group companies are
disclosed under Other in the tables below. Also refer to note A.3. for further details with respect to the disposal of
one portion of our investment in Milvik AB.
186
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
Helios Towers
Millicom sold its tower assets and leased back a portion of space on the towers in several African countries and
contracted for related operation and management services with HTA. The Group has future lease commitments in
respect of the tower companies (see note G.2.2.).
Empresas Públicas de Medellín (EPM)
EPM is a state-owned, industrial and commercial enterprise, owned by the municipality of Medellin, and
provides electricity, gas, water, sanitation, and telecommunications. EPM owns 50% of our operations in Colombia.
Miffin Associates Corp (Miffin)
The Group purchases and sells products and services from and to the Miffin Group. Transactions with Miffin
represent recurring commercial operations such as purchase of handsets, and sale of airtime.
Cable Onda Partners
Our partners in Panama are the non-controlling shareholders of Cable Onda and own 20% of the company.
Additionally, they also hold interests in several entities which have purchasing and selling recurring commercial
operations with Cable Onda (such as the sale of content costs, delivery of broadband services, etc.).
Expenses from transactions with related parties
2018
2017
2016
Purchases of goods and services from Miffin ...........................................
Purchases of goods and services from EPM..............................................
Lease of towers and related services from HTA........................................
Other expenses...........................................................................................
Total ..........................................................................................................
(US$ millions)
(181)
(36)
(28)
(4)
(250)
(173)
(40)
(28)
(3)
(244)
(167)
(22)
(35)
(9)
(233)
Income and gains from transactions with related parties
2018
2017
2016
Sale of goods and services to EPM ...........................................................
Sale of goods and services to Miffin .........................................................
Other revenue ............................................................................................
Total ..........................................................................................................
(US$ millions)
18
277
1
295
17
284
2
303
18
261
10
289
As at December 31, the Company had the following balances with related parties:
Non-current and current liabilities
Payables to Guatemala joint venture(i) .............................................................................
Payables to Honduras joint venture(ii)..............................................................................
Payables to EPM ...............................................................................................................
Other accounts payable .....................................................................................................
Sub-total ............................................................................................................................
Finance lease liabilities to tower companies(iii)...............................................................
Total ..................................................................................................................................
187
Year ended December 31,
2018
2017
(US$ millions)
315
143
14
9
482
99
580
273
135
3
10
421
108
529
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
(i) Shareholder loans bearing interest. Out of the amount above, $135 million are due over more than one year.
(ii) Amount payable mainly consist of dividend advances for which dividends are expected to be declared later in 2019 and/or
shareholder loans.
(iii) Disclosed under Debt and other financing in the statement of financial position.
Non-current and current assets
Receivables from EPM .....................................................................................................
Receivables from Guatemala and Honduras joint ventures ..............................................
Advance payments to Helios Towers Tanzania.................................................................
Receivable from AirtelTigo Ghana(i) ...............................................................................
Other accounts receivable .................................................................................................
Total ..................................................................................................................................
(i) Disclosed under Other non-current assets in the statement of financial position. See note A.2.2.
Year ended December 31,
2018
2017
(US$ millions)
5
20
6
41
1
73
3
25
8
40
1
77
H. 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 authorised share capital in a public
offering on the Dar Es Salaam Stock Exchange. Early 2017, Tigo Tanzania, Zantel and Telesis each received from
the Tanzanian Communications Regulatory Authority (TCRA) a notice of material breach of the license giving
thirty-days to comply. Millicom has signaled its intention for its subsidiaries to comply with the law and list its
businesses but did not complete the public offerings by such time until the incorrect filing related to Tigo Tanzania
made in the commercial register was corrected (see note G.3.1.). Accordingly, Millicom’s businesses in Tanzania
may face sanctions from the regulator or other government bodies, which could include financial penalties, or even
suspension or cancellation of its license although to-date there has been no notification from the TCRA of any
indication or intention to proceed with sanctions. Management is currently not able to assess the financial impact on
its consolidated financial statements (although the Company deems the suspension or cancellation of the license to
be unlikely) and therefore, no provision has been recorded as of December 31, 2018.
This said, the Group is currently working on the preliminary steps (e.g., converting Tigo Tanzania into a public
limited company) with the view of listing in the first half of 2019.
I. Subsequent events
Nasdaq
On January 9, 2019, Millicom shares began trading on the Nasdaq Stock Exchange in the U.S. under ticker
symbol TIGO.
Dividend
On February 7, 2019, Millicom’s Board decided to propose to the AGM of the shareholders a dividend
distribution of US$2.64 per share to be paid in two equal installments in May and November 2019, out of Millicom
profits for the year ended December 31, 2018. The AGM to vote this matter is scheduled for May 2, 2019.
Telefónica acquisition
188
Millicom International Cellular S.A.
Notes to the consolidated financial statements
for the years ended December 31, 2018, 2017 and 2016 – continued
On February 20, 2019, the Group announced it has entered into agreements with Telefónica S.A. and certain of
its affiliates (Telefónica), to acquire the entire share capital of Telefónica Móviles Panamá, S.A., Telefónica de Costa
Rica TC, S.A. (and its wholly owned subsidiary, Telefónica Gestión de Infraestructura y Sistemas de Costa Rica,
S.A.) and Telefonía Celular de Nicaragua, S.A. (together, Telefonica CAM) for a combined enterprise value of
$1,650 million (the Transaction) payable in cash. The Transaction is subject to customary closing conditions,
including regulatory approval in each market, and closings are expected during H2 2019. Millicom has secured
bridge funding commitments to finance the acquisition, and the bridge will be refinanced predominantly with the
issuance of new debt by Millicom and its operating subsidiaries.
189
Independent Auditor’s Report
To the shareholders of Millicom International Cellular S.A.
2, rue du Fort Bourbon, L-1249 Luxembourg
Report on the audit of the
consolidated financial statements
Opinion
We have audited the accompanying
consolidated financial statements of
Millicom International Cellular S.A. (“the
Group”) included on page 95 to page 189,
which comprise the consolidated
statement of financial position as of
December 31, 2018, the consolidated
statement of income, the consolidated
statement of comprehensive income, the
consolidated statement of cash flows, and
the consolidated statement of changes in
equity for the year then ended, and a
summary of significant accounting policies
and other explanatory information.
In our opinion, the consolidated financial
statements give a true and fair view of the
financial position of Millicom International
Cellular S.A., as of December 31, 2018,
and of its financial performance and its
cash flows for the year then ended in
accordance with International Financial
Reporting Standards as adopted by the
European Union.
Basis for opinion
We conducted our audit in accordance
with EU Regulation N° 537/2014, the Law
of July 23, 2016 on the audit profession
(the “Law of July 23, 2016”) and with
International Standards on Auditing
(“ISAs”) as adopted for Luxembourg by
the “Commission de Surveillance du
Secteur Financier” (“CSSF”).
