Connections That Matter

Millicom drives business success through connections that matter. Connections that open doors to knowledge. Connections that help individuals become part of the digital economy and businesses realize financial opportunities that would otherwise go untapped.

Chairman's Message
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Former Chairman's Message

Tom Boardman
 

Transformation and growth. Those two words define Millicom’s trajectory in 2018.

2018 was a watershed year for Millicom. The company returned to solid top line growth as the strategy of monetizing mobile data, building our cable network, preparing for convergence, and growing B2B continued yielding positive results.

Details of the effective execution of these four key strategic building blocks are contained in the strategy section on pages 9 to 15 of the report.

We accelerated the build and deployment of high-speed data networks in Central and South America, and acquired Cable Onda in Panama during the last quarter of 2018.

We continued to focus on customer service and experience which included the implementation during the year of Net Promoter Score (NPS) as a key performance indicator measuring each customer touch point and segment.

Working in emerging markets influences our approach to business growth. In these developing economies and societies we must integrate our business strategy and corporate responsibility efforts to create shared value and promote sustainable development for all our stakeholders.

We can’t accomplish all our goals without the dedication and skills of our people. During the year, we continued nurturing our strong company culture, which our people refer to as “Sangre Tigo”.

Millicom understands the need to remain vigilant in the area of governance, compliance and business ethics. We believe Millicom and our Tigo brands should, and can, lead the way in these areas in all our markets. The Governance section of this report sets out Millicom’s framework, approach and commitment to strong corporate governance. During 2018, we strengthened our Anti-Bribery Anti-Corruption policies and resources and enhanced our Anti-Money Laundering tools, systems, processes, and training to allow Millicom to more rapidly assess potential problems. We also incorporated compliance factors into executive incentive programs and developed a three-year strategic plan to enhance our Information Security programs.

Leadership for our company drives its success. On behalf of the Board of Directors, I would like to thank Mauricio Ramos, our CEO, and his executive team for their dedication and drive, and for inspiring every colleague to make The Digital Lifestyle™ a reality for millions of customers in ways that benefit all our stakeholders.

As I step out of my role as Board Chair in early 2019 and pass the mantle to José Antonio Ríos García, I am confident Millicom’s leadership will continue to position the business to create shareholder value, rewarding employment opportunities, and prosperity for the communities where we operate.

Tom BoardmanFormer Chairman of the Board of Directors

Chairman's Message

José Antonio Ríos García
 

Since joining the Board in May 2017, I have witnessed firsthand the strong, steady leadership of Tom Boardman, as well as the great strides Millicom has made in executing its strategy. On behalf of the Board, I thank Tom for all he has done to advance the company’s vision, mission and purpose.

In January 2019, Tom passed the baton of Millicom’s Chairmanship to me. Given the company’s increased focus on Latin America, I look forward to drawing on my own experience both in the telecommunications sector and in the region, to help Millicom’s senior leadership team as they strive to advance the company’s purpose and create value for shareholders.

Having already visited several of Millicom’s operations, I remain impressed by the dedication of our employees, and the clear and ethical purpose evident in the strategic and operating decisions the company makes every day. Our robust business strategy and corporate responsibility framework have laid a solid foundation for even greater success moving forward. I welcome the opportunity to serve as the company’s Chairman and look forward to doing my part to ensure continued success and growth for all our stakeholders.

Thank you,

José Antonio Ríos GarcíaChairman of the Board of Directors

People and Communities

Discover How We Connect Communities
 
Sangre Tigo

Our Purpose

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Responsible Leadership

Empowering Women

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Digital Highways

Build Cable

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People and Community

Diversity and Inclusion

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Innovations

Tigo Sports

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Responsible Operations

Commitment to Datacenters

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Connecting Classrooms

Schools in Latam

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Responsible Leadership

Protecting Human Rights

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Responsible Leadership

Partnership Against Violence

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Mauricio Ramos

Chief Executive Officer’s Message

Mauricio Ramos
 

I’m very pleased to share this year’s integrated report because it highlights the most important and exciting ways Millicom manifested its purpose in 2018. That purpose remains clear: We build the digital highways that connect people, improve lives, and develop our communities.

We believe our core products and services make a positive impact on the lives of people in the countries we serve. By creating the infrastructure for digital communications and economies, we directly influence the development and advancement of these countries and the quality of life of our customers. We simply do not want anyone to be left behind, and our success as a company depends on that.

And 2018 was very successful on many fronts. We exceeded our goal to cover 10 million homes with our cable network, and we also hit our target of 10 million 4G customers. We were equally successful at delivering our service revenue and EBITDA growth targets, and we generated more than enough cash flow to continue to fund our network investments and to pay an attractive dividend to our shareholders. Consistent with our strategic plan, we also made great strides to increase our focus on Latin America, and we capped the year by completing our U.S. listing, allowing our shares to begin trading on the Nasdaq Stock Exchange in January 2019.

This strong performance can only occur by first having a clear understanding of the overarching factors critical to our success. Our business model must adopt and integrate rapid technological innovations to make these advancements both affordable and accessible in our markets.

We also understand that as a market leader, we have an obligation to ensure the technology we provide is being used responsibly and has the best possible outcome for the communities we serve. That is why we continue to promote initiatives that protect children online, promote digital literacy among vulnerable populations, and support privacy, freedom of expression and gender equality. This includes our renewed commitment to the United Nations Global Compact.

With that as our backdrop, we see Millicom as an essential bridge between investors who want to invest capital in developing economies and the individuals and businesses who will benefit from that capital. 2018 proved to be a year that overwhelmingly demonstrates how that bridge provides benefits in both directions.

I am delighted to highlight some of the most significant accomplishments Millicom made toward living our purpose and advancing our mission in 2018.

2018 Highlights

  • Strategic Success: The strategy we introduced in 2015 and have continued to refine ever since keeps working. We delivered a successful year both operationally and financially. We closed 2018 ahead of our target of 10 million homes passed, while adding more than 400,000 new HFC customer relationships. We also increased the number of our 4G smartphone data customers by more than 3 million, which means that more than 10 million customers now enjoy our 4G networks available in all of our eight mobile markets. Our financial performance returned to steady growth. Millicom’s revenue, EBITDA and returns on capital in 2018 improved on an organic basis, in contrast with the mixed performance in the broader telecommunications sector.
  • Acquisition of Cable Onda in Panama: Taking advantage of our healthy free cash flow generation and our strong balance sheet in 2018, we made our largest acquisition since 2014, entering a new country with a fast-growing economy.
  • U.S. Listing: As a result of our recent listing on the Nasdaq Stock Market in the U.S., our shares now trade in the most developed market in the world under the ticker TIGO.
  • Updated Corporate Responsibility (CR) Framework: In 2018, we took an in-depth look at ways we could better focus our CR activities to reflect emerging issues, the topics our stakeholders care most about, and the challenges we are uniquely positioned to solve.
  • Corporate Culture and Talent Development: We paid special attention to maintaining and enhancing our strong company culture and took the time to better map and develop our talent. Our dedication to our people has been recognized. For the second consecutive year we were among the top 25 employers in Latin America across industries, and received “Great Place To Work” awards in many of the countries where we operate.

We are truly excited about our accomplishments in 2018 and optimistic about our future. The long-term plan we have shared with the Board of Directors reflects our view that there is enormous potential for growth over the next five years. I am confident that we have the right team in place to deliver on our promises and to continue to earn the trust of all our stakeholders.

Thank you for joining us on this journey.

Mauricio Ramos Chief Executive Officer

Our Business Strategy

The Engine That Drives Our Purpose
 

In 2018, a relentless focus on our business model for growth resulted in robust financial and social returns. The following carefully crafted strategies, executed with discipline, have helped us build a world-class organization that benefits shareholders and brings value to emerging markets and societies.

Monetize Data

A sound mobile data monetization strategy will continue to translate incremental growth into additional revenues through:

  • Expansion of our 4G/LTE network;
  • Transition to a postpaid subscription model; and
  • Products and services that stimulate data usage.
Build Cable

Cable now represents 36 percent of our Latam service revenue with demand for high-speed data from both the business sector and individual customers driving continued revenue growth. To meet this demand, we are:

  • Accelerating the expansion of our hybrid fiber-coaxial (HFC) network;
  • Targeting acquisitions that complement our organic buildout, such as Panama’s Cable Onda, which increases our cable exposure and significantly enhances our B2B capabilities; and
  • Adding content and services to drive further growth in Average Revenue Per User (ARPU).
Prepare for Convergence

As we evolve from being a traditional mobile operator to a more comprehensive service provider, we are expanding our ability to offer convergent services that include both mobile and cable services to customers of all sizes. The deployment of IT solutions to efficiently market and support convergent solutions will help us:

  • Differentiate ourselves in the marketplace;
  • Generate new revenue streams;
  • Increase customer satisfaction and loyalty;
  • Reduce customer churn and costs; and
  • Prepare for future network deployments such as 5G.
Accelerate B2B

Since launching in 2012, Tigo Business has enjoyed exceptional growth among its three primary audiences: multinational corporations, large local companies, and small and medium size businesses (SMBs). To accelerate this growth, we have made B2B fundamental to our strategy by:

  • Differentiating the Tigo Business brand through excellent service and frontline execution and
  • Selectively evolving our portfolio into Information and Communications Technology (ICT)-managed services.
Go Digital

Increased digitization of our processes and operations in 2018 drove efficiencies that benefit the company and customers alike. This transformation will continue as we:

  • Provide superior digital journeys for our customers that will ensure we become or remain the operator of choice;
  • Create new tools and an enhanced operational model so our teams can do their work more efficiently; and
  • Offer next generation user-experience platforms that seamlessly integrate content across linear and on-demand channels. By the end of 2018, one such platform, Tigo ONEtv, was already present in half of our Latam markets.
Best Customer Experience

At Millicom, living our purpose means much more than just offering a wide variety of products and services. It means knowing our customers and employing a truly customer-centric mindset that provides the products and services they want while taking care of their needs efficiently and effectively. We place our customers at the center of everything we do, and our purpose at the heart of every product and service we offer.

Casita Top Part
Monetize Mobile Data
Build Cable
Prepare for Convergence
Accelerate B2B
Go Digital
Provide Best Customer Experience

Performance

2018 Highlights
 

2018 was very successful on many fronts. We exceeded our goal to cover 10 million homes with our cable network, and we also hit our target of 10 million 4G customers. We were equally successful at delivering our service revenue and EBITDA growth targets, and we generated more than enough cash flow to continue to fund our network investments and to pay an attractive dividend to our shareholders. As a responsible market leader, we continued to promote initiatives that protect children online, promote digital literacy among vulnerable populations, and support privacy, freedom of expression and gender equality. This includes our renewed commitment to the United Nations Global Compact.

Equity free cash flow*

(US%m)
2016
$141
2017
$306
2018
$326
arrow_upward
+6.6%

Year-over-year change

Return on invested capital*

(%)
2016
13.1
2017
16.2
2018
18.2

4G smartphone data users

(m)
2016
3.4
2017
7.2
2018
10.5
arrow_upward
+47.2%

Year-over-year growth

HFC Revenue generating units

(m)
2016
3.7
2017
4.4
2018
6.2
arrow_upward
20.9%

Year-over-year growth**

Equity free cash flow and Return on invested capital are non-IFRS measures. Please refer to page 196 of the annual report for description of non-IFRS measures.

Year-over-year growth excludes contribution from the Panama acquisition.

Corporate Responsibility (CR)

Our Updated CR Framework
 

With our purpose at its center, our updated framework conveys our commitments to conduct our core business in a responsible way, drive digital connectivity and become agents of positive change in our markets.

Responsible Leadership in Action Connecting Communities Protecting Children Empowering Women Environment Supply Chain Human Rights Inclusion Ethics CR Fundamentals Purpose: Build Digital Highways that connect people, improve lives and develop communities
Connecting Communities

Millicom helps communities prosper by building digital highways, by providing communities with digital education and equipping them with access to technology.

Protecting Children

We have great potential to help children safely explore, learn and grow through digital tools and we take concrete steps to educate children, parents, teachers and caregivers on the risks and opportunities of digital technology.

Empowering Women

Millicom trains women and girls on digital literacy and entrepreneurship to make the opportunities associated with the digital world accessible to them.

Environment

We work across our organization to ensure that we use the natural resources and systems we depend on wisely, through fit-for-purpose policies and practices, and minimize any negative impacts.

Supply Chain

We seek to do business with suppliers that have strong environmental and human rights standards and practices, and encourage the exchange of best practices and mutual learning.

Human Rights

We respect human rights, as defined in the UN Guiding Principles for Business and Human Rights, the International Bill of Human Rights and Children’s Rights and Business Principles. We are committed to respecting and safeguarding every person’s right to freedom of expression and privacy.

Inclusion

We seek to build inclusive workplaces and communities through initiatives that foster an equal opportunity culture and the ability to fulfill one´s potential.

Ethics

Millicom’s success is built on a culture of ethics and integrity. This means we handle our everyday interactions with high ethics and integrity and zero tolerance for any form of corruption. We want our people to feel free to voice their concerns without any fear of retaliation and with confidence that their concