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Millicom International Cellular S.A. 6-K 2009
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
For August 19, 2009
Commission File Number: 000-22828
MILLICOM INTERNATIONAL
15, rue Léon Laval L-3372 Leudelange Grand-Duchy of Luxembourg (Address of principal executive offices)
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 o
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): o
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): o
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
Item 1. FINANCIAL STATEMENTS
Millicom International Cellular S.A. and subsidiaries (“MIC” or “Millicom” or the “Group”) unaudited interim condensed consolidated financial statements as of June 30, 2009.
Millicom is a global telecommunications group with mobile telephony operations in the world’s emerging markets. It also operates fixed telephony, cable and broadband businesses in five countries in Central America. As of June 30, 2009, Millicom had 16 mobile operations in 16 emerging markets in Central America, South America, Africa and Asia. In 2008, Millicom acquired 100% of Amnet Telecommunications Holding Limited, a provider of broadband and cable television services in Costa Rica, Honduras and El Salvador, of fixed telephony in El Salvador and Honduras, and of corporate data services in the above countries as well as Guatemala and Nicaragua. In addition, in December 2008 Millicom was successful in the tender for the third national mobile license in Rwanda. The Company’s shares are traded on the NASDAQ Global Select Market and on the Stockholm stock exchange.
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(i) Comparative information reclassified as a result of the classification of Millicom’s operations in Cambodia, Laos, Sri Lanka and Sierra Leone as discontinued operations.
The accompanying notes are an integral part of these condensed financial statements.
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(i) Comparative information reclassified as a result of the classification of Millicom’s operations in Cambodia, Laos, Sri Lanka and Sierra Leone as discontinued operations.
The accompanying notes are an integral part of these condensed financial statements.
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The accompanying notes are an integral part of these condensed financial statements.
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The accompanying notes are an integral part of these condensed financial statements.
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The accompanying notes are an integral part of these condensed financial statements.
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The accompanying notes are an integral part of these condensed financial statements.
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(i) Comparative information reclassified as a result of the classification of Millicom’s operations in Cambodia, Laos, Sri Lanka and Sierra Leone as discontinued operations.
The accompanying notes are an integral part of these condensed financial statements.
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The accompanying notes are an integral part of these condensed financial statements.
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1. ORGANIZATION
Millicom International Cellular S.A. (the “Company”), a Luxembourg Société Anonyme, and its subsidiaries, joint ventures and associates (the “Group” or “Millicom”) is a global telecommunications group with mobile telephony operations in the world’s emerging markets. It also operates fixed telephony, cable and broadband businesses in five countries in Central America. The Group was formed in December 1990 when Investment AB Kinnevik (“Kinnevik”), formerly named Industriförvaltnings AB Kinnevik, a company established in Sweden, and Millicom Incorporated (“Millicom Inc.”), a corporation established in the United States of America, contributed their respective interests in international mobile joint ventures to form the Group.
As of June 30, 2009, Millicom had 16 mobile operations in 16 countries focusing on emerging markets in Central America, South America, Africa and Asia. Millicom operates its mobile businesses in El Salvador, Guatemala and Honduras in Central America; in Bolivia, Colombia and Paraguay in South America; in Chad, the Democratic Republic of Congo, Ghana, Mauritius, Senegal, Sierra Leone and Tanzania in Africa; and in Cambodia, Laos and Sri Lanka in Asia.
In 2008, Millicom acquired 100% of Amnet Telecommunications Holding Limited, a provider of broadband and cable television services in Costa Rica, Honduras and El Salvador, of fixed telephony in El Salvador and Honduras, and of corporate data services in the above countries as well as Guatemala and Nicaragua. In addition, in December 2008 Millicom was successful in the tender for the third national mobile license in Rwanda, where it is currently rolling out its network and expects to launch services in the last quarter of 2009.
The Company’s shares are traded on the NASDAQ Global Select Market under the symbol MICC and on the Stockholm stock exchange under the symbol MIC. The Company has its registered office at 15, Rue Léon Laval, L-3372, Leudelange, Grand Duchy of Luxembourg and is registered with the Luxembourg Register of Commerce under the number RCS B 40 630.
2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES
The interim condensed consolidated financial statements of the Group are unaudited. They are presented in US dollars and have been prepared in accordance with International Accounting Standard (IAS) 34 ‘Interim Financial Reporting’, as published by the International Accounting Standards Board (“IASB”). In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments that are necessary for a proper presentation of the results for interim periods. Millicom’s operations are not affected by significant seasonal or cyclical patterns. The interim condensed consolidated financial statements should be read in conjunction with the annual report for the year ended December 31, 2008 on Form 20-F filed with the U.S. Securities and Exchange Commission.
The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the accounts and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The interim condensed consolidated financial statements are prepared in accordance with consolidation and accounting policies consistent with Millicom’s consolidated financial statements as of December 31, 2008, as disclosed in Note 2 of those financial statements, with the exception of the early adoption as of January 1, 2009 of IFRS 3R, ‘Business combinations’, and IAS 27R, ‘Consolidated and separate financial statements’.
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The Group early adopted IFRS 3R, ‘Business combinations’, in 2009. The revised standard continues to apply the acquisition method to business combinations but with some significant changes compared with IFRS 3. For example, all payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the statement of comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed.
As the Group has early adopted IFRS 3R, it is required to early adopt IAS 27R, ‘Consolidated and separate financial statements’, at the same time. IAS 27R requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting treatment when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognized in profit or loss.
The following new standards and amendments to standards, which affect the presentation of the interim condensed consolidated financial statements, are mandatory for the first time for the financial year beginning January 1, 2009.
· IAS 1 (revised), ‘Presentation of financial statements’. The revised standard prohibits the presentation of items of income and expenses (that is ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity. All ‘non-owner changes in equity’ are required to be shown in a performance statement. In addition, the Standard introduces the statement of comprehensive income, which presents all items of income and expenses recognized in profit or loss, together with all other items of recognized income and expense. Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). The Group has decided to present two statements. The interim financial statements have been prepared under the revised disclosure requirements.
· IFRS 8, ‘Operating segments’. IFRS 8 replaces IAS 14, ‘Segment reporting’. It requires a ‘management approach’ under which segment information is presented on the same basis as that used for internal reporting purposes. Operating segments are reported in a manner consistent with the internal reporting provided to the “Chief Operating Decision-Maker”, who makes strategic decisions. As a result of the adoption of IFRS 8, Millicom concluded that its reportable segments were Central America, Amnet, South America, Africa and Asia, which does not present any change compared to the definition of segments under IAS 14. Some comparatives for 2008 have been reclassified.
In addition, the following amendments to standards and interpretations are mandatory for the first time for the financial year beginning January 1, 2009, but are not currently relevant nor have a material impact for the Group.
· IFRS 2 (amendment), ‘Share-based payment’. · IAS 32 (amendment), ‘Financial instruments: Presentation’. · IFRIC 13, ‘Customer loyalty programmes’. · IFRIC 15, ‘Agreements for the construction of real estate’. · IFRIC 16, ‘Hedges of a net investment in a foreign operation’.
Finally, the following new interpretations have been issued, but are not effective for the period of these financial statements and have not been early adopted.
· IFRIC 17, ‘Distributions of non-cash assets to owners’, effective for annual periods beginning on or after July 1, 2009. · IFRIC 18, ‘Transfers of assets from customers’, effective for transfers of assets received on or after July 1, 2009.
3. ACQUISITION OF SUBSIDIARIES, JOINT VENTURES AND MINORITY INTERESTS
During the six months ended June 30, 2009, Millicom’s joint venture in Guatemala acquired the remaining non-controlling interest in Navega.com S.A. and Millicom acquired the remaining non-controlling interest in its operation in Chad.
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Navega.com S.A.
On March 13, 2009, Millicom’s joint venture in Guatemala completed the acquisition of the remaining 55% interest in Navega.com S.A. (“Navega”). The allocation of the purchase price will be completed within the one year window period allowed by IFRS 3R. As of June 30, 2009, the consideration paid in excess of the carrying value of the net assets acquired has been provisionally allocated to goodwill. Millicom’s share of this goodwill amounted to $36 million. Navega’s net asset book value amounted to $14 million.