Our responsibilities under those
Regulation, Law, and standards are
further described in the “Responsibilities
of the ‘réviseur d’entreprises agréé’ for
the audit of the consolidated financial
statements“ section of our report. We are
also independent of the Group in
accordance with the International Ethics
Standards Board for Accountants’ Code
of Ethics for Professional Accountants
(IESBA Code) as adopted for Luxembourg
by the CSSF together with the ethical
requirements that are relevant to our
audit of the consolidated financial
statements in Luxembourg, and we have
fulfilled our other ethical responsibilities
under those ethical requirements. We
believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that,
in our professional judgment, were of
most significance in our audit of the
consolidated financial statements of the
current period. These matters were
addressed in the context of our audit of
the consolidated financial statements as a
whole, and in forming our opinion thereon,
and we do not provide a separate opinion
on these matters.
1. Revenue recognition - accuracy of
revenue recorded given the complexity
of systems
Risk identified
The Group’s revenue consists of mobile
and data telephony services, corporate
solutions, fixed-line broadband, fixed-line
telephone, cable TV, and MFS to retail and
business customers.
Revenue from these services is considered
a significant risk due to both the bundling
of these services and the complexity of the
Group’s systems and processes used to
record revenue. Also, the application of
revenue recognition accounting standards
is complex and involves a number of key
judgments and estimates, especially in the
light of the IFRS 15 recent application.
Our answer
Our audit procedures over revenue
included, among others:
•
We understood and assessed the
overall IT control environment and the
IT controls in place, assisted by our
information technology specialists. We
tested the operating effectiveness of
controls around access rights, system
development, program changes , and
IT dependent business controls to
establish that changes to the system
were appropriately authorized and also
developed and implemented properly
including those over: set-up of customer
accounts, pricing data, segregation of
duties, and the linkage to usage data
that drives revenue recognition.
We tested the end-to-end reconciliation
from business support systems to billing
and rating systems to the general
ledger. This testing included validating
material journal entries processed
between the billing systems and
general ledger.
We tested transactions for main
revenues streams (calls, data, SMS,
content).
We assessed the accounting applied to
commercial offers, particularly in light
of the revenue recognition criteria set
by IFRS 15.
We assessed the adequacy of the
assumptions used by the Management
in the process of determination of
significant judgments and estimates
relating to the application of IFRS 15.
Those judgments include mainly the
determination of the Standalone
Selling Price of handsets, assessment of
the Adjusted Contract Term, agent vs.
principal considerations, and the use of
practical expedient in relation to the
significant financing component.
•
•
•
•
•
We performed tests on the accuracy of
customer bill generation on a sample
basis and testing of a sample of the
credits and discounts applied to
customer bills.
•
We tested substantively deferred
income, through validation reports used
in its determination at period end.
190
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Independent Auditor’s Report–continued
To the shareholders of Millicom International Cellular S.A.
•
•
•
•
We tested cash receipts for a sample of
customers back to the customer invoice.
We performed substantive analytical
procedures on revenue and deferred
revenue based on our industry
knowledge, forming an expectation of
revenue based on key performance
indicators taking into consideration
disconnections, installations, changes in
rates, and trends in deferred income.
We assessed the adequacy of the
provision for impairment of trade
receivables, including the
appropriateness of the methodology
used to calculate the provision, and
analyzing individual significant long
outstanding balances.
We assessed the adequacy of the
Group’s disclosures in respect of the
accounting policies on revenue
recognition as disclosed in Note B.1.1 of
the Consolidated Financial Statements.
2. Carrying value of goodwill and cash
generating units (CGUs)
Risk identified
Under EU-IFRSs, the Group is required to
annually test the amount of goodwill for
impairment. This annual impairment test
was significant to our audit because the
balance of USD$1,077 million as of
December 31, 2018 is material to the
consolidated financial statements. In
addition, the Group’s assessment process
includes significant judgments and is
based on assumptions derived from the
Group’s five-year plan, which are affected
by expected future market or economic
conditions.
Our answer
Our audit procedures included, among
others, an assessment of the historical
accuracy of management’s estimates and
budgets, evaluation, and assessment of
the assumptions, methodologies, CGU
determination, the WACC, and data used
by the Group, for example by comparing
them to external data. We have involved
our valuation experts to assist us with our
assessment of the WACC, expected
inflation rates, and the appropriateness of
the model used. Furthermore, we have
analyzed sensitivities if a lower growth rate
or higher WACC were used. The Group’s
disclosures about goodwill are included in
Notes E.1.5 and E.1.6.
3. Recognition of tax contingencies
and tax assets
Risk identified
Income tax positions were significant to
our audit because the assessment process
is complex and involves a high degree of
judgment and the amounts involved are
material to the consolidated financial
statements as a whole. The Group’s
operations are subject to income taxes in
various jurisdictions resulting in different
subjective and complex interpretation of
local tax laws as uncertainty prevails in the
emerging market economies in which
Millicom is operating. In addition, the
global tax environment worldwide
continues to evolve and becomes more
complex. Management exercises
judgment in assessing the level of provision
required for taxation when such taxes are
based on the interpretation of complex tax
laws. The future actual outcome of the
decisions concerning these tax exposures
may result in materially higher or lower
amounts than the accrual included in the
accompanying Consolidated Financial
Statements.
The Group’s deferred income tax assets as
at December 31, 2018 amount to
USD$202 million. Under EU-IFRS, the
Group is required to periodically determine
the valuation of deferred tax asset
positions. This area was significant to our
audit because of the related complexity of
the valuation process which involves
significant management judgment, given
it is based on assumptions that are
affected by expected future market or
economic conditions.
Our answer
Our procedures included, among others,
assessing the appropriateness of
management’s assumptions and
estimates in relation to uncertain tax
positions, and considering advice received
by management from external parties to
support their position. We have involved
our tax specialists, where relevant, to
consider management’s assessment of the
tax positions and related provision/liability
accruals when necessary.
We assessed the business plans to
determine the appropriateness of
management’s assessment that
recovering the deferred tax assets based
on future taxable profits within the five
year plan approved by the Board of
Directors is probable and assessed the
adequacy of the assumptions and
sensitivities in such business plans.
We also assessed the adequacy of the
Group’s disclosures in respect of the tax
contingencies and tax positions as set out
in Note B.6 and G.3.2.
4. Capitalization and asset lives
Risk Identified
The net book value of fixed assets at
December 31, 2018 is USD$5,415 million.
The assessment and timing of whether
assets meet the capitalization criteria set
out in the relevant accounting standards,
the estimation of appropriate useful
economic lives, and the assessment of
whether any impairment indicators are
present, such as redundant assets, as well
as the identification and the classification
of leases, all require judgment.
191
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Independent Auditor’s Report–continued
To the shareholders of Millicom International Cellular S.A.
Our answer
Our audit procedures included, among
others:
•
•
•
•
•
•
We evaluated the design and testing
the operating effectiveness of controls
around the asset capitalization cycle.
We considered material contracts
signed during the year regarding new
indefeasible rights of use (IRU), licenses,
frequency charges, or broadcasting
rights to assess the appropriateness of
accounting treatment.
We assessed management
assumptions over the carrying value
and useful economic life of key assets
by consideration of internal and
external available data.
We tested a sample of fixed asset
additions to third-party evidence such
as purchase invoice and bank
statement to assess the valuation and
appropriateness of capitalization of
those additions.
We considered the circumstances as to
whether any additions or prevailing
events would give rise to indicators of
impairment such as redundant assets.
We assessed the adequacy of the
Group’s disclosures in respect of PP&E
and intangible assets as set out in
Notes E.2 and E.1.
5. Ongoing investigation by the
International Commission Against
Impunity in Guatemala (CICIG)
Risk identified
On July 14, 2017, the International
Commission Against Impunity in
Guatemala (CICIG), disclosed an ongoing
investigation into alleged illegal campaign
financing that includes Comcel. The CICIG
further indicated that the investigation
would include Comcel. On November 23
and 24, 2017, Guatemala’s attorney
general and CICIG executed search
warrants on the offices of Comcel.
Considering the current situation, the
Group has not been able to estimate the
outcome of these cases and therefore the
potential financial impact on its financial
position, and accordingly, has disclosed
these matters in Note G.3.1of the
consolidated financial statements.
Our answer
Our audit procedures included, among
others:
•
•
•
•
•
We inquired of Millicom’s lawyers
dealing with the matter and we
obtained external confirmation from
these lawyers as part of our audit
procedures. We also inquired of Group
management on the matter.
We inquired of the Head of Compliance
to understand the remediation actions
taken from an internal control
perspective and involved our forensic
specialists to discuss such remediation
with management.
We tested that the Millicom’s updated
Anti-Bribery and Anti-Corruption policy
and Code of Conduct have been rolled
out in the Group’s operations.
We performed a test of controls over
the procure-to-pay process.
We assessed the adequacy of the
Group’s disclosures in respect of these
matters as set out in Note G.3.1.
6. Business combination of Cable
Onda
Risk Identified
The Group acquired control over, and
therefore consolidated Cable Onda as of
December 13, 2018. The related
disclosures are included in Notes A.1.2. The
acquisition is material, complex, and
contains significant judgment in relation to
the purchase price allocation. The Group,
assisted by its external valuation
specialists, determined the fair value of
Cable Onda’s identifiable assets and
liabilities, which included a number of
assumptions such as useful life of assets,
customer churn, and contingent liabilities.
The purchase price allocation resulted in a
remaining goodwill of USD$512 million.
The purchase price allocation remains
provisional as of December 31, 2018.
Our answer
Our audit procedures included, amongst
others:
•
•
•
•
•
We assessed the sale/purchase
agreements and tested the payment of
the purchase price to the sellers and we
assessed the related accounting
treatment including for the put and call
options and the transaction costs.
We assessed the competence and
relevant experience of the expert
engaged by management in order to
perform the purchase price allocation.
We used our own valuation specialists
to audit the reasonableness of
management’s valuation
methodologies and assumptions, using
source data and market data.
We assessed the sensitivity of
management’s estimates and
assumptions used in the purchase price
allocation and audited the adequacy of
the related disclosures in Note A.1.2 to
the consolidated financial statements.
We performed an audit of Cable
Onda’s opening balance-sheet as of
November 30, 2018 and reviewed
significant transactions up to December
13, 2018.
•
We assessed the adequacy of the
Group’s disclosures in respect of these
matters as set out in Note A.1.2.
192
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Independent Auditor’s Report–continued
To the shareholders of Millicom International Cellular S.A.
Other information
The Board of Directors is responsible for
the other information. The other
information comprises the information
included in the consolidated management
report on page 92 and the accompanying
corporate governance statement on pages
57 to 91 but does not include the
consolidated financial statements and our
report of “réviseur d’entreprises agréé”
thereon.
Our opinion on the consolidated financial
statements does not cover the other
information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the
consolidated financial statements, our
responsibility is to read the other
information and, in doing so, consider
whether the other information is materially
inconsistent with the consolidated financial
statements or our knowledge obtained in
the audit or otherwise appears to be
materially misstated. If, based on the work
we have performed, we conclude that
there is a material misstatement of this
other information, we are required to
report this fact. We have nothing to report
in this regard.
Responsibilities of the Board of
Directors and of those charged with
governance for the consolidated
financial statements
The Board of Directors is responsible for
the preparation and fair presentation of
the consolidated financial statements in
accordance with IFRSs as adopted by the
European Union, and for such internal
control as management determines is
necessary to enable the preparation of
consolidated financial statements that are
free from material misstatement, whether
due to fraud or error.
In preparing the consolidated financial
statements, the Board of Directors is
responsible for assessing the Group’s ability
to continue as a going concern, disclosing,
as applicable, matters related to going
concern and using the going concern basis
of accounting unless management either
intends to liquidate the Group or to cease
operations, or has no realistic alternative
but to do so.
Those charged with governance are
responsible for overseeing the Group’s
financial reporting process.
Responsibilities of the “réviseur
d’entreprises agréé” for the audit of
the consolidated financial statements
The objectives of our audit are to obtain
reasonable assurance about whether the
consolidated financial statements as a
whole are free from material
misstatement, whether due to fraud or
error, and to issue a report of the “réviseur
d’entreprises agréé” that includes our
opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee
that an audit conducted in accordance
with EU Regulation N° 537/2014, the Law
of July 23, 2016 and with the ISAs as
adopted for Luxembourg by the CSSF will
always detect a material misstatement
when it exists. Misstatements can arise
from fraud or error and are considered
material if, individually or taken together,
they could reasonably be expected to
influence the economic decisions of users
taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with EU
Regulation N° 537/2014, the Law of July
23, 2016 and with ISAs as adopted for
Luxembourg by the CSSF, we exercise
professional judgment and maintain
professional skepticism throughout the
audit. We also:
•
•
•
fraud or error, design and perform audit
procedures responsive to those risks,
and obtain audit evidence that is
sufficient and appropriate to provide a
basis for our opinion. The risk of not
detecting a material misstatement
resulting from fraud is higher than for
one resulting from error, as fraud may
involve collusion, forgery, intentional
omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal
control relevant to the audit in order to
design audit procedures that are
appropriate in the circumstances, but
not for the purpose of expressing an
opinion on the effectiveness of the
Group’s internal control.
Evaluate the appropriateness of
accounting policies used and the
reasonableness of accounting
estimates and related disclosures made
by management.
Conclude on the appropriateness of
management’s use of the going
concern basis of accounting and, based
on the audit evidence obtained,
whether a material uncertainty exists
related to events or conditions that may
cast significant doubt on the Group’s
ability to continue as a going concern. If
we conclude that a material uncertainty
exists, we are required to draw attention
in our report of the “réviseur
d’entreprises agréé” to the related
disclosures in the consolidated financial
statements or, if such disclosures are
inadequate, to modify our opinion. Our
conclusions are based on the audit
evidence obtained up to the date of our
auditor’s report. However, future events
or conditions may cause the Group to
cease to continue as a going concern.
•
Identify and assess the risks of material
misstatement of the consolidated
financial statements, whether due to
•
Evaluate the overall presentation,
structure and content of the
consolidated financial statements,
193
2 0 18 M I L L IC O M IN T E G R AT E D R E P O R T
OverviewStrategyPerformanceGovernanceFinancialsAppendix Independent Auditor’s Report–continued
To the shareholders of Millicom International Cellular S.A.
including the disclosures, and whether
the consolidated financial statements
represent the underlying transactions
and events in a manner that achieves
fair presentation.
