Millicom International Cellular S.A. — Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2022; filed February 28, 2023. This is an annual report, not a standalone Q4 report, and the supplied filing text does not provide clear Q4-only financial results. Financial statements are prepared under IFRS as issued by the IASB. Millicom provides mobile, broadband, pay-TV and mobile financial services across nine Latin American countries. Following the sale of Tanzania in April 2022, it no longer had African operations.
Key financial metrics
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $5,624 million | $4,261 million |
| Service revenue | $5,171 million | $3,997 million |
| Operating profit | $915 million | $619 million |
| Profit from continuing operations | $16 million | $570 million |
| Net profit | $129 million | $542 million |
| Net profit attributable to company owners | $177 million | $590 million |
| Net cash from operating activities | $1,284 million | $956 million |
| Operating free cash flow | $765 million | $582 million |
| Free cash flow | $77 million | $(46) million |
| Cash and cash equivalents | $1,039 million | $895 million |
| Debt, excluding leases | $6,804 million | $7,744 million |
| Net financial obligations, including leases | $6,780 million | $7,981 million |
Gross profit was $4,118 million, or approximately 73.2% of revenue, compared with $3,063 million, or 71.9%, in 2021. Operating profit margin was approximately 16.3%, versus 14.5%. Net profit margin was approximately 2.3%, versus 12.7%; the comparison is affected by a $670 million non-recurring gain in 2021 from revaluing Millicom’s previously held Guatemala interest. Interest and other financial expenses rose to $617 million from $495 million. Basic earnings per share were $1.27, compared with $4.59.
Management-reported Group Segment EBITDA, a non-IFRS measure that includes Honduras and presents Guatemala as consolidated for comparative periods, was $2,457 million, down 1.5% from $2,494 million. Group Segment revenue was $6,203 million, broadly flat year over year. These segment measures are not directly equivalent to consolidated IFRS results.
Material changes versus the prior year
- Reported consolidated revenue increased 32.0%, while organic revenue growth was 3.3% and organic service revenue growth was 3.5%. The reported increase primarily reflects full-year consolidation of Guatemala; 2021 included only about six weeks of its results in consolidated statements.
- Mobile revenue rose to $2,957 million from $2,000 million, and fixed-services revenue rose to $2,145 million from $1,938 million. Telephone and equipment revenue increased to $454 million from $263 million.
- Profit from continuing operations fell to $16 million from $570 million, reflecting the absence of the 2021 Guatemala revaluation gain, higher interest expense and taxes, and other year-over-year items. Discontinued operations contributed $113 million of profit in 2022, including the Tanzania disposal gain, versus a $28 million loss in 2021.
- Operating cash flow increased, while investing cash outflow declined to $1,104 million from $2,703 million, when the Guatemala acquisition drove substantial investment outflow. Financing cash flow was approximately neutral in 2022, versus $1,777 million used in 2021.
- Millicom raised approximately $717 million net in a 2022 rights offering, issuing 70.4 million shares; shares outstanding rose to 172.1 million from 101.7 million. It also acquired the remaining 20% of Tigo Panama for approximately $290 million. No dividends or share repurchases were made in 2022.
Liquidity, debt and capital investment
Cash and cash equivalents were $1,039 million, including $675 million at holding-company level and $364 million at operating subsidiaries. Current assets were $2,065 million and current liabilities $2,119 million. Debt excluding lease liabilities was $6,804 million; lease liabilities were $1,016 million. Including leases, gross financial obligations were $7,820 million, and net financial obligations were $6,780 million. The company reported net financial obligations to EBITDA of 3.04x on an IFRS basis; it stated that the ratio calculated under indenture covenant definitions was below 3.0x. There were no financial covenant breaches at year end.
Approximately 62% of debt excluding leases was at operating-company level and generally non-recourse to MIC S.A.; 40% of that operating-level debt was denominated in local currency. About 82% of borrowings were fixed-rate or swapped to fixed-rate, compared with 64% in 2021. Capital additions were $1,167 million, including $823 million for property, plant and equipment and $345 million for licenses and other intangibles. Capital expenditure commitments were $406 million, of which $259 million was due within one year. Management said available cash, borrowing capacity and operating-company funds should cover projected operating and capital needs for at least 12 months.
Management commentary, outlook and risks
- Management said 2022 performance was broadly in line with plans despite a more challenging macroeconomic environment. It cited inflation, foreign-exchange pressure and higher energy and labor costs; price increases and cost-saving initiatives were implemented during the second half of 2022. No specific numerical earnings or revenue guidance is provided in the supplied filing text.
- Strategic priorities include expanding HFC and FTTH broadband, monetizing mobile data, growing B2B and digital services, improving convergence and customer experience, and developing Tigo Money and tower businesses. Millicom reported launching 5G in parts of Guatemala City and expanding 4G coverage.
- Key risks include currency depreciation and restrictions on converting or upstreaming local cash; inflation and economic or political instability in emerging markets; intense competition and pricing pressure; spectrum and license renewal; cybersecurity, privacy and network resilience; and the ability to generate returns on broadband and technology investment.
- Debt service and liquidity depend on operating cash generation and access to financing. Management identifies Guatemala as an important cash-flow source. Foreign-exchange losses were $84 million in 2022, versus $42 million in 2021.
- The DOJ issued a subpoena in April 2022 seeking information about Guatemala, including the 2021 partner-interest purchase, and other Latin American operations. Millicom said it was cooperating and could not predict the matter’s scope, timing or outcome.
- Subsidiary legal claims totaled $239 million, with $25 million provisioned; the Honduras joint venture’s share of claims was $13 million, with $1 million provisioned. Subsidiary tax-risk exposure was estimated at $221 million, with $38 million provided; the joint venture’s share was $97 million, with $7 million provided. Management said the ultimate outcome of disclosed legal claims was not expected to materially affect the Group, but outcomes remain uncertain.
- The Tanzania sale generated an approximately $109 million net gain. The sale terms include price adjustments for certain contingencies and an IPO-related adjustment clause effective through April 5, 2024; management had recorded no additional provision for these matters at year end.
- After year end, Millicom confirmed discussions with Apollo Global Management and Claure Group about a potential acquisition of all outstanding shares; it cautioned that no transaction was assured and terms and timing were uncertain.
Investor facts to verify
- Separate underlying operating performance from Guatemala consolidation, the 2021 revaluation gain and Tanzania discontinued-operation and disposal effects; review organic growth and Group Segment measures alongside IFRS results.
- Assess whether cash flow, refinancing capacity and covenant headroom can support debt service, capital investment and any shareholder returns, including the distinction between reported and covenant leverage.
- Review Guatemala’s contribution to cash generation and the status or consequences of the DOJ inquiry and material tax exposures.
- Evaluate currency exposure, particularly in Colombia and Paraguay, and the ability to upstream local cash; verify upcoming spectrum and license renewals, including Colombian licenses expiring in 2023 and Paraguayan spectrum expiring in 2023–2024.
- Examine goodwill impairment assumptions: goodwill was $4,059 million, and management reported less headroom for Colombia and Nicaragua than for other cash-generating units, although no impairment was recorded.
- Consider the dilution from the 2022 rights offering and the uncertain outcome of the potential acquisition discussions disclosed after year end.
Ernst & Young issued an unqualified opinion on the IFRS financial statements and an unqualified opinion on internal control over financial reporting as of December 31, 2022.