← Back to TIGO filing summaryOriginal filing text · Part I
Item 5 — Management's Discussion and Analysis
Millicom International Cellular SA · 20-F · FY 2022 · Period ended Dec 31, 2022
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The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements for the years ended December 31, 2022, 2021 and 2020, and the notes thereto, included elsewhere in this Annual Report.
The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of events may differ materially from those expressed or implied in such forward-looking statements as a result of various factors, including those set forth in “Forward-Looking Statements” and “Item 3. Key Information—D. Risk Factors.”
A. Operating Results
Factors affecting our results of operations
Our performance and results of operations have been and will continue to be affected by a number of factors and trends, including principally:
• Macro and socio-demographic factors. These affect demand for and affordability of our services and include consumer confidence and expansion of the middle class, as well as foreign currency exchange rate volatility and inflation which can impact our cost structure and profitability. Growth in GDP per capita and expansion of the middle class make our services affordable to a larger pool of consumers. The emerging markets we serve tend to have younger populations and faster household formation, and typically have more children per family, than developed markets, driving demand for our residential services, such as broadband internet and pay-TV. Digitalization of societies leads to more devices connected per household and more data needs. Exposure to inflationary pressures and foreign currency exchange volatility may negatively impact our profitability or make our services more expensive for our customers; in this respect see “Item 11. Quantitative and Qualitative Disclosures About Risk—Foreign currency risk.”
• Competitive intensity, which largely reflects the number of market participants and the financial strength of each. Competitive intensity varies over time and from market to market. Markets tend to be more price competitive and less profitable for us when there are more market participants, and thus any future increase in the number of market participants in any of our markets would likely have a negative effect on our business.
• Changes in regulation. Our business is highly dependent on a variety of licenses granted by regulators in the countries where we operate. Any changes in how regulators award and renew these licenses could impact our business. In particular, our mobile services business requires access to licensed spectrum, and we expect our business and the mobile industry in general will require more spectrum in the future to meet future mobile data traffic needs. In addition, regulators can impose certain constraints and obligations that can have an impact on how we operate the business and on our profitability.
• Technological change. Our business relies on technology that continues to evolve rapidly, forcing us to adapt and deploy new innovations that can impact our investment needs and our cost structure, as well as create new revenue opportunities. This is true for both our mobile and fixed services. With respect to our mobile services, while we are still deploying 4G networks, the industry is already well advanced in planning for the future deployment of 5G, which we expect will drive continued demand for data in the future. With respect to our fixed services, the cable infrastructure we are deploying, largely based on the DOCSIS 3.0 standard, continues to evolve, and we are deploying alternatives such as DOCSIS 3.1 and FTTH in certain markets. Over time, 5G and other mobile technologies may also be considered as viable alternatives for fixed services. In the meantime, an important recent trend in the Latin American telecommunications market has been the growth in fixed broadband penetration. We have significantly increased the coverage of our HFC network largely in response to demand for high-speed fixed broadband services. Technological change is also impacting the capabilities of the equipment our customers use, such as mobile handsets and set-top boxes, and potential change in this area may impact demand for our services in the future.
• Changes in consumer behavior and needs. In recent years, consumption of mobile services has shifted from voice and SMS to data services due largely to changes in consumer patterns, including for example the adoption and growth of social media, made possible by new smartphones on 4G and 5G networks capable of high quality live video streaming.
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• Political changes. The countries where we operate are characterized as having a high degree of political uncertainty, and electoral cycles can sometimes impact business investment, consumer confidence, and broader economic activity, as well as inflation and foreign exchange rates. Moreover, changes in government can sometimes produce significant changes in taxation and regulation of the telecommunications industry that can have a material impact on our business and financial results.
•COVID-19. On March 11, 2020, the World Health Organization declared the coronavirus outbreak a pandemic. Governments in the vast majority of our markets imposed lockdowns that caused sharp reductions in mobility and were among the most stringent in the world, according to data compiled by the University of Oxford. Government restrictions forced many of our stores and distribution channels to close, which had a significant adverse affect on our gross sales. Additionally, governments in some countries mandated that companies such as ours continue to provide services to non-paying clients, waive fees for late payments, or defer payments over an extended period of time, among other measures. These measures had a material negative impact on our collections, thus causing higher provisions for bad debt. While the COVID-19 pandemic did not significantly impact our financial condition and results of operations in 2021 or 2022, the ultimate severity and impact of the pandemic will depend on future developments, as variant strains of the virus have led to increased uncertainty.
Additional factors and trends affecting our performance and the results of operations are set out in "Item 3. Key Information—D. Risk Factors."
Factors affecting comparability of prior periods
Acquisitions
On November 12, 2021, Millicom signed and closed an agreement to acquire the remaining 45% equity interest in its joint venture business in Guatemala (“Tigo Guatemala”) from our local partner for $2.2 billion in cash. As a result, Millicom owns a 100% equity interest in Tigo Guatemala. See note A.1.2. to our audited consolidated financial statements for additional details regarding this acquisition and the accounting treatment thereof.
In the years ended December 31, 2022 , 2021 and 2020, the Group also completed certain other minor acquisitions.
Discontinued operations
Tanzania
On April 19, 2021, we announced the signing of an agreement for the sale of our operations in Tanzania to a consortium led by Axian. The transaction was completed on April 5, 2022 for initial cash consideration of approximately $101 million (subject to final price adjustments). See note E.4. to our audited consolidated financial statements for additional details regarding this divestiture.
Ghana
On March 3, 2017, we and Bharti Airtel Limited ("Airtel") announced that we had entered into an agreement for MIC S.A.'s subsidiary Tigo Ghana Limited and Airtel's subsidiary Airtel Ghana Limited to combine their operations in Ghana. As per the agreement, we and Airtel had equal ownership and governance rights in the combined entity ("AirtelTigo"). On April 19, 2021, we announced that we had signed a definitive agreement to sell our ownership in AirtelTigo to the Government of Ghana, and the sale was subsequently completed on October 13, 2021.
Guatemala and Honduras joint ventures
Though we hold a majority ownership interest in the entities that own the Honduras joint venture, the board of directors is composed of equal numbers of directors from Millicom and from our respective partners, and the shareholders’ agreements for each entity require unanimous board approval for key decisions relating to the activities of these entities. As such, we have determined that neither party controls the entities, and we therefore account for our investments in these entities as equity method investments.
Prior to November 12, 2021, we held a majority interest in the entities that comprised the Guatemala joint venture and accounted for our investments in these entities as equity method investments, as neither we nor our partners controlled the entities. As a result of the acquisition of the remaining 45% equity interest in our operations
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in Guatemala on November 12, 2021, we have consolidated Tigo Guatemala in our audited consolidated financial statements since November 12, 2021.
We report our share of the net income of these joint ventures in our consolidated statement of income under the caption “Share of profit in joint ventures.” The share of the net income of the Guatemala joint venture is reflected in this caption up until November 12, 2021. On and after November 12, 2021, the Guatemala operations are consolidated within our audited consolidated statement of income.
For additional details on the Guatemala and Honduras joint ventures, see note A.2. to our audited consolidated financial statements.
Our segments
Our management determines operating and reportable segments based on the reports that are used by the chief operating decision maker to make strategic and operational decisions from both a business and geographic perspective. The Millicom Group’s risks and rates of return for its operations are predominantly affected by operating in different geographical regions. Until the divestiture of our Tanzania business in April 2022, the Millicom Group had businesses in two main regions, Latin America and Africa, which constituted our two reportable segments. As a result of the sale of the Tanzania business and its reclassification as discontinued operations, we no longer report an Africa segment in our financial statements included elsewhere in this Report. The Group now only operates in a single region, Latin America.