•
Obtain sufficient appropriate audit
evidence regarding the consolidated
financial information of the entities or
business activities within the Group to
express an opinion on the consolidated
financial statements. We are
responsible for the direction, supervision
and performance of the group audit.
We remain solely responsible for our
audit opinion.
We communicate with those charged with
governance regarding, among other
matters, the planned scope and timing of
the audit and significant audit findings,
including any significant deficiencies in
internal control that we identify during our
audit.
We also provide those charged with
governance with a statement that we have
complied with relevant ethical
requirements regarding independence,
and to communicate with them all
relationships and other matters that may
reasonably be thought to bear on our
independence, and where applicable,
related safeguards.
From the matters communicated with
those charged with governance, we
determine those matters that were of
most significance in the audit of the
consolidated financial statements of the
current period and are therefore the key
audit matters. We describe these matters
in our auditor’s report unless law or
regulation precludes public disclosure
about the matter.
Report on other legal and regulatory
requirements
We have been appointed as “réviseur
d’entreprises agréé” by the General
Meeting of the Shareholders on May 4,
2018 and the duration of our uninterrupted
engagement, including previous renewals
and reappointments, is seven years.
The consolidated management report on
page 92 is consistent with the consolidated
financial statements and has been
prepared in accordance with applicable
legal requirements.
The accompanying corporate governance
statement on pages 57 to 91 is the
responsibility of the Board of Directors. The
information required by article 68ter
paragraph (1) letters c) and d) of the law of
December 19, 2002 on the commercial
and companies register and on the
accounting records and annual accounts of
undertakings, as amended, is consistent
with the consolidated financial statements
and has been prepared in accordance with
applicable legal requirements.
We confirm that the audit opinion is
consistent with the additional report to the
audit committee or equivalent.
We confirm that the prohibited non-audit
services referred to in EU Regulation No
537/2014 were not provided and that we
remained independent of the Group in
conducting the audit.
Other matter
The corporate governance statement
includes the information required by article
68ter paragraph (1) of the law of
December 19, 2002 on the commercial
and companies register and on the
accounting records and annual accounts of
undertakings, as amended.
Ernst & Young
Société anonyme
Cabinet de révision agréé
Olivier Lemaire
Luxembourg February 28, 2019
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Disclaimer
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. This
includes, but is not limited to, Millicom’s
expectation and ability to pay semi-annual
cash dividends on its common stock in
the future, subject to the determination
by the Board of Directors, and based on
an evaluation of company earnings,
financial condition and requirements,
business conditions, capital allocation
determinations and other factors, risks,
and uncertainties. In the event such risks
or uncertainties materialize, Millicom’s
results could be materially adversely
affected. 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;
• 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 annual report on Form
20-F, including those risks outlined in “Item
3. Key Information-D. Risk Factors,” and
in Millicom’s subsequent U.S. Securities
and Exchange Commission filings, all of
which are available at
www.sec.gov.
All forward-looking statements attributable
to us or any person acting on our behalf
are expressly qualified in their entirety by
this cautionary statement. Readers are
cautioned not to place undue reliance
on these forward-looking statements
that speak only as of the date hereof.
Except to the extent otherwise required by
applicable law, we do not undertake any
obligation to update or revise forward-
looking statements, whether as a result
of new information, future events, or
otherwise.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Cash Capex represents the cash spent in
relation to capital expenditure, excluding
spectrum and licenses costs and finance
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), plus dividends received from joint
ventures less advances for dividends to
non-controlling interests.
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.
Operating Profit After Tax displays the
profit generated from the operations of
the company after statutory taxes.
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), minus
assets and liabilities held for sale.
Disclaimer
Non-IFRS Measures
This document 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 15, and are proforma for
material changes in perimeter due to
acquisitions and divestitures.
The non-IFRS financial measures are
presented in this document as Millicom’s
management believes they provide
investors with 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.
Non-IFRS 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.
Underlying measures, such as Service
revenue, EBITDA, and Net debt, include
Guatemala and Honduras as if fully
consolidated.
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 unallocated costs and
inter-company eliminations.
Organic growth represents year-on
year-growth excluding the impact of
changes in FX rates, perimeter, and
accounting.
Net debt is Gross debt (including finance
leases) less cash and pledged and term
deposits.
Proportionate net debt is the sum of the
net debt in every country where Millicom
operates, including its Guatemala and
Honduras joint ventures, pro rata for
Millicom’s ownership stake in each country.
Net debt to EBITDA is the ratio of net
debt over LTM (last twelve month)
EBITDA.
Proportionate net debt to EBITDA is the
ratio of proportionate net debt over LTM
proportionate EBITDA.
Capex is balance sheet capital expenditure
excluding spectrum and license costs
and finance lease capitalizations from
tower sale and leaseback transactions.
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OverviewStrategyPerformanceGovernanceFinancialsAppendix Appendix:
Corporate Responsibility
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OverviewStrategyPerformanceGovernanceCR AppendixForm 20-FOverviewStrategyPerformanceGovernanceFinancialsAppendix Corporate
Responsibility
Appendix
Wrapping Up a Great Five Years
This appendix highlights what we have achieved over the past year in each of the material CR topics we have identified.
2018 has been a milestone year given that it as the last of the 2014 five-year plan. It has found us with CR firmly embedded in the
day-to-day practices of many of our core business areas, leading to mutual learning, as well as an increasingly regional scope and
positive impacts of our flagship programs. In the following pages we will share the main achievements and lessons learned which
are at the core of the work laid out in our new five-year plan.
This corporate responsibility report includes the Honduras and Guatemala joint ventures as if fully consolidated in accordance with
our management reporting. Reported indicators exclude Emtelco, Ghana, Nicaragua, and recently acquired Panama operation.
Additional exclusions, where applicable, are detailed in footnotes.
Measure the success and health of our
company beyond financials
Promote, protect, and strengthen our
performance and reputation
Demonstrate thought leadership
in areas that link to business success
What we did in 2018
• Strenghthened the collaboration with other business functions to best
align CR and business objectives.
• Revised our data-management processes to enhance continuous
improvement of our reports to stakeholders.
• Launched an updated CR Framework that stresses the intrinsic
connection between our CR and business strategies.
What we did in 2018
• Continued to actively engage with our investors, partners, and other
key stakeholders.
• Conducted our first external GNI Assessment.
What we did in 2018
• Conducted a one-of-a-kind study in Colombia to understand how
children use the internet.
• Relaunched a best-in-class Supplier Training Program on CR.
• Rolled out a Women’s Digital Inclusion program in all Latam.
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OverviewStrategyPerformanceGovernanceCR AppendixForm 20-FOverviewStrategyPerformanceGovernanceFinancialsAppendix Our Performance
Five-year plan objectives (by 2018)
Where we are today
What we learned
1. Privacy and freedom of expression
» Complete an external assessment of Millicom’s policies and
processes relating to privacy and freedom of expression.