Millicom’s share of the acquisition cost of the remaining 55% interest in Navega amounted to $50 million and Millicom’s share of the net cash acquired amounted to $11 million; net cash used for this acquisition therefore amounted to $39 million.
The acquired business contributed revenues of $7 million and made no contribution to the Group net profit for the period from acquisition to June 30, 2009. If the acquisition had occurred on January 1, 2009, unaudited pro forma Group revenues from continuing operations for the six months ended June 30, 2009 would have been $1,607 million, and the unaudited pro forma profit for the period from continuing operations for the same period would have been $237 million. These amounts have been calculated using the Group accounting policies.
Millicom decided to early adopt IFRS 3R and has applied it to this acquisition (see note 2). As a result, Millicom revalued at fair value its previously held 45% interest in Navega (held by Millicom’s joint venture in Guatemala) and its previously held 49% interest in Metrored S.A. (“Metrored”), a subsidiary of Navega (held by Millicom’s joint venture in Honduras), recognizing a gain of $32 million, recorded under the caption “Other non operating (expense) income, net” (see note 8).
Millicom Tchad S.A.
On March 4, 2009, Millicom completed the acquisition of the remaining 12.5% non-controlling interests in its operation in Chad. The initial consideration amounted to $8 million and was paid in cash. If certain conditions are met, Millicom will have to pay further $2 million within the next 24 months.
Millicom decided to early adopt IAS 27R and applied it to this acquisition (see note 2). As a result, the purchase of the non-controlling interest in Chad was treated as an equity transaction. The difference between the acquisition cost and the carrying value of the existing non-controlling interest at the date of the transaction resulted in a decrease of Millicom shareholders’ equity of $10 million.
4. DISPOSAL OF SUBSIDIARIES AND JOINT VENTURES
There were no disposals of subsidiaries and joint ventures during the six months ended June 30, 2009.
5. DISCONTINUED OPERATIONS AND ASSET HELD FOR SALE
In May 2009, Millicom decided to dispose of its businesses in Cambodia, Laos and Sri Lanka and, as a result, in accordance with IFRS 5, these operations have been classified as discontinued operations and comparative figures have been reclassified for comparison purposes. In addition as at June 30, 2009 the assets and liabilities of these operations were disclosed under the caption “Assets held for sale” and “Liabilities directly associated with assets held for sale”. Millicom’s businesses in Cambodia, Laos and Sri Lanka previously represented the whole of the segment “Asia”.
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The results for the six and three months ended June 30, 2009 and 2008 of Millicom’s operations in Cambodia, Laos, Sri Lanka and Sierra Leone, which was classified as an asset held for sale and discontinued operation as from December 2008 and was previously disclosed under the segment “Africa”, are presented below:
(i) Includes an impairment for Millicom’s operation in Sierra Leone, amounting to $9 and $7 million for the six and three months ended June 30, 2009.
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6. JOINT VENTURES
The following amounts have been proportionally consolidated into the Group’s accounts representing the Group’s share of revenues, operating expenses and operating profit in the Group’s joint ventures:
(i) Comparative information reclassified as a result of the classification of Millicom’s operations in Cambodia as discontinued operations.
7. SEGMENT INFORMATION
Management has determined the operating and reportable segments based on the reports that are used to make strategic and operational decisions.
Management considers the Group from both a business and geographic perspective. The Group operates in the mobile telephony business as well as in the cable, broadband and fixed telephony business (Amnet). Group’s risks and rates of return for its mobile operations are affected predominantly by the fact that it operates in different geographical regions. The mobile operating businesses are organized and managed according to these selected geographical regions, which represent the basis for evaluation of past performance and for making decisions about the future allocation of resources.
The Group has mobile businesses in three regions: Central America, South America and Africa. Its Amnet business operates in Central America. Millicom’s operation in Sierra Leone was classified as a discontinued operation as from December 2008; the Asia segment has been classified as a discontinued operation from January 1, 2009 (see note 5).
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The information provided to the management for the reportable segments for the six and three months ended June 30, 2009 is as follows:
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The information provided to the management for the reportable segments for the six and three months ended June 30, 2008 is as follows:
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