As a result, the Millicom Group now manages and reports a single segment, called the "Group Segment." Group Segment financial information includes our Honduras joint venture as if it were fully consolidated, as this reflects the way management reviews and uses internally reported information to make decisions about operating matters and to provide increased transparency to investors on those operations. Group Segment financial information also includes our operations in Guatemala as if they were fully consolidated for all comparative periods, for the same reasons. On November 12, 2021, we acquired the remaining 45% equity interest in our Guatemala joint venture business, and we now fully consolidate our operations in Guatemala. Prior to this date, we held a 55% stake in our operations in Guatemala and accounted for them using the equity method of accounting and as a joint venture, along with our operations in Honduras.
Our customer base
We generate revenue mainly from the mobile and cable and other fixed services that we provide and, to a lesser extent, from the sale of telephone and other equipment. For a description of our services, see “Item 4. Information on the Company—B. Business Overview—Our services.” Our results of operations are therefore dependent on both the size of our customer base and on the amount that customers spend on our services.
We measure the amount that customers spend on our services using a telecommunications industry metric known as ARPU, or average revenue per user per month. We define ARPU for our Mobile customers as (x) the total mobile and mobile financial services revenue (excluding revenue earned from tower rentals, call centers, data and mobile virtual network operators, visitor roaming, national third parties roaming and mobile telephone equipment sales revenue) for the period, divided by (y) the average number of Mobile subscribers for the period, divided by (z) the number of months in the period. We define ARPU for our Home customers as (x) the total Home revenue (excluding equipment sales, TV advertising and equipment rental) for the period, divided by (y) the average number of customer relationships for the period, divided by (z) the number of months in the period. ARPU is not subject to a standard industry definition, and our definition of ARPU may be different from that of other industry participants.
We provide certain customer data below that we believe will assist investors in understanding our performance and to which we refer later in this section in discussing our results of operations.
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Group mobile customers
As of December 31,
2022 2021(i) 2020(i) (ii)
(in thousands, except where noted)
Mobile Customers 40,576 39,802 37,115
of which are 4G customers 20,886 19,046 16,129
Mobile customer ARPU (in U.S. dollars) $ 6.1 $ 6.3 $ 6.6
(i) Recast to reflect Tanzania in discontinued operations, as discussed above.
(ii) Tigo Guatemala is fully consolidated since the acquisition of the remaining 45% shareholding on November 12, 2021. Figures as of December 31, 2020 include Tigo Guatemala as if it was consolidated.
Including our Honduras joint venture with 5,152 thousand mobile customers, our Group Segment had 45,728 thousand mobile customers as of
December 31, 2022, as disclosed by country below.
Mobile customers by country in our Group
As of December 31,
2022 2021 2020
(in thousands)
Bolivia 3,687 4,119 3,920
Colombia 11,511 11,271 10,025
El Salvador 3,026 2,919 2,685
Guatemala 11,793 11,754 11,416
Nicaragua 3,860 3,757 3,493
Panama 2,441 2,095 1,957
Paraguay 4,258 3,887 3,618
Our Honduras Joint Venture had 5,152 thousand mobile customers as of December 31, 2022, 5,079 thousand customers as of December 31, 2021 and 4,620 customers as of December 31, 2020.
Group Home customers
As of December 31,
2022 2021 (i) 2020 (i) (ii)
(in thousands, except where noted)
Total homes passed 12,905 12,083 11,625
Total customer relationships 4,811 4,704 4,369
HFC / FTTH homes passed 12,632 11,810 11,284
HFC / FTTH customer relationships (iii) 4,139 3,988 3,588
HFC / FTTH RGUs 8,708 8,360 7,319
HFC / FTTH broadband internet RGUs 3,778 3,637 3,218
Home ARPU (in U.S. dollars) $ 26.6 $ 28.4 $ 28.0
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(i) Recast to reflect Tanzania in discontinued operations, as discussed above.
(ii) Tigo Guatemala is fully consolidated since the acquisition of the remaining 45% shareholding on November 12, 2021. Figures as of December 31, 2020 include Tigo Guatemala as if it was consolidated.
(iii) Including our Honduras joint venture with 172,000 HFC / FTTH customer relationships, our Group Segment had 4.3 million HFC / FTTH customer relationships as of December 31, 2022.
Results of operations
We have based the following discussion on our consolidated financial statements included elsewhere in this Annual Report. You should read it along with these financial statements, and it is qualified in its entirety by reference to them. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Factors affecting comparability of prior periods.”
Group Consolidated results of operations for the years ended December 31, 2022 and 2021
The following table sets forth certain consolidated statement of income data for the periods indicated:
Year ended December 31, Percentage Change
2022(ii) 2021(i)
(U.S. dollars in millions, except percentages)
Revenue 5,624 4,261 32.0 %
Cost of sales (1,506) (1,197) (25.8) %
Gross profit 4,118 3,063 34.5 %
Operating expenses (1,890) (1,546) (22.3) %
Depreciation (999) (804) (24.3) %
Amortization (345) (310) (11.4) %
Share of profit in joint ventures 32 210 (84.6) %
Other operating income (expenses), net (2) 5 NM
Operating profit 915 619 47.9 %
Interest and other financial expenses (617) (495) (24.6) %
Interest and other financial income 18 23 (23.0) %
Revaluation of previously held interests — 670 NM
Other non-operating (expenses) income, net (78) (49) (57.2) %
Loss from other joint ventures and associates, net — (40) 98.8 %
Profit (loss) before taxes from continuing operations 238 728 (67.3) %
Charge for taxes, net (222) (158) (41.1) %
Profit (loss) for the year from continuing operations 16 570 (97.2) %
Profit (loss) for the year from discontinued operations, net of tax 113 (28) NM
Net profit (loss) for the year 129 542 (76.2) %
(i) Re-presented for discontinued operations (see note A.4. to our audited consolidated financial statements).
(ii) 2021 financial information includes the impact of our acquisition of the remaining 45% shareholding in Tigo Guatemala (approximately 1.5 months of statement of income data as from November 12, 2021). See note A.1.2. to our audited consolidated financial statements. As a result, 2022 yearly figures are not directly comparable with 2021 yearly figures.
Revenue
Revenue increased by 32.0% for the year ended December 31, 2022 to $5,624 million from $4,261 million for the year ended December 31, 2021. The increase in revenue of $1,393 million reflects the impact of the acquisition of Tigo Guatemala, as discussed above, which was partially offset by the depreciation of currencies in Colombia and Paraguay during the year.
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Guatemala represented 29%, Colombia represented 24%, Panama, Bolivia, Paraguay and El Salvador each represented between 8% and 12%, and Costa Rica and Nicaragua represented less than 6% of our consolidated revenue for the year ended December 31, 2022. Guatemala experienced the highest relative increase in revenues of $1,391 million, or 611%, due to consolidation of Tigo Guatemala for the full year ended December 31, 2022 compared to the year ended December 31, 2021. El Salvador increased $29 million, or 6.4%, due to strong results across the business. Panama revenue increased $18 million, or an increase of 2.9%, due to strong results in the Mobile business. Revenue increased by 3.7% in Nicaragua and 0.2% in Paraguay as both countries saw continued strength in the Mobile business during the year. Revenue declined in Bolivia by 0.4% as a result of a change in regulation affecting the Mobile business and a regional strike. Revenue in Costa Rica declined 2.6% as a result of the depreciation of the Costa Rican colon during the year, which offset growth in our Home and B2B businesses. In Colombia, revenue declined 5.5% as a result of the depreciation of the Colombian peso which offset strong organic growth in our Mobile business driven by postpaid customers.
