UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE
ISSUER
PURSUANT TO RULE 13a-16
OR 15d-16 OF THE
SECURITIES EXCHANGE ACT
OF 1934
For the month of June, 2023.
Commission File Number: 001-38763
MILLICOM INTERNATIONAL CELLULAR S.A.
(Exact Name of
Registrant as Specified in Its Charter)
2, Rue du Fort Bourbon,
L-1249 Luxembourg
Grand Duchy of Luxembourg
(Address of principal executive office)
Indicate by check
mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F x
Form 40-F ¨
Indicate by check
mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ¨ No x
Indicate by check
mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ¨ No x
MILLICOM INTERNATIONAL
CELLULAR S.A.
INDEX TO FURNISHED MATERIAL
Item
______
1. Press release dated June
28, 2023.
Millicom (Tigo) updates its financial targets
Luxembourg,
June 28, 2023 – Millicom informs that it now expects to achieve lower than previously expected cumulative equity free cash
flow for the three years up to and including 2024. Millicom now targets cumulative equity free cash flow of at least $500 million for
the 2022-2024 period, as compared to the prior target of between $800 million to $1 billion.
In
addition, potential asset monetizations and partner equity funding being pursued in Colombia could add an estimated $100 to $150 million
of additional cash flows; and the company continues to progress on its plans to carve out and monetize Lati, the company’s newly-created
tower business.
The
revised target reflects the following considerations:
| · | Higher
Spectrum Costs – Total spectrum costs in 2023 are now expected to be approximately
$215 million due to (a) higher than initially expected upfront cash payment to renew, for
20 years, our 1900 MHz spectrum license in Colombia, (b) the acquisition of 2.6 GHz spectrum
in Guatemala in early June, and (c) the recently announced auctions now being planned in
Guatemala (700 MHz). In addition, Colombia recently announced a planned 5G auction, which
is expected to impact 2024. |
| · | Higher
Financing Costs – Total financing charges are now expected to be higher than previously
expected in 2023 and 2024, mostly reflecting the impact of elevated interest rates on the
company’s variable-rate local currency debt in Colombia, as well as recently introduced
commissions on the purchase of U.S. dollars in Bolivia. |
| · | Guatemala
– In tandem with the acquisition of strategically-important spectrum, management has
decided to elevate levels of investment and commercial activity to sustain market leadership
and protect long-term profitability of the company’s largest operation. |
| · | Home
– We now expect the softer Home operational performance to continue in some countries,
partially offset by reduced investment in this area. |
Based
on the company’s outlook, 2024 is expected to be the strongest year of equity free cash flow generation in the three-year period
due to savings from Project Everest (the company’s efficiency program), and lower expected spectrum investment and lower one-time
items compared to 2023.
Q2
2023 Update - During the first two months of the second quarter of 2023, the company experienced slower service revenue growth compared
to Q1 2023. Based on expected performance for June, and subject to completion of regular quarter-end closing activities, the company
now expects the following for Q2:
| · | Service
revenue of between $1.275 and $1.300 billion, representing organic growth of approximately
2.0%, compared to 2.2% in Q1. |
| · | EBITDA
of between $515 and $535 million, representing an organic decline of approximately 6.0%,
as compared to an organic decline of 6.2% in Q1. This is primarily attributable to market
response activities in Guatemala, as well as ongoing challenges in Bolivia and the impact
of implementing Project Everest. |
Notwithstanding
the market-related challenges observed year-to-date and excluding the impact of ongoing foreign exchange volatility, management continues
to target organic Operating Cash Flow growth of approximately 10% in 2023, mostly reflecting lower capex in Home, commensurate with the
observed slowdown in customer acquisition activity and reduced network rollout in some markets, as well as the benefit of multi-year
agreements with key network vendors, as disclosed at Q1.
For further information,
please contact:
Press:
Sofia
Corral, Director Corporate Communications
press@millicom.com
|
Investors:
Michel
Morin, VP Investor Relations
Sarah Inmon, Director
Investor Relations
investors@millicom.com |
About
Millicom
Millicom
(NASDAQ U.S.: TIGO, Nasdaq Stockholm: TIGO_SDB) is a leading provider of fixed and mobile telecommunications services in Latin America.
Through our TIGO® and Tigo Business® brands, we provide a wide range of digital services and products, including TIGO Money for
mobile financial services, TIGO Sports for local entertainment, TIGO ONEtv for pay TV, high-speed data, voice, and business-to-business
solutions such as cloud and security. As of March 31, 2023, Millicom, including its Honduras Joint Venture, employed approximately 19,300
people and provided mobile and fiber-cable services through its digital highways to more than 45 million customers, with a fiber-cable
footprint over 13 million homes passed. Founded in 1990, Millicom International Cellular S.A. is headquartered in Luxembourg.