» Millicom has evolved its
Privacy and Freedom of
Expression (FoE) framework
with a new Global Privacy
Policy and an updated set of
Law Enforcement Assistance
and Major Events Guidelines,
fit for today’s technological
and security challenges. Our
LED report has been
recognized as best practice
in the industry.
» We will continue our
engagements with peers/
other stakeholders on our
policies and practices. It is
our firm belief that positive
outcomes for human rights
will only come from
collaboration via a
multi-stakeholder forum
such as the GNI - this is the
best way to address such
complex challenges.
2. Child rights and online protection
» The Mobile Operator Child Rights Impact Assessment (MO
CRIA) tool we jointly developed with UNICEF is used across
the mobile operator community.
» Conduct the MOCRIA in all operations in Africa and 50% of
operations in Latam.
» Integrate promotion of parental controls and distribution of
safe internet into mobile, fixed, and cable TV customer
processes in Latin America.
» Publish child online protection (COP) policy and
accompanying guidelines, and roll out across all operations.
» While to our knowledge no
other companies of the
industry have publicly
adopted the use of the
MOCRIA, it has been
conducted in all our Latam
operations with action plans
in place. Parental controls are
available for digital cable TV
devices. COP Policy is in
place, with COP training
programs well established
across the region, targeting
parents, teachers and
caregivers.
» Through our work on COP, we
learned that our assessment
and work needed to be
expanded to the broader
concept of Child Rights. We
are also introducing findings
from the MOCRIA into
business processes, products
and services.
3. Acting with integrity: anti-corruption compliance
» Continue external and internal monitoring of the Anti-
Bribery and Anti-Corruption (ABAC) program enhancements
with a view to measure the maturity level of the compliance
framework over time.
» Embed compliance risk management into business risk
management at global, regional, and local level.
» Third-party due diligence for end-to-end process, from
landowners to suppliers, IT software providers etc. based on
risk level.
» We have established a robust
» While having policies and
Anti-corruption Program,
rolling out policies across the
organization to meet our
legal compliance obligations
and acquired automated
solutions for third party
vetting to improve corruption
risk management within the
organization
screening tools may mitigate
corruption risks,
implementing a
comprehensive framework
where anti-corruption
procedures are embedded in
business processes have
proven effective, as well has
the risk based training
modules that enables
employees to assess
potential risk of corruption in
their day to day function.
4. Reducing our environmental footprint
» Establish a cross-functional steering committee and global
energy reduction and green energy strategy.
» Global e-waste process implemented in all operations to
manage e-waste through responsible vendors.
» Extend environmental reporting to consider emissions
relating to logistics and supply chain.
» Our operations have directed
investments and technology
into our infrastructure to
reduce our energy
consumption, and have
implemented e-waste
programs with vendors. We
will establish a steering
committee which will focus
on a comprehensive climate
strategy and targets.
» While we have examples of
good practices throughout
our operations, an improved
governance process will
allow us to further replicate,
scale and measure the
results of these practices
with common metrics.
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Five-year plan objectives (by 2018)
Where we are today
What we learned
5. Diversity
» Increase the number of women among senior managers
each year.
» Establish a Group-wide maternity and paternity leave policy,
to also include a shortened working week for breastfeeding
mothers.
» Percentage of women in
senior management has
increased Company-wide
from 22 to 29%and gender
equality at all levels will
continue to be at the
forefront of our inclusion
efforts.
Our work towards a more
inclusive workplace focuses on
a broad range of life
circumstances and needs. We
are working with our
operations to enhance
inclusion across all dimensions
of diversity.
6. Taking care of our people
» Continue our zero-fatality commitment.
» Review risk assessments for each country on a quarterly basis
and update and manage as required.
» Continue reporting to senior management and the Board on
progress and incidents on a monthly basis.
7. Responsible supply chain management
» Full supplier monitoring program in place, including self-
assessments and on-site audits.
» Support capacity building of local suppliers to manage
corporate responsibility-related risks.
8. Social investment
» Connect 2,100 schools and public institutions to the internet
by 2030 in Latin America.
» Implement a volunteering program with digital education
initiatives in all our markets by 2020.
» Since 2017, Health and
Safety is part of the
Integrated Services’ team
scope of work for a
comprehensive approach
across risk categories.
» Zero Fatality is a
commitment that never
expires and we will continue
to seek ways to reduce the
occurrence of all incidents by
root cause analysis,
remediation action plans,
and targeted training.
» Learning is part of everyday
management and each
incident is carefully analyzed
to enhance prevention. We
will continue to focus on
management protocols,
reporting, trend analysis to
identify key risks and
refurbish our mitigation
controls. These points are
tied in with an extensive
program of accident/
incident awareness training.
» We have increased the
» We will step up our efforts to
maturity level of our supplier
assessment and monitoring
programs by integrating a
Supplier Due Diligence
platform in our vetting
process.
» We have an established
supplier CR training in
Latam.
incorporate relevant CR
criteria in our Procurement
analysis and decision-
making processes, further
the collaboration between
CR and Procurement teams,
and provide CR training
tailored to Procurement staff
members.
» Our Social Investments (SI)
have become more regional
and strategic. We have
already achieved 5% of the
goal for 2030. In addition, all
Latam markets have ongoing
volunteer programs focused
on COP and the use of
technology.
» SI is more a tool than an
issue in and of itself.
Therefore, we are
discontinuing “Social
Investment” as a separate
focus area. Our updated CR
framework contains our
flagship programs under
Responsible Leadership in
Action. This will enable a
more regional, strategic and
measurable approach to our
investments.
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Our Performance–continued
1. Privacy and freedom of expression
KPI
% of operations with controls systematically applied in line with the Group guidelines1
Total number of law enforcement requests (Group)
Number of major events
1 Based on 11 operations.
Law Enforcement Requests
KPI
Number of law enforcement requests - Latam
Interception
Customer metadata
MFS
Content Takedown
Number of law enforcement requests - Africa
Interception
Customer metadata
MFS
Content Takedown
Overview of Major Events by Type3
KPI
Shutdown or restriction of services4
Proposals for significant changes5 in local laws
Proposals for significant changes5 in technical or operational procedures
Disproportionate interception or customer data requests
Politically motivated messages
Other
2 MFS values for requests in Paraguay derived from estimates.
3 Data reported for financial year, including 2017 data.
4 Renamed from “Shutdown of services” to “shutdown or restriction of services”.
5 Concerning government surveillance, interception or other (with Privacy or FoE-related implications).
2017 value
2018 value
100%
41,323
14
100%
45,6662
20
2017 value
2018 value
971
32,340
181
1
0
7,705
251
3
2116
33,868
5232
0
0
8,930
228
1
2017 value
2018 value
2
4
1
2
0
5
7
5
2
2
1
3
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2. Child rights and online protection
KPI
2017 value
2018 value
% of operations with controls systematically applied in line with the minimum age policy
% of operations with child risk impact assessments conducted to date
% of operations that have hosted a multi-stakeholder COP workshop to date
% of operations with a child online protection portal
Number of children reached by COP training (000)
% of operations in Latam blocking child sexual abuse content
100%
57%
86%
71%
188.6
71%
100%
100%
100%
71%
360.11
71%
1 Cumulative from 2016. From October 1, 2017 to September 30, 2018, the number of children reached by COP training was 171,500 in Latam.
3. Acting with integrity: anti-corruption compliance
KPI
2017 value
2018 value
% of employees who acknowledged the Code of Conduct
% of employees who have completed the Code training
% of procurement staff trained on ABAC
% of senior managers trained on ABAC
% of employees who filled and signed the conflict of interest declaration form
Number of cases of unethical behavior reported and investigated
Investigations resulting in written warning
Investigations resulting in termination of employee contract
% revenue from MFS represented by operations audited for AML controls
% of operations (where) we conducted a compliance risk assessment or audit
Turnover of procurement staff (%)
961
962
96
98
90.5
164
6
58
27
45
17
91
90
97
99
923
3364
72
31
975
30
28
1 The percentages of employees who acknowledged the Code and who have completed the Code training are the same as both were done simultaneously for 2017.
2
In the framework of the 2017 Global Compliance Awareness Week, held in November 2017, acknowledgment of the Code was simultaneous with the training, hence the
identical percentages. Employees are required to complete a training session on both the Code and Anti-Bribery and Anti-Corruption at least once a year. The Corporate
Offices’ training completion rate excludes employees on long-term leave.
3 Guatemala not included because, as of December 31st, 2018, authorization of the conflict of interest form and policy is pending by local compliance committee.
4
Incidents reported through Millicom Ethics Line and Linea Etica TigoUne. Incidents reported from Guatemala were channeled through Millicom Ethics Line in 2018, as Linea
Ética Tigo Guatemala, currently going through an upgrading process, was. Incidents reported through Linea Ética Tigo Guatemala are included as of 2017. In addition to the
inclusion of the incidents reported through Línea Ética Tigo Guatemala, the increase in incident count can be attributed to the efforts placed in promoting the Ethics lines.
In 2018, 6 of our 8 operations offering MFS were audited on their AML controls.
5
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Our Performance–continued
3. Acting with integrity: anti-corruption compliance—continued
Overview of cases reported to Millicom Ethics Line1
Bribery and Corruption
KPI
Number of cases reported and investigated
Cases resulting in written warning
Cases resulting in termination
Discrimination and Harassment
KPI
Number of cases reported and investigated
Cases resulting in written warning
Cases resulting in termination
Human Rights and Labor
KPI
Number of cases reported and investigated
Cases resulting in written warning
Cases resulting in termination
Conflict of Interest
KPI
Number of cases reported and investigated
Cases resulting in written warning
Cases resulting in termination
Fraud
KPI
Number of cases reported and investigated
Cases resulting in written warning
Cases resulting in termination
Other
KPI
Number of cases reported and investigated
Cases resulting in written warning
Cases resulting in termination
2017 value
2018 value
7
0
0
10
2
3
2017 value
2018 value
12
0
0
49
16
10
2017 value
2018 value
22
2
0
0
0
0
2017 value
2018 value
7
0
0
24
4
3
2017 value
2018 value
10
0
3
16
3
2
2017 value
2018 value
22
4
1
89
21
4
1
The metric “Cases resulting in written warning or termination” reports number of cases with that outcome; not number of written warning and/or terminations.
One case can include warnings and/or terminations to multiple employees.
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4. Reducing our environmental footprint
e-waste recycled through responsible waste management program (tonnes)1
KPI
Bolivia
Colombia
Costa Rica
El Salvador
Guatemala
Honduras
Paraguay
Tanzania
1 Program also set up in Chad. No values available for this operation.
Energy use
Total Energy Consumption/Sources of Energy by Asset Type
KPI
Base station and fixed network sites1
Fuel (000 l)
Energy from fuel (MWh)
Electricity (MWh)
Our fleet2
Fuel (000 l)
Energy from fuel (MWh)
Electricity (MWh)
Datacenters and offices3
Fuel (000 l)3
Energy from fuel (MWh)
Electricity (MWh)
Shops6
Fuel (000 l)
Energy from fuel (MWh)
Electricity (MWh)7
2017 value
2018 value
474
77
44.5
162
1,037
3.52
236
462
7.74
587
310
147
400
0
105.18
400
2017 value
2018 value
14,732
147,073
354,949
10,435.32
104,178.29
444,885.99
6,335
60,756
N/A
988
24,082
55,8855
332
3,312
15,509
4,063.98
38,609.45
N/A
449.74
4,489.88
89,582.09
23.44
233.94
16,916.97
1 Zantel excluded.
2
3
Fuel consumption for fleet includes gasoline and diesel consumption.
Many of our data centers are co-located with our offices. Therefore, they often do not have separate meters to enable us to report on datacenter consumption separately.
Zantel excluded for 2017 and Chad excluded for 2017 and 2018. Estimated data for Colombia Movil.
5 Electricity consumption for offices and datacenters in El Salvador excluded in 2017.
6 Zantel and Chad excluded for 2018.
7 Electricity consumption for shops in Guatemala is calculated based on electricity cost.
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Emissions and e-waste overview
KPI
2017 value
2018 value
Total weight of e-waste recycled through our responsible e-waste management program
2,496.02
1,956.92
Scope 1 emissions (tonnes CO2e)1
Scope 2 emissions (tonnes CO2e)2
Scope 3 emissions (tonnes CO2e)3
% of operations set up on global responsible e-waste recycling program
% of operations with controls systematically applied in line with the environment policy
Tonnes of CO2e emissions per USD$1,000 revenue
58,787
114,883
NA
91
100
0.029
39,181
141,439
NA
91
100
0.03
1
2
3
Emissions from fuel are calculated using World Resources Institute (2015) GHG Protocol tool for stationary combustion, version 4.1.
Emissions from electricity are calculated using Electricity Emission Factors from IEA, version 2016, except in the cases of Paraguay and Chad, where other official sources were
used. Zantel excluded.
Not included, as we are currently reassessing our methodology for reporting Scope 3 emissions.
5. Diversity
KPI
% of operations with breastfeeding rooms in Latam
% of women in senior management positions
% of women across our employee base
6. Taking care of our people
KPI1
% of operations with controls systematically applied in line with our Group health and
safety policy
% of operations in line with OHSAS 18001
% of operations certified against OHSAS 18001
Number of employee fatalities1
Number of contractor fatalities
Number of health and safety incidents reported
Lost-time injury rate per 1,000 workers
Absentee rate
2017 value
2018 value
64
33
40
100
28
41
2017 value
2018 value
100
100
46
1
9
387
2.6
0.8
100
100
91
0
2
369
0.54
1.29
1
Numbers of employee and contractor fatalities reported are aligned with the reporting period from October 1st 2017 to September 30th, 2018. Fatalities for previous years
have been reported between the same dates.
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OverviewStrategyPerformanceGovernanceCR AppendixForm 20-FOverviewStrategyPerformanceGovernanceFinancialsAppendix Our Performance–continued
7. Responsible supply chain management
KPI
2017 value
2018 value
Total number of suppliers invited to complete an EcoVadis assessment
Total number of suppliers who completed the assessment
Total number of suppliers that do not fulfill our requirements
Number of suppliers with improved scores following implementing corrective
action plans (CAPs)
Number of CAPs requested from suppliers by EcoVadis categories
Environmental
Labor rights
Fair business practices
Sustainable procurement
% of strategic suppliers who signed the supplier code
% of all suppliers who have signed the supplier code
% of spend represented by suppliers who completed assessments on EcoVadis to date
% of procurement teams trained on responsible supply chain management
Number of suppliers trained on Millicom's corporate responsibility strategy and requirements
321
68
42
47
58
127
88
63
89
611
47.3
962
121
326
129
58
73
35
81
59
36
89
65
42
813
108
1 Guatemala’s information excluded from this percentage for 2017 as a different definition was applied to calculate the indicator locally. The 2018 value includes
Guatemala.
2 Procurement teams training focused on Anti-Bribery, Anti-Corruption (ABAC) in 2017, as reported in the Compliance performance table for that year (page 103).
3 Colombia excluded
8. Social investment
KPI
Number of volunteering hours
Monetary value of employee volunteering (US$ 000)
Total cash contributions (US$ 000)
In-kind giving (US$ 000, at cost)
Schools and public institutions connected to the internet1
Women enrolled in digital inclusion programs2
Women enrolled in financial inclusion programs2
2017 value
2018 value
14,841
24,732
170
3,203
6,399
1,259
235
3,776
6,737
1,361
New KPI for
2018
New KPI for
2018
117,340
97,978
1 Cumulative since 2016, then the commitment with the ICT 2030 Alliance was signed with the OAS (see page 80 of our 2016 Annual Report).
2
Depending on local curriculum, women enrolled in training programs receive training on both digital and financial inclusion, therefore the two figures partially overlap and
should not be combined.
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OverviewStrategyPerformanceGovernanceCR AppendixForm 20-FOverviewStrategyPerformanceGovernanceFinancialsAppendix Independent Limited Assurance Report
To the Management and Directors of Millicom International Cellular S.A.
Scope of work
We have undertaken a limited assurance engagement in relation to the Millicom International Cellular S.A (Millicom) Corporate
Responsibility Report (Pages 100 – 109) of the Millicom Annual Report 2018 (the “Corporate Responsibility Report”).
The scope determined by Millicom for the preparation of this independent limited assurance report is described below:
Reporting Section
Indicator Description
Privacy and freedom of
expression
% of operations with controls systematically applied in line with the
Group guideline
Total number of law enforcement requests (Group)
Number of major events
KPI Reference
Review Period 2018
Q4 2017 -Q3 2018
Q4 2017 - Q3 2018
Q1 2018 - Q4 2018
% of employees who acknowledged the Code of conduct
Q1 2018 - Q4 2018
% of employees who have completed the Code training
% of procurement staff trained on ABAC
% of senior managers trained on ABAC
Acting with integrity
% of employees who filled and signed the conflict of interest
declaration form
Q1 2018- Q4 2018
Q1 2018- Q4 2018
Q1 2018- Q4 2018
Q1 2018- Q4 2018
Number of cases of unethical behavior reported and investigated
Q1 2018 - Q4 2018
Investigations resulting in written warning
Q1 2018 - Q4 2018
Investigations resulting in termination of employee contract
Q1 2018 - Q4 2018
Turnover of procurement staff
Q4 2017 - Q3 2018
Total Energy Consumption / Sources of energy by asset type
Q4 2017 - Q3 2018
Reducing our environ-
mental footprint
Scope 1 and 2 carbon emissions
Diversity
% of women in senior management positions
Taking care of our
people
Absentee rate
Total number of suppliers invited to complete an EcoVadis
assessment
Responsible supply
chain
management
% of strategic suppliers who signed the supplier code
% of all suppliers who have signed the supplier code
% of procurement teams trained on responsible supply chain
management
Q4 2017 - Q3 2018
Q1 2018 - Q4 2018
Q4 2017- Q3 2018
Q4 2017 - Q3 2018
Q4 2017 - Q3 2018
Q4 2017 - Q3 2018
Q4 2017 - Q3 2018
The Millicom Corporate Responsibility
Report was prepared in accordance with
AA1000 AccountAbility Principles Standard
2008 (AA1000 APS 2008).
Criteria
Our review was carried out based on:
•
•
AA1000 AccountAbility Assurance
Standard 2008, with a moderate
level of type 2 assurance.
Standard ISAE 3000, Assurance
Engagements, issued by the
International Auditing and
Assurance Standard Board
(IAASB) of the International
Federation of Accountants (IFAC),
with a limited scope of assurance.
Management’s Responsibility
The management of Millicom is responsible
for the preparation and fair presentation of
the Corporate Responsibility Report in
accordance with the Criteria, and is also
responsible for the selection of methods
used in the Criteria. Further, Millicoms’
management is responsible for establishing
and maintaining internal controls relevant to
the preparation and presentation of the
Corporate Responsibility Report that is free
from material misstatement, whether due to
fraud or error; selecting and applying
appropriate criteria; maintaining adequate
records and making estimates that are
reasonable in the circumstances.
Assurance Practitioner’s Responsibility
on the content of Millicom’s Corporate
Responsibility Report according to the
scope previously defined.
Our procedures were designed to obtain a
limited level of assurance on which to base
our conclusion, and, as such, do not provide
all of the evidence that would be required to
provide a reasonable level of assurance. The
procedures performed depend on the
assurance practitioner’s judgement
including the risk of material misstatement
of the Corporate Responsibility Report,
whether due to fraud or error. While we
considered the effectiveness of
management’s internal controls when
determining the nature and extent of our
procedures, our assurance engagement was
not designed to provide assurance on
internal controls.
Our responsibility is to provide with
independent third-party limited assurance
Our procedures did not include testing
controls or performing procedures relating
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OverviewStrategyPerformanceGovernanceCR AppendixForm 20-FOverviewStrategyPerformanceGovernanceFinancialsAppendix to checking aggregation or calculation of
data within IT systems, which would have
been performed under a reasonable
assurance engagement.
Independence
We have performed our work in accordance
with the standards of independence
required by the Code of Ethics of the
International Federation of Accountants
(IFAC).
Applied procedures
Our assurance procedures consisted in
requesting information from Millicom
Corporate Responsibility department and
business areas participating in the
preparation of the Corporate Responsibility
Report and applying analytical procedures
and sampling tests as described in general
terms below:
1. Interviews with senior managers
responsible for management of
Corporate Responsibility issues and
review of selected evidences to support
issues discussed. The list of interviewees
included Executives with overall
responsibility for Millicom’s Corporate
Responsibility strategy and programmes
and for specific functions, including
Supply Chain, Health and Safety, Privacy
and Compliance. The purpose of these
interviews was to obtain awareness of
the Corporate Responsibility objectives
and policies as well as how they are put
into practice and integrated into
Millicom’s strategy
2. Review of Millicom’s approach to
stakeholder’s engagement and outputs.
3. Review of the processes for gathering
and consolidating the specified
performance data and, for a sample,
checking the data consolidation.
4. Checks on a sample basis of the
quantitative information included in the
Corporate Responsibility Report as well as
its adequate compilation from data
supplied by information sources. The
tests have been defined to provide
limited assurance levels in line with the
criteria described in this report.
5. Site visits in Millicom’s operations in
Guatemala and Paraguay to review
process and systems for preparing site
level corporate responsibility data and
implementation of Corporate
Responsibility strategy.
Conclusions
Based on our limited assurance procedures
described above, nothing has come to our
attention that causes us to believe that the
Corporate Responsibility Report is not
presented fairly, in all material respects, in
accordance with the Criteria (the principles
established in standard AA1000 APS 2008)
such as:
1. Inclusiveness
•
In 2018, Millicom continued its efforts to
engage and establish relationships with
its key stakeholders, with regards to CR,
such as, quarterly updates for the Board
of Directors and for investors, interactions
with civil society and active participation
in GNI. Specifically, they used the
opportunity of the materiality
assessment this year to include various
stakeholders across four key groups,
namely investors, civil society, customers
and employees into CR discussions.
•
Millicom partnered with the EAFIT
University in Medellin, Colombia to
launch a pioneering assessment on the
use of ICT by children, that not only
conducted research but also actively
involved members of civil society and
Millicom employees.
2. Materiality
•
In 2018, Millicom developed a new
materiality matrix with the support of an
external provider. This materiality matrix
has been based on a series of more than
40 interviews in total, covering various
types of internal and external
stakeholders. With this initiative, Millicom
has responded to the prior years’
assurance observations regarding
materiality assessment and
demonstrates its commitment to
continuous improvement in this area.
•
Millicom has developed the necessary
competencies of internal CR stakeholders
to apply the materiality based reporting
process and to strengthen their
awareness on importance of data
management and quality.
3. Responsiveness
•
Millicom’s Law Enforcement Disclosure
(LED) committee is formed by a cross
functional team of internal stakeholders
that views relevant issues of privacy,
cybersecurity and freedom of expression
in a combined manner. It keeps track of
trends and concerns in this sector, and
regularly interacts with key external
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•
•
stakeholders. One of the key responses to
these challenges was carrying out the
GNI assessment and development of the
‘Global Privacy Policy’ in 2018.
In 2018, Millicom developed both a
“Corporate Responsibility Reporting
Governance Process” and a “Reporting
Guidelines” that aim at strengthening the
Corporate Responsibility Reporting
process by detailing roles and
responsibilities, definitions of the key
indicators, data flow, required evidences
for indicators and calculations and data
control. Moreover, Millicom trained the
whole “CR team” in the various local
operations including “Data contributors”
and “Data validators” to this new
“Corporate Responsibility Reporting
Governance Process”.
Through its continuous improvement of
learning processes, Millicom further
enhanced the training provided to its key
suppliers with one-on-one follow-up
sessions to ensure that suppliers
understand the high expectations and
standards of Millicom regarding critical
issues, such as Ethics, Privacy, Child
Rights, Diversity, Health and Safety and
Environment.
Recommendations
We also presented to Millicom our
recommendations regarding areas of
improvement related to the application of
standard AA1000 APS 2008 as well as to
actions taken with main stakeholders. The
most significant recommendations are
summarized below:
1. Inclusiveness
•
•
We support the commitment of Millicom
to go further in the holistic
dissemination of information and
expectations across the entire value
chain, by ensuring that the content of
the Responsible Supply Chain
Management training, currently
provided to the procurement team, is
aligned and made consistent with that
of the Supplier training program carried
out for LATAM suppliers in 2018.
While already implemented throughout
2018, we recommend that Millicom
continues to identify opportunities to
develop communication platforms in
order to broaden and strengthen its
dialogue on CR with all its stakeholders,
such that their expectations and
priorities can be consistently
incorporated into Millicom’s CR strategy
and action plan.
OverviewStrategyPerformanceGovernanceCR AppendixForm 20-FOverviewStrategyPerformanceGovernanceFinancialsAppendix 2. Materiality
•
•
We recommend Millicom to not only
continue to implement its plan to
conduct the materiality assessment on a
biennial basis, but also to monitor key
trends and context that can assist in
regularly updating their CR action plan.
We further recommend Millicom to use
the opportunity of the results of the new
materiality assessment and creation of
the new CR action plan to further refine
material requirements and their actions
at the country level.
3. Responsiveness
•
Although Millicom deployed the
“Corporate Responsibility Reporting
Governance Process” and “Reporting
Guidelines”, the on-ground application
and integration of these processes and
guidelines needs further efforts. As
already started in 2018, we recommend
Millicom to pursue its implementation in
all locations and departments. In this
regard, we also recommend to further
strengthen data collection and control
processes regarding the monitoring and
follow up of Health & Safety (H&S)
incidents and continue to develop
communication with external providers
on H&S issues. We also recommend
Millicom to pursue its efforts for an
enhanced reporting of Environmental
data.
•
In order to continue and enhance
dialogue with key stakeholders, we
recommend Millicom to respond to its
stakeholder’s material CR concerns by
developing a process and methodology
of communication on achievements of
commitments and progress against
goals of its CR action plan.
Ernst & Young
Société Anonyme
Cabinet de Révision Agréé
Olivier Lemaire
Partner
David Cau
Director
Luxembourg, February 28, 2019
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OverviewStrategyPerformanceGovernanceCR AppendixForm 20-FOverviewStrategyPerformanceGovernanceFinancialsAppendix
Corporate Information
AUDITOR
Ernst & Young
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Luxembourg, L-1855
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changes should be directed to:
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1-800-937-5449 ext. 4801
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help@astfinancial.com
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INVESTOR RELATIONS
Investors@millicom.com
MEDIA CONTACT
Press@Millicom.com
ANNUAL MEETING
The 2019 Annual Meeting of Shareholders
will be held on May 2, 2019 at the Hotel Le
Royal, 12 Boulevard Royal, Luxembourg,
L-2449.
HEADQUARTERS
Millicom International Cellular S.A.
2 Rue du Fort Bourbon
Luxembourg, L-1249
BOARD OF DIRECTORS
José Antonio Ríos García
Chairman, Director
Pernille Erenbjerg
Deputy Chairman, Director
Odilon Almeida
Director
Janet Davidson
Director
Tomas Eliasson
Director
Lars-Åke Norling
Director
Roger Solé Rafols
Director
James Thompson
Director
EXECUTIVE TEAM
Mauricio Ramos
Chief Executive Officer
Tim Pennington
Chief Financial Officer
Esteban Iriarte
Chief Operating Officer—Latam
Mohamed Dabbour
Head of Africa Division
Xavier Rocoplan
Chief Technology and Information Officer
Rachel Samrén
Chief External Affairs Officer
Salvador Escalón
General Counsel
Susy Bobenrieth
Chief Human Resources Officer
HL Rogers
Chief Ethics and Compliance Officer
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OverviewStrategyPerformanceGovernanceForm 20-FCR Appendix For further information, please contact:
investors@millicom.com
millicom.com