Cost of sales
Cost of sales increased by 25.8% for the year ended December 31, 2022 to $1,506 million from $1,197 million for the year ended December 31, 2021. Of the increase, $322 million was attributable to the Tigo Guatemala acquisition. The remaining $14 million decline was primarily due to the impact of the depreciation of the Colombian peso and the Paraguayan guarani on our cost of sales.
Operating expenses
Operating expenses increased by 22.3% for the year ended December 31, 2022 to $1,890 million from $1,546 million for the year ended December 31, 2021. Of the increase, $324 million was attributable to the Tigo Guatemala acquisition. The remaining $21 million of the increase was primarily due to increased investment to support the development and expansion of our Tigo Money and Towers businesses, increased energy and employee costs, as well as sales and marketing costs to support growth, especially in our Colombia business.
Depreciation
Depreciation increased by 24.3% for the year ended December 31, 2022 to $999 million from $804 million for the year ended December 31, 2021. Substantially all of the increase was attributable to the consolidation of Tigo Guatemala and the related purchase price allocation.
Amortization
Amortization increased 11.4% for the year ended December 31, 2022 to $345 million from $310 million for the year ended December 31, 2021. Of the increase, $88 million was attributable to the Tigo Guatemala acquisition, which offset a decline in amortization due to the one-off accelerated brand amortization in Panama in 2021.
Share of profit in joint ventures
Share of profit in joint ventures decreased by 84.6% for the year ended December 31, 2022 to $32 million from $210 million for the year ended December 31, 2021. The decrease reflects the impact of the Tigo Guatemala acquisition, as Tigo Guatemala contributed $183 million to share of profit in joint ventures for the year ended December 31, 2021 but was not included in the year ended December 31, 2022 due to its full consolidation. Excluding the impact of the Tigo Guatemala acquisition, share of profit in joint ventures would have increased by $6 million, due to increased profitability in Honduras.
Other operating income (expenses), net
Other operating income (expenses), net, decreased by $7 million for the year ended December 31, 2022 to an expense of $2 million from an income of $5 million for the year ended December 31, 2021. Of the decrease, $3 million was attributable to the Tigo Guatemala acquisition. The decline was mainly due to $7 million in expenses related to a software contract termination for the year ended December 31, 2022 compared to a gain from an earn-out offset by losses from a disposal in our equity investment in Helios Towers for the year ended December 31, 2021.
Interest and other financial expenses
Interest and other financial expenses increased by 24.6% for the year ended December 31, 2022 to $617 million from $495 million for the year ended December 31, 2021, reflecting the consolidation of Tigo Guatemala, which contributed $89 million to the increase, and the subsequent issuance of debt by us and Tigo Guatemala.
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Interest and other financial income
Interest and other financial income decreased by 23.0% for the year ended December 31, 2022 to $18 million from $23 million for the year ended December 31, 2021, which reflects the non-recurring gain from the exchange of the 6.625% Senior Notes due 2026 for newly issued 4.500% Senior Notes due 2031. Of the increase, $37 million was attributable to the Tigo Guatemala acquisition.
Other non-operating (expenses) income, net
Other non-operating expenses increased by $28 million for the year ended December 31, 2022 to an expense of $78 million from an expense of $49 million for the year ended December 31, 2021. The increase was mainly due to foreign exchange losses for the year ended December 31, 2022 compared to a revaluation charge of the put-option liability in Panama for $26 million and losses on foreign exchange, which was partially offset by the mark-to-market revaluation of Helios Towers for an $18 million gain for the year ended December 31, 2021. Of the increase, $2 million was attributable to the Tigo Guatemala acquisition.
Revaluation of previously held interest
As a result of the acquisition of the remaining 45% shareholding in Guatemala, the Group had to revalue its 55% previously held investment at the fair value implied by the transaction. This resulted in the recognition of a gain of $670 million with a corresponding increase in goodwill in 2021.
Loss from other joint ventures and associates, net
Loss from other joint ventures and associates, net decreased by $39 million for the year ended December 31, 2022 to $0 million from a loss of $40 million for the year ended December 31, 2021 that was attributable to our former operations in Ghana.
Charges for taxes, net
Charges for taxes, net increased by 41.1% for the year ended December 31, 2022 to $222 million from $158 million for the year ended December 31, 2021. A majority of the increase, was attributable to the consolidation of Tigo Guatemala as of November 12, 2021. The increase was also impacted by the net effect of the recognition and derecognition of certain deferred tax assets in UNE and Colombia Móvil, respectively, as well as an amnesty settlement.
The main components of charges for taxes, net are the income tax generated by our operations and the withholding tax we pay when cash is repatriated from our local operations. We also have net losses mainly in our corporate entities that reduce our profit before taxes and for which no deferred tax asset is recognized due to the history of losses in such entities. As a result, our effective tax rate is generally above our average statutory tax rate. Moreover, due to the jurisdictional differences and mix, we do not have the opportunity to offset tax expense with accumulated tax loss carry-forwards.
Net profit (loss) for the year
Net profit for the year decreased by $413 million for the year ended December 31, 2022 to a profit of $129 million from $542 million for the year ended December 31, 2021. Profit for the year from continuing operations decreased by $554 million for the year ended December 31, 2022 to a profit of $16 million from $570 million for the year ended December 31, 2021 for the reasons stated above. Profit (loss) for the year from discontinued operations, net of tax increased by $141 million for the year ended December 31, 2022 to $113 million as compared to a loss of $28 million for the year ended December 31, 2021.
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Year ended December 31,
2022 2021 Percentage Change
Group (ii) Group (ii) Group (ii)
(U.S. dollars in millions, except percentages)
Mobile revenue 2,957 2,000 47.9 %
Cable and other fixed services revenue 2,145 1,938 10.7 %
Other revenue 69 60 15.3 %
Service revenue (i) 5,171 3,997 29.4 %
Telephone and equipment revenue 454 263 72.3 %
Revenue 5,624 4,261 32.0 %
(i) Service revenue is revenue related to the provision of ongoing services such as monthly subscription fees for mobile and broadband, airtime and data usage fees, interconnection fees, roaming fees, mobile finance service commissions and fees from other telecommunications services such as data services, short message services, installation fees and other value-added services excluding telephone and equipment sales.
(ii) As further explained above, Group numbers include Guatemala (until acquisition in November 2021) and exclude Africa.
Group Segment results of operations for the years ended December 31, 2022 and 2021
Our Group Segment includes our Honduras joint venture as if it were fully consolidated, as this reflects the way management reviews and uses internally reported information to make decisions. Group Segment financial information also includes our operations in Guatemala as if they were fully consolidated for all comparative periods, for the same reasons. On November 12, 2021, we acquired the remaining 45% equity interest in our Guatemala joint venture business, and we now fully consolidate our operations in Guatemala. Prior to this date, we held a 55% stake in our operations in Guatemala and accounted for them using the equity method of accounting and as a joint venture, along with our operations in Honduras. See note A.1.2. to our audited consolidated financial statements for additional details regarding this acquisition and the accounting treatment thereof. See “—Our segments” above.
The following table sets forth certain segment data, which has been extracted from note B.3. to our audited consolidated financial statements, where segment data is reconciled to consolidated data, for the periods indicated:
Year ended December 31,
2022 2021 Percentage Change
Group Segment (iii) Group Segment (iii) Group Segment (iii)
(U.S. dollars in millions, except percentages)
Service revenue (i) 5,712 5,712 —%
Telephone and equipment revenue 491 503 (2.5)%
Revenue 6,203 6,216 (0.2)%
Operating profit 1,004 983 2.1%
Add back:
Depreciation and amortization 1,454 1,516 (4.1)%
Other operating income (expenses), net (1) (5) (79.0)%
EBITDA (ii) 2,457 2,494 (1.5)%
(i) Service revenue is revenue related to the provision of ongoing services such as monthly subscription fees for mobile and broadband, airtime and data usage fees, interconnection fees, roaming fees, mobile finance service commissions and fees from other telecommunications services such as data services, short message services, installation fees and other value-added services excluding telephone and equipment sales.
(ii) EBITDA is operating profit excluding impairment losses, depreciation and amortization and gains/losses on the disposal of fixed assets.
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(iii) As further explained above, Group Segment numbers include Guatemala (until acquisition in November 2021) and Honduras as if they were fully consolidated, and exclude Africa.
The following table sets forth revenue from continuing operations for the countries in our Group Segment (i):
December 31 Percentage Change
2022 2021
(U.S. dollars in millions, except percentages)
Colombia 1,335 1,414 (5.5)%
Guatemala 1,618 1,601 1.1%
Panama 651 633 2.9%
Paraguay 556 555 0.2%
Honduras 586 589 (0.5)%
Bolivia 621 623 (0.4)%
El Salvador 476 447 6.4%
Nicaragua 248 239 3.7%
Costa Rica 138 141 (2.6)%
(i) The revenue figures above are shown before intercompany eliminations.
Group Segment revenue
Group Segment revenue decreased by 0.2% for the year ended December 31, 2022 to $6,203 million from $6,216 million for the year ended December 31, 2021. The decrease was mainly due to the depreciation of the Colombian peso and the Paraguayan gauarani, which offset revenue growth accross business lines and most countries, such as El Salvador and Colombia.
Group Segment operating profit
Group Segment operating profit increased by 2.1% for the year ended December 31, 2022 to $1,004 million from $983 million for the year ended December 31, 2021. The increase was mainly due to strong results across all of our business units and in the majority of our countries, partially offset by inflationary pressures on costs including energy and labor for the year ended December 31, 2022 compared to December 31, 2021.
Group Segment EBITDA
Group Segment EBITDA is Group Segment operating profit excluding depreciation and amortization and other operating income (expenses), net which includes impairment losses and gains/losses on the disposal of fixed assets attributable to the segment. Group Segment EBITDA is used by management to monitor the segmental performance and for capital management and is further detailed in note B.3. to our audited consolidated financial statements.
Group Segment EBITDA decreased by 1.5% for the year ended December 31, 2022 to $2,457 million from $2,494 million for the year ended December 31, 2021. The decrease was mainly due to the impact of the depreciation of the Colombian peso and the Paraguayan guarani, which offset Group Segment EBITDA growth in countries such as Panama and El Salvador during the year ended December 31, 2022.
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Group Consolidated results of operations for the years ended December 31, 2021 and 2020
The following table sets forth certain consolidated statement of income data for the periods indicated:
December 31 Percentage Change
2021(i) (ii) 2020 (i)
(U.S. dollars in millions, except percentages)
Revenue 4,261 3,805 12.0%
Cost of sales (1,197) (1,060) (13.0)%
Gross profit 3,063 2,745 11.6%
Operating expenses (1,546) (1,383) (11.8)%
Depreciation (804) (810) 0.7%
Amortization (310) (309) (0.1)%
Share of profit in joint ventures 210 171 22.6%
Other operating income (expenses), net 5 (12) NM
Operating profit 619 402 53.9%
Interest and other financial expenses (495) (560) 11.6%
Interest and other financial income 23 13 75.7%
Revaluation of previously held interest 670 — NM
Other non-operating (expenses) income, net (49) (107) NM
Profit (loss) from other joint ventures and associates, net (40) (1) NM
Profit (loss) before taxes from continuing operations 728 (252) NM
Tax (charge), net (158) (72) (117.7)%
Profit from continuing operations 570 (325) NM
Profit (loss) from discontinued operations, net of tax (28) (60) NM
Net profit (loss) for the period 542 (385) NM
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(i) Re-presented for discontinued operations (see note A.4. to our audited consolidated financial statements).
(ii) 2021 financial information includes the impact of our acquisition of the remaining 45% shareholding in Tigo Guatemala (approximately 1.5 months of statement of income data as from November 12, 2021). See note A.1.2. to our audited consolidated financial statements. As a result, 2021 yearly figures are not directly comparable with 2020 yearly figures.
Revenue
Revenue increased by 12.0% for the year ended December 31, 2021 to $4,261 million from $3,805 million for the year ended December 31, 2020. The increase is largely due to strong operational results in all business lines and countries, compared to relatively weak performance in the year ended December 31, 2020, at the onset of the pandemic, as well as additional revenue due to the consolidation of our Guatemala operations in November 2021.
Colombia represented 33%, El Salvador, Bolivia, Paraguay and Panama each represented between 10% and 15%, Costa Rica and Nicaragua represented 9%, and Guatemala represented 5% of our consolidated revenue for the year ended December 31, 2021. Colombia experienced the highest relative increase in revenues of $68 million, or an increase of 5.1%, as a result of strong performance in the Mobile and Home businesses during 2021. Revenue in El Salvador increased $58 million, or an increase of14.9%, due to strong prepaid mobile results stemming from recent network investments. Revenue increased by 6.7% in Bolivia and 2.0% in Paraguay due to increased commercial activity as mobility returned to the country. Revenue in Nicaragua increased by 8.1% due to growth in the mobile business. Costa Rica revenue grew 0.9%, as a result of changes in football programming rights affecting our pay-TV business.
Cost of sales
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Cost of sales increased by 13.0% for the year ended December 31, 2021 to $1,197 million from $1,060 million for the year ended December 31, 2020. The increase was mainly due to higher costs related to increased activity levels, as well as the consolidation of our operations in Guatemala as of November 12, 2021, which was partly offset by the benefit of a lower provision for bad debt for the year ended December 31, 2021 compared to December 31, 2020.
Operating expenses
Operating expenses increased by 11.8% for the year ended December 31, 2021 to $1,546 million from $1,383 million for the year ended December 31, 2020. The increase was mainly due to increased sales and marketing costs to support robust customer growth in the year ended December 31, 2021, as well as the consolidation of our operations in Guatemala as of November 12, 2021, as compared to the year ended December 31, 2020 when strict lockdowns significantly curtailed commercial activity.
Depreciation
Depreciation decreased by 0.7% for the year ended December 31, 2021 to $804 million from $810 million for the year ended December 31, 2020. The decrease was mainly due to network modernization activities which accelerated the depreciation of older infrastructure in 2020, despite the additional depreciation due to the consolidation of our operations in Guatemala as of November 12, 2021.