Regulatory
Statement
This
information was prior to this release inside information and is information that Millicom is obliged to make public pursuant to the EU
Market Abuse Regulation. This information was submitted for publication, through the agency of the contact person set out above, at 17:00
CET on June 28, 2023.
Forward-Looking
Statements
Statements
included herein that are not historical facts, including without limitation statements concerning future strategy, plans, objectives,
expectations and intentions, projected financial results, liquidity, growth and prospects, are forward-looking statements. Such forward-looking
statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties
materialize, Millicom’s results could be materially adversely affected. In particular, there is uncertainty about global economic
activity and inflation, the demand for Millicom's products and services, and global supply chains. The risks and uncertainties include,
but are not limited to, the following:
| · | global
economic conditions, foreign exchange rate fluctuations and high inflation, as well as local
economic conditions in the markets we serve, which can be impacted by geopolitical developments
outside of our principal geographic markets, such as the armed conflict between Russia and
the Ukraine and related sanctions; |
| · | potential
disruption due to diseases, pandemics, political events, armed conflict, acts by terrorists,
including the impact of the COVID-19 virus and the ongoing efforts throughout the world to
contain it; |
| · | telecommunications
usage levels, including traffic, customer growth and the accelerated transition from traditional
to digital services; |
| · | competitive
forces, including pricing pressures, piracy, 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; |
| · | the
achievement of our operational goals, environmental, social and governance targets, financial
targets and strategic plans, including the acceleration of cash flow growth, the expansion
of our fixed broadband network, the reintroduction of a share repurchase program and the
reduction in net leverage; |
| · | legal
or regulatory developments and changes, or changes in governmental policy, including with
respect to the availability and terms and conditions of spectrum and licenses, the level
of tariffs, laws and regulations which require the provision of services to customers without
charging, tax matters, the terms of interconnection, customer access and international settlement
arrangements; |
| · | our
ability to grow our mobile financial services business in our Latin American markets; |
| · | adverse
legal or regulatory disputes or proceedings; |
| · | the
success of our business, operating and financing initiatives and strategies, including partnerships
and capital expenditure plans; |
| · | our
expectations regarding the growth in fixed broadband penetration rates and the return that
our investment in broadband networks will yield; |
| · | 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; |
| · | our
ability to create new organizational structures for the Tigo Money and Towers businesses
and manage them independently to enhance their value; |
| · | relationships
with key suppliers and costs of handsets and other equipment; |
| · | disruptions
in our supply chain due to economic and political instability, the outbreak of war or other
hostilities, public health emergencies, natural disasters and general business conditions; |
| · | our
ability to successfully pursue acquisitions, investments or merger opportunities, integrate
any acquired businesses in a timely and cost-effective manner, divest or restructure assets
and businesses, and achieve the expected benefits of such transactions; |
| · | the
availability, terms and use of capital, the impact of regulatory and competitive developments
on capital outlays, the ability to achieve cost savings and realize productivity improvements; |
| · | technological
development and evolving industry standards, including challenges in meeting customer demand
for new technology and the cost of upgrading existing infrastructure; |
| · | the
capacity to upstream cash generated in operations through dividends, royalties, management
fees and repayment of shareholder loans; and |
| · | other
factors or trends affecting our financial condition or results of operations. |
A
further list and description of risks, uncertainties and other matters can be found in Millicom’s Registration Statement on Form
20-F, including those risks outlined in “Item 3. Key Information—D. Risk Factors,” and in Millicom’s subsequent
U.S. Securities and Exchange Commission filings, all of which are available at www.sec.gov. All forward-looking statements attributable
to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. Readers are cautioned
not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Except to the extent otherwise
required by applicable law, we do not undertake any obligation to update or revise forward-looking statements, whether as a result of
new information, future events or otherwise.
Non-IFRS
Measures
This
press release contains financial measures not prepared in accordance with IFRS. These measures are referred to as “non-IFRS”
measures and include: non-IFRS service revenue, non-IFRS EBITDA, and non-IFRS Capex, among others defined below. Annual growth rates
for these non-IFRS measures are often expressed in organic constant currency terms to exclude the effect of changes in foreign exchange
rates, the adoption of new accounting standards, and are proforma for material changes in perimeter due to acquisitions and divestitures.
The non-IFRS financial measures are presented in this press release as Millicom’s management believes they provide investors with
an additional information for the analysis of Millicom’s results of operations, particularly in evaluating performance from one
period to another. Millicom’s management uses non-IFRS financial measures to make operating decisions, as they facilitate additional
internal comparisons of Millicom’s performance to historical results and to competitors' results, and provides them to investors
as a supplement to Millicom’s reported results to provide additional insight into Millicom’s operating performance. Millicom’s
Remuneration Committee uses certain non-IFRS measures when assessing the performance and compensation of employees, including Millicom’s
executive directors.
The
non-IFRS financial measures used by Millicom may be calculated differently from, and therefore may not be comparable to, similarly titled
measures used by other companies - refer to the section “Non-IFRS Financial Measure Descriptions” for additional information.
In addition, these non-IFRS measures should not be considered in isolation as a substitute for, or as superior to, financial measures
calculated in accordance with IFRS, and Millicom’s financial results calculated in accordance with IFRS and reconciliations to
those financial statements should be carefully evaluated.
The
following changes were made to some definitions of the Group's non-IFRS financial measures as disclosed in the 2022 Annual Report: the
definition of 'EBITDA after leases' has changed from lease cash payments to income statement line items (interest expense and depreciation
charge). This does not change the manner in which we calculate Equity Free Cash Flow, but aligns our calculation for leverage purposes
with peers. The definition of Net Debt has changed to include derivative financial instruments in order to have a more comprehensive
view of our financial obligations. Finally, Home ARPU has changed to include equipment rental in our Home revenue, as these are long-term
payment plans.
Non-IFRS
Financial Measure Descriptions
Service
revenue is revenue related to the provision of ongoing services such as monthly subscription fees for mobile and broadband, airtime and
data usage fees, interconnection fees, roaming fees, mobile finance service commissions and fees from other telecommunications services
such as data services, short message services, installation fees and other value-added services excluding telephone and equipment sales.
EBITDA
is operating profit excluding impairment losses, depreciation and amortization, and gains/losses on fixed asset disposals.
EBITDA
after Leases (EBITDAaL) represents EBITDA after lease expense and depreciation charge.
EBITDA
Margin represents EBITDA in relation to Revenue.
Organic
growth represents year-on-year growth excluding the impact of changes in FX rates, perimeter, and accounting. Changes in perimeter
are the result of acquisitions and divestitures. Results from divested assets are immediately removed from both periods, whereas the
results from acquired assets are included in both periods at the beginning (January 1) of the first full calendar year of ownership.
Net
debt is Debt and financial liabilities, including derivative instruments (assets and liabilities), less cash and pledged and time
deposits.
Net
financial obligations is Net debt plus lease liabilities.
Leverage
is the ratio of net financial obligations over LTM (Last twelve month) EBITDA, proforma for acquisitions made during the last twelve
months.
Leverage
after leases is the ratio of net debt over LTM (Last twelve month) EBITDA after leases, proforma for acquisitions and disposals made
during the last twelve months.
Capex
is balance sheet capital expenditure excluding spectrum and license costs and lease capitalizations.
Cash
Capex represents the cash spent in relation to capital expenditure, excluding spectrum and licenses costs.
Operating
Cash Flow (OCF) is EBITDA less Capex.
Operating
Free Cash Flow (OFCF) is EBITDA, less cash capex, less spectrum paid, working capital and other non-cash items, and taxes paid.
Equity
Free Cash Flow (EFCF) is OFCF less finance charges paid (net), lease interest payments, lease principal repayments, and advances
for dividends to non-controlling interests, plus cash repatriation from joint ventures and associates.
Operating
Profit After Tax displays the profit generated from the operations of the company after statutory taxes.
Return
on Invested Capital (ROIC) is used to assess the Group’s efficiency at allocating the capital under its control to and is defined
as Operating Profit After Tax divided by the average invested Capital during the period.
Average
Invested Capital is the capital invested in the company operation throughout the year and is calculated with the average of opening
and closing balances of the total assets minus current liabilities (excluding debt, joint ventures, accrued interests, deferred and current
tax, cash as well as investments and non-controlling interests), less assets and liabilities held for sale.
Average
Revenue per User per Month (ARPU) for our Mobile customers is (x) the total mobile and mobile financial services revenue (excluding
revenue earned from tower rentals, call center, data and mobile virtual network operator, visitor roaming, national third parties roaming
and mobile telephone equipment sales revenue) for the period, divided by (y) the average number of mobile subscribers for the period,
divided by (z) the number of months in the period. We define ARPU for our Home customers as (x) the total Home revenue (excluding equipment
sales and TV advertising) 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 other industry participants.
Please
refer to our 2022 Annual Report for a list and description of non-IFRS measures.
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
MILLICOM INTERNATIONAL CELLULAR
S.A.
(Registrant) |
|
|
|
|
|
|
By: |
/s/ Salvador Escalón |
|
|
|
Name: |
Salvador Escalón |
|
|
|
Title: |
Executive Vice President, Chief Legal and Compliance Officer |
Date: June 28, 2023
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