Amortization
Amortization was stable, increasing 0.1% for the year ended December 31, 2021 to $310 million from $309 million for the year ended December 31, 2020. In 2020, our amortization expense was higher than our usual run-rate as we transitioned our old B2B brand in Panama to Tigo Business. In 2021, this line was again impacted by our decision to transition the Cable Onda brand to Tigo in Panama which took effect in April 2021 and by the consolidation of our operations in Guatemala as of November 12, 2021.
Share of profit in joint ventures
Share of profit in joint ventures increased by 22.6% for the year ended December 31, 2021 to $210 million from $171 million for the year ended December 31, 2020. The increase was mainly due to strong operational performance and lower financing costs stemming from the reduction in debt in Guatemala prior to the acquisition, offset by the consolidation of our operations in Guatemala as of November 12, 2021.
Other operating income (expenses), net
Other operating income (expenses), net increased by $17 million for the year ended December 31, 2021 to an income of $5 million from an expense of $12 million for the year ended December 31, 2020. The increase was mainly due to a gain from an earn-out offset by losses from a disposal in our equity investment in Helios Towers for the year ended December 31, 2021 compared to expenses related to the impairment of a loan to our prior operations in Ghana offset by gains from disposal in equity investments in Helios Towers and Jumia for the year ended December 31, 2020.
Interest and other financial expenses
Interest and other financial expenses decreased by 11.6% for the year ended December 31, 2021 to $495 million from $560 million for the year ended December 31, 2020. The decrease was mainly due to lower average debt levels, following repayment activity over the last year.
Interest and other financial income
Interest and other financial income increased by 75.7% for the year ended December 31, 2021 to $23 million from $13 million for the year ended December 31, 2020. The increase was mainly due to a gain from the exchange of the 6.625% Senior Notes due 2026 for newly issued 4.500% Senior Notes due 2031.
Other non-operating (expenses) income, net
Other non-operating expenses decreased by $57 million for the year ended December 31, 2021 to an expense of $49 million from an expense of $107 million for the year ended December 31, 2020. The decrease was mainly due to the revaluation charge of the put-option liability in Panama for $26 million and losses on foreign exchange, which was partially offset by the mark-to-market revaluation of Helios Towers for an $18 million gain for the year ended December 31, 2021 compared to the mark-to-market revaluation of Jumia and Helios Towers for a $63 million loss and losses on foreign exchange for the year ended December 31, 2020.
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Revaluation of previously held interest
As a result of the acquisition of the remaining 45% shareholding in Guatemala, the Group had to revalue its 55% previously held investment at the fair value implied by the transaction. This resulted in the recognition of a gain of $670 million for the year ended December 31, 2021, with a corresponding increase in goodwill.
Loss from other joint ventures and associates, net
Loss from other joint ventures and associates, net increased by $39 million for the year ended December 31, 2021 to a loss of $40 million from a loss of $1 million for the year ended December 31, 2020. The increase is due to the exit financing of AirtelTigo Ghana for $38 million.
Charges for taxes, net
Charges for taxes, net increased by 117.7% for the year ended December 31, 2021 to $158 million from $72 million for the year ended December 31, 2020. The increase was mainly due to the consolidation of our operations in Guatemala as of November 12, 2021 and higher profitability in the operations of the Group. This also includes the net effect of the recognition and derecognition of certain deferred tax assets in UNE and Colombia Móvil, respectively.
The main components of charges for taxes, net are the income tax generated by most of the operations in our Latin America segment and the withholding tax we pay when cash is repatriated from our local operations. We also have net losses mainly in our corporate entities that reduce our profit before taxes and for which no deferred tax asset is recognized due to the history of losses in such entities. As a result, our effective tax rate is generally above our average statutory tax rate. Moreover, due to the jurisdictional differences and mix, we do not have the opportunity to offset tax expense with accumulated tax loss carry-forwards.
Net profit (loss) for the year
Net profit (loss) for the year increased by $927 million for the year ended December 31, 2021 to a profit of $542 million from a loss of $385 million for the year ended December 31, 2020. Profit (loss) for the year from continuing operations increased by $895 million for the year ended December 31, 2021 to a profit of $570 million from a loss of $325 million for the year ended December 31, 2020 for the reasons stated above. Net loss for the year from discontinued operations, net of tax decreased by $33 million for the year ended December 31, 2021 to $28 million as compared to a loss of $60 million for the year ended December 31, 2020.
December 31
2021 2020 Percentage Change
Group(ii) Group(ii) Group(ii)
(U.S. dollars in millions, except percentages)
Mobile revenue 2,000 1,759 13.7 %
Cable and other fixed services revenue 1,938 1,794 8.0 %
Other revenue 60 51 16.3 %
Service revenue (i) 3,997 3,604 10.9 %
Telephone and equipment revenue 263 201 31.3 %
Revenue 4,261 3,805 12.0 %
i) Service revenue is revenue related to the provision of ongoing services such as monthly subscription fees for mobile and broadband, airtime and data usage fees, interconnection fees, roaming fees, mobile finance service commissions and fees from other telecommunications services such as data services, short message services, installation fees and other value-added services excluding telephone and equipment sales.
(ii) As further explained above, Group numbers include Guatemala (until acquisition in November 2021) as it were fully consolidated, and exclude Africa.
Group Segment results of operations for the years ended December 31, 2021 and 2020
Our Group Segment includes our Honduras joint venture as if it were fully consolidated, as this reflects the way management reviews and uses internally reported information to make decisions. Group Segment financial
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information also includes our operations in Guatemala as if they were fully consolidated for all comparative periods. On November 12, 2021, we acquired the remaining 45% equity interest in our Guatemala joint venture business, and we now fully consolidate our operations in Guatemala. Prior to this date, we held a 55% stake in our operations in Guatemala and accounted for them using the equity method of accounting and as a joint venture, along with our operations in Honduras. See note A.1.2. to our audited consolidated financial statements for additional details regarding this acquisition and the accounting treatment thereof. See “—Our segments” above.
The following table sets forth certain segment data, which has been extracted from note B.3. to our audited consolidated financial statements, where segment data is reconciled to consolidated data, for the periods indicated:
December 31
2021 2020 Percentage Change
Group Segment(iii) Group Segment(iii) Group Segment(iii)
(U.S. dollars in millions, except percentages)
Service revenue (i) 5,712 5,374 6.3%
Telephone and equipment revenue 503 466 8.0%
Revenue 6,216 5,840 6.4%
Operating profit (loss) 983 763 28.9%
Add back:
Depreciation and amortization 1,516 1,572 (3.6)%
Other operating income (expenses), net (5) 19 NM
EBITDA (ii) 2,494 2,354 6.0%
i) Service revenue is revenue related to the provision of ongoing services such as monthly subscription fees for mobile and broadband, airtime and data usage fees, interconnection fees, roaming fees, mobile finance service commissions and fees from other telecommunications services such as data services, short message services, installation fees and other value-added services excluding telephone and equipment sales.
(ii) EBITDA is operating profit excluding impairment losses, depreciation and amortization and gains/losses on the disposal of fixed assets.
(iii) As further explained above, Group Segment numbers include Guatemala (until acquisition in November 2021) and Honduras as if they were fully consolidated, and exclude Africa.
The following table sets forth revenue from continuing operations by country for certain of the countries in our Group Segment:
December 31 Percentage Change
2021 2020
(U.S. dollars in millions, except percentages)
Colombia 1,414 1,346 5.1%
Guatemala 1,601 1,503 6.5%
Panama 633 585 8.2%
Paraguay 555 544 2.0%
Honduras 589 552 6.7%
Bolivia 623 584 6.7%
El Salvador 447 389 14.9%
Group Segment revenue
Group Segment revenue increased by 6.4% for the year ended December 31, 2021 to $6,216 million from $5,840 million for the year ended December 31, 2020. The increase was mainly due to strong operational results in all business lines and countries, compared to relatively weak performance in the year ended December 31, 2020, at the
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onset of the pandemic. The main drivers of growth were in our Home business, where we saw increased demand for our broadband services, and in our Mobile business, which benefited from increased commercial activity as mobility returned to our markets during the year. The countries that drove revenue growth during 2021 were Colombia, where recent investments in our mobile network and improved mobility helped drive Mobile and Home growth, and El Salvador, where investments in our network supported growth in our Mobile business.
Group Segment operating profit
Group Segment operating profit increased by 28.9% for the year ended December 31, 2021 to $983 million from $763 million for the year ended December 31, 2020. The increase was mainly due to increased commercial activity that benefited our revenue but resulted in higher costs during the year related to increased activity levels, which was partially offset by a lower provision for bad debt for the year ended December 31, 2021 compared to December 31, 2020. The increase was also due to a decrease in depreciation caused by network modernization activities that accelerated the depreciation of older infrastructure in 2020.
Group Segment EBITDA
Group Segment EBITDA is Group Segment operating profit excluding, depreciation and amortization and other operating income (expenses), net which includes impairment losses and gains/losses on the disposal of fixed assets attributable to the segment. Group Segment EBITDA is used by management to monitor the segmental performance and for capital management and is further detailed in note B.3. to our audited consolidated financial statements.
Group Segment EBITDA increased by 6.0% for the year ended December 31, 2021 to $2,494 million from $2,354 million for the year ended December 31, 2020. The increase was mainly due to increased commercial activity, which was partly offset by an increase in sales and marketing expenses. The countries that most contributed to the increase in EBITDA were Guatemala and El Salvador, both driven by strong performance in all business units, and Panama, driven by strong results in consumer Mobile and Home business units.
Other financial data
December 31,
2022 2021
(U.S. dollars in millions, except percentages)
Group:
Service revenue 5,171 3,997
Telephone and equipment revenue 454 263
Revenue 5,624 4,261
Revenue growth 32.0% 12.0%
Revenue organic growth(2) 3.3% 7.1%
Service revenue growth 29.4% 10.9%
Service revenue organic growth(2) 3.5% 7.0%
Net cash provided by operating activities 1,284 956
Net cash used in investing activities (1,104) (2,703)
Net cash provided by (used in) financing activities (1) 1,777
Operating free cash flow(1) 765 582
Free cash flow(1) 77 (46)
Equity free cash flow(1) 161 10
Equity free cash flow excluding Africa(1) 171 12
(1) Free Cash Flow Measures
Operating free cash flow
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Operating free cash flow is a non-IFRS measure and is not a uniformly or legally defined financial measure. Operating free cash flow is not a substitute for IFRS measures in assessing our overall financial performance. Because Operating free cash flow is not determined in accordance with IFRS, and is susceptible to varying calculations, Operating free cash flow may not be comparable to other similarly titled measures presented by other companies. Operating free cash flow is included in this report because it is used by our management, and we believe it may be useful to investors, to evaluate our core operational cash flow performance from period to period, as reflected in the adjustments in the reconciliation table below. Operating free cash flow has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for an analysis of our results as reported under IFRS.
Free cash flow
Free cash flow is a non-IFRS measure and is not a uniformly or legally defined financial measure. Free cash flow is not a substitute for IFRS measures in assessing our overall financial performance. Because Free cash flow is not determined in accordance with IFRS, and is susceptible to varying calculations, Free cash flow may not be comparable to other similarly titled measures presented by other companies. Free cash flow is included in this report because it is used by our management, and we believe it may be useful to investors, to evaluate our cash flow performance from period to period as it reflects the operating free cash flow generated as described above after net finance charges paid. Free cash flow has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for an analysis of our results as reported under IFRS.
Equity free cash flow
Equity free cash flow is a non-IFRS measure and is not a uniformly or legally defined financial measure. Equity free cash flow is not a substitute for IFRS measures in assessing our overall financial performance. Because Equity free cash flow is not determined in accordance with IFRS, and is susceptible to varying calculations, Equity free cash flow may not be comparable to other similarly titled measures presented by other companies. Equity free cash flow is included in this report because it is used by our management, and we believe it may be useful to investors, to evaluate our cash flow performance from period to period as it reflects our non–IFRS Free cash flow as described above with the addition of repatriations received from our joint ventures and associates and the deduction of dividends paid to non–controlling interests. Equity free cash flow has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for an analysis of our results as reported under IFRS.
Equity free cash flow excluding Africa
Equity free cash flow excluding Africa is a non-IFRS measure and is not a uniformly or legally defined financial measure. Equity free cash flow excluding Africa is not a substitute for IFRS measures in assessing our overall financial performance. Because Equity free cash flow excluding Africa is not determined in accordance with IFRS, and is susceptible to varying calculations, Equity free cash flow excluding Africa may not be comparable to other similarly titled measures presented by other companies. Equity free cash flow excluding Africa is included in this report because it is used by our management, and we believe it may be useful to investors, to evaluate our cash flow performance from period to period as it reflects our non–IFRS Equity free cash flow as described above with the deduction equity free cash flow related to our Africa operations before disposal. Equity free cash flow excluding Africa has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for an analysis of our results as reported under IFRS.
The following table shows a reconciliation from Net cash provided by operating activities to Operating free cash flow, Free cash flow, Equity free cash flow, and Equity free cash flow excluding Africa for the Millicom Group:
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December 31,
2022 2021
(U.S. dollars in millions)
Net cash provided by operating activities 1,284 956
Purchase of property, plant and equipment (800) (740)
Proceeds from sale of property, plant and equipment 21 11
Purchase of intangible assets (179) (98)
Purchase of spectrum and licenses (93) (37)
Proceeds from sale of intangible assets — —
Finance charges paid, net 530 491
Operating free cash flow 765 582
Interest (paid), net (530) (491)
Lease Principal Repayments (157) (137)
Free cash flow 77 (46)
Repatriation from joint ventures 88 62
Dividends paid to non-controlling interests (4) (6)
Equity free cash flow 161 10
Less: Equity free cash flow - Africa (10) (2)
Equity free cash flow - excluding Africa 171 12
(2) Revenue and Service Revenue Organic Growth
Revenue Organic Growth and Service Revenue Organic Growth are non-IFRS measures and are not uniformly or legally defined financial measures. Revenue Organic Growth and Service Revenue Organic Growth are not substitutes for IFRS measures in assessing our overall operating performance. Because Revenue Organic Growth and Service Revenue Organic Growth are not determined in accordance with IFRS, and are susceptible to varying calculations, Revenue Organic Growth and Service Revenue Organic Growth may not be comparable to other similarly titled measures presented by other companies.
Revenue Organic Growth and Service Revenue Organic Growth are included in this report because our management uses these measures to evaluate our core revenue generating performance from period to period, having eliminated (1) changes in perimeter due to acquisitions and (2) currency fluctuations.
To eliminate the impact of currency fluctuations, we use recent U.S. dollar exchange rate data for the local non-U.S.-dollar currencies of the markets in which we operate to determine an estimated, or budgeted, exchange rate for such currencies. Revenues and service revenues in non-U.S.-dollar currencies from both the more recent period and the corresponding period of the prior year are then translated into U.S. dollars at the same budgeted exchange rates. Revenue Organic Growth and Service Revenue Organic Growth have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for an analysis of our results as reported under IFRS.
The following table shows a reconciliation from reported growth on an IFRS basis to organic growth for revenue and service revenue:
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Revenue Service Revenue
As of and for the year ended December 31,
2022 2021 2022 2021
(U.S. dollars in millions, except percentages)
Current period 5,624 4,261 5,171 3,997
Prior year period 4,261 3,805 3,997 3,604
Reported Growth 32.0% 12.0% 29.4% 10.9%
Change in perimeter impact(i) (32.2)% (3.0)% (29.4)% (2.3)%
Foreign exchange impact and other (ii) 3.5% (1.9)% 3.5% (1.6)%
Organic Growth 3.3% 7.1% 3.5% 7.0%
(i) The following change in perimeter impacts was eliminated to calculate Revenue Organic Growth: a positive $1,373 million revenue impact in the year ended December 31, 2022, and a positive $112 million revenue impact in the year ended December 31, 2021 due to revenue generated by Tigo Guatemala, which was consolidated as of November 12, 2021. The following change in perimeter impacts was eliminated to calculate Service Revenue Organic Growth: a positive $1,174 million service revenue impact in the year ended December 31, 2022, and a positive $82 million service revenue impact in the year ended December 31, 2021 due to service revenue generated by Tigo Guatemala, which was consolidated as of November 12, 2021.
(ii) The following foreign exchange and other impacts were eliminated to calculate Revenue Organic Growth: a negative $148 million revenue impact in the year ended December 31, 2022, and a positive $73 million revenue impact in the year ended December 31, 2021. The following foreign exchange and other impacts were eliminated to calculate Service Revenue Organic Growth: a negative $141 million service revenue impact in the year ended December 31, 2022, and a positive $58 million service revenue impact in the year ended December 31, 2021.
Critical accounting policies
The preparation of our 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 described in “Introduction— Judgments and critical estimates” in the notes to our audited consolidated financial statements, and in the notes referenced therein.
For a description of new or amended IFRS accounting standards to which we are subject, see “Introduction— New and amended IFRS accounting standards” in the notes to our audited consolidated financial statements.
B. Liquidity and Capital Resources
Overview
The Millicom Group’s sources of funds are cash from operations, internal and external financing as well as proceeds from the disposal of assets. The Millicom Group finances its operations centrally at the MIC S.A. level or alternatively, where it deems it more cost effective to do so, at the operational level.
In particular, we seek to finance the costs of deploying and expanding our fixed and mobile networks mainly at the operating level on a country-by-country basis, utilizing credit facilities provided by banks and entering into leases, obtaining financing from the debt capital markets, and seeking funding from export credit agencies and development financial institutions such as the Inter-American Development Bank.
If we decide to acquire other businesses, we expect to fund these acquisitions from cash resources, borrowings under existing credit facilities, through new borrowings, including under new credit facilities or issuances of debt securities, and, if necessary, we may issue equity to raise funds.
As of December 31, 2022, our consolidated cash and cash equivalents balance was $1,039 million (of which $675 million was at the holdings level and $364 million was at the operating subsidiaries level). As of December 31, 2021 and 2020, our consolidated cash and cash equivalents balance was $895 million (of which $260 million was at the
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holdings level and $635 million was at the operating subsidiaries level) and $875 million (of which $305 million was at the holdings level and $570 million was at the operating subsidiaries level), respectively.
If funds at the foreign operating subsidiaries level are repatriated, taxes on each type of repatriation and each country would need to be accrued and paid, where applicable.
As of December 31, 2022, our total consolidated indebtedness (excluding lease liabilities) was $6,804 million. As of December 31, 2021 and 2020 our total consolidated indebtedness (excluding lease liabilities) was $7,744 million and $5,691 million , respectively.
We believe that our available cash and cash equivalents, borrowings and funds from our operating subsidiaries will be sufficient to meet our projected operating and capital expenditure requirements for at least the next 12 months.
Cash repatriation
Progressive improvement in operating and financial performance of our operations has enabled the repatriation of excess cash to MIC S.A. This is accomplished through a combination of dividends, fees and shareholder loan repayments.
The following table sets forth cash repatriated to MIC S.A. from our subsidiaries and joint ventures for the periods presented:
December 31,
2022(i) 2021 2020
(U.S. dollars in millions)
Subsidiaries 1,565 556 392
Joint ventures 85 49 98
Total 1,651 605 490
i) Cash repatriated from subsidiaries as of December 31, 2022 includes approximately $900 million of proceeds from the issuance of the 5.125% Senior Notes due 2032, which were used to partially refinance the bridge loan that we obtained to fund the acquisition of the remaining 45% equity interest in our Guatemala joint venture business.
In each case, the repatriated cash was principally used to cover corporate expenses, service corporate debt and pay corporate taxes.
Some of our operating subsidiaries and joint ventures have covenants on debt outstanding that impose restrictions on their ability to upstream cash to MIC S.A. As a result of these restrictions, significant cash or cash equivalent balances may be held from time to time at our operating subsidiaries and joint ventures.
Cash flows
Set forth below is a comparative discussion of our cash flows, which includes cash flows from discontinued operations.
Years ended December 31, 2022 and 2021
For the year ended December 31, 2022, cash provided by operating activities was $1,284 million, compared to $956 million for the year ended December 31, 2021. The increase is mainly due to the consolidation of Tigo Guatemala and higher working capital during due to foreign exchange for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Cash used in investing activities was $1,104 million for the year ended December 31, 2022, compared to $2,703 million for the year ended December 31, 2021. In the year ended December 31, 2022, Millicom used $283 million for the acquisition of the non-controlling interest of Tigo Panama, $800 million to purchase property, plant and equipment and $179 million to purchase intangible assets and licenses, and these items were partially offset by proceeds of $10 million in dividends from joint ventures, $152 million from the disposal of subsidiaries and joint ventures, and $21 million from the sale of property, plant and equipment such as towers and buildings. For the year ended December 31, 2021, Millicom used $2,000 million in the acquisition of subsidiaries, $740 million to purchase
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property, plant and equipment and $98 million to purchase intangible assets and licenses, and these items were partially offset by proceeds of $13 million in dividends from joint ventures, $30 million from the disposal of subsidiaries, $163 million from the disposal of equity investments and $11 million from the sale of property, plant and equipment such as towers.
Cash provided by financing activities was $1 million for the year ended December 31, 2022, compared to cash used by financing activities of $1,777 million for the year ended December 31, 2021. For the year ended December 31, 2022, we repaid debt of $2,127 million and lease capital of $157 million while raising funds of $1,570 million through new financing. We also issued new equity for a total net amount of $717 million. In 2022, we paid no dividends and did not repurchase shares. In the year ended December 31, 2021, we paid no dividends, used $50 million for share repurchases, and repaid debt of $1,335 million and lease capital of $137 million while raising funds of $3,113 million through new financings.
Years ended December 31, 2021 and 2020
For the year ended December 31, 2021, cash provided by operating activities was $956 million, compared to $821 million for the year ended December 31, 2020. The increase is mainly due to lower working capital during the year ended December 31, 2021 compared to the year ended December 31, 2020
Cash used in investing activities was $2,703 million for the year ended December 31, 2021, compared to $495 million for the year ended December 31, 2020. In the year ended December 31, 2021, Millicom used $2,000 million in the acquisition of subsidiaries, $740 million to purchase property, plant and equipment and $98 million to purchase intangible assets and licenses, and these items were partially offset by proceeds of $13 million in dividends from joint ventures, $30 million from the disposal of subsidiaries, $163 million from the disposal of equity investments and $11 million from the sale of property, plant and equipment such as towers. Cash used in investing activities was $495 million for the year ended December 31, 2020. In the year ended December 31, 2020, Millicom used $10 million in the acquisition of subsidiaries, net of cash acquired (mobile operations in Panama and Nicaragua), $622 million to purchase property, plant and equipment and $101 million to purchase intangible assets and licenses. These items were partially offset by proceeds of $71 million in dividends from joint ventures, $10 million from the disposal of subsidiaries, $197 million from the disposal of equity investments and $9 million from the sale of property, plant and equipment such as towers.
Cash used in financing activities was $1,777 million for the year ended December 31, 2021, compared to cash provided by financing activities of $598 million for the year ended December 31, 2020. In the year ended December 31, 2021, we paid no dividends, used $50 million for share repurchases, and repaid debt of $1,335 million and lease capital of $137 million while raising funds of $3,113 million through new financing. In the year ended December 31, 2020, we paid no dividends and repaid debt of $1,744 million and lease capital of $116 million while raising funds of $1,470 million through new financing.
Group Capital expenditures
Historical capital expenditures
Our capital expenditures of property, plant and equipment, licenses and other intangibles on a consolidated basis, including accruals for such additions at the end of the periods, for the years ended December 31, 2022, 2021, and 2020 are set out in the table below. Our capital expenditure mainly relates to the growth of the 4G network, the rollout of the HFC network, connection of new homes, IT investments and spectrum.
December 31
2022 2021 2020
(U.S. dollars in millions)
Additions to property, plant and equipment 823 787 649
Additions to licenses and other intangibles 345 164 520
Total consolidated additions 1,167 951 1,169
Capital expenditure commitments
As of December 31, 2022, we had commitments to purchase network equipment, other fixed assets and intangible assets with a value of $406 million from a number of suppliers, of which $259 million was within one year
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and $147 million more than one year. Out of these commitments, $29 million relate to the Company’s share in joint ventures ($29 million within one year). We expect to meet these commitments from our current cash balance and from cash generated from our operations.
Financing
We seek to finance our operations on a country-by-country basis when we determine it to be more cost and risk effective. As local financial markets become more developed, we have been able to finance increasingly at the level of our operations in local currency and on a generally non-recourse basis to MIC S.A. As of December 31, 2022, 62% ($4,231 million) of our total consolidated debt excluding lease liabilities of $6,804 million was at the operational level (excluding our Honduras joint venture) and generally non-recourse to MIC S.A., and 40% of this debt was denominated in local currency. In addition, as of December 31, 2022 our joint venture in Honduras had $292 million of debt excluding lease liabilities which was non-recourse to MIC S.A. From time to time, we may provide support to our subsidiaries and service indebtedness that is held at the operational level.
Consolidated indebtedness
Millicom’s total consolidated debt excluding lease liabilities as of December 31, 2022 was $6,804 million (December 31, 2021: $7,744 million) and our total consolidated net debt (representing total consolidated debt after deduction of cash, cash equivalents, and pledged deposits) was $5,765 million (December 31, 2021: $6,814 million).
Including lease liabilities, Millicom's total consolidated financial obligations as of December 31, 2022 were $7,820 million (December 31, 2021: $8,911 million) and our total consolidated net financial obligations (representing total consolidated financial obligations after deduction of cash, cash equivalents, and pledged deposits) were $6,780 million (December 31, 2021: $7,981 million). Millicom's lease liabilities as of December 31, 2022 were $1,016 million. 99% of our consolidated lease liabilities, or $1,004 million, was at the operational level (excluding our joint venture in Honduras) and non-recourse to MIC S.A.
See note C.6. to our audited consolidated financial statements included elsewhere in this Annual Report for a reconciliation of total consolidated debt (and financial obligations) to total consolidated net debt (and financial obligations). Our consolidated interest and other financial expenses for the year ended December 31, 2022 were $617 million and for the years ended December 31, 2021 and 2020 were $495 million and $560 million, respectively.
The following table sets forth our consolidated debt and financing by entity or operational entity location for the periods indicated:
December 31,
2022 2021 2020
(US$ millions)
MIC S.A. (Luxembourg) 2,573 4,020 2,504
Latin America:
Guatemala (i) 1,465 605 —
Colombia 605 802 803
Paraguay 678 751 738
Bolivia 260 310 337
El Salvador 173 100 118
Costa Rica 128 121 119
Nicaragua 147 — —
Panama 773 846 869
Africa:
Tanzania (ii) — 188 203
Total debt and financing 6,804 7,744 5,691
(i) Fully consolidated as a subsidiary from November 12, 2021. Debt and financing at the Guatemala joint venture at December 31, 2020 was $413 million.
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(ii) Debt and financing from Tanzania was divested upon the completion of the sale of our operations in Tanzania.
For a more detailed description of our outstanding financial obligations, including our credit facilities and outstanding bond or note issuances, see note C.3. to our audited consolidated financial statements.
Our financing facilities at the MIC S.A. level are subject to a number of financial covenants including net leverage and interest coverage requirements. In addition, certain financings at the MIC S.A. level contain restrictions on sale of businesses or significant assets within the businesses.
Our financing facilities at the operational level are subject to a number of financial covenants including requirements with respect to net leverage, debt service coverage, debt to earnings and cash levels. In addition, certain financings at the operational level contain restrictions on sale of businesses or significant assets within the businesses.
Indebtedness of joint ventures
With respect to the Honduras joint venture, total debt excluding lease liabilities as of December 31, 2022 was $292 million. As of December 31, 2022, our joint venture in Honduras had lease liabilities of $64 million. The total net debt (representing total debt after deduction of cash, cash equivalents, and pledged deposits) was $266 million. Annual interest expense for the Honduras joint venture for the years ended December 31, 2022, 2021 and 2020 was $29 million, $34 million and $24 million, respectively.
The following table sets forth the debt and financing of the Honduras joint venture for the periods indicated:
December 31,
2022 2021 2020
(US$ millions)
Honduras 357 340 337
The financing facilities of the Honduras joint venture are subject to a number of financial covenants such as net leverage requirements. In addition, certain of their financings contain restrictions on sale of businesses or significant assets within the businesses.
With respect to our operations in Guatemala (former joint venture, see note A.1.2. to our audited consolidated financial statements) interest expense for the period ended November 12, 2021, and the year ended December 31, 2020 was $52 million and $114 million, respectively.
Off-Balance Sheet Arrangements
As of December 31, 2022, the Millicom Group’s share of total debt and financing secured by either pledged assets, pledged deposits issued to cover letters of credit, or guarantees issued was $501 million with no assets pledged by the Millicom Group for these debts and financings amounted as of December 31, 2022. The table below details the maximum exposure under these guarantees and their remaining terms, as of December 31, 2022.
Total Less than 1 year 1-3 years 3-5 years
(US$ millions)
Theoretical maximum exposure 501 13 70 418
C. Research and Development, Patents and Licenses, etc.
We do not engage in research and development activities, and we do not own any patents.
D. Trend Information
For a discussion of trend information, see “—A. Operating Results—Factors affecting our results of operations.” and “—A. Operating Results—Factors affecting comparability of prior periods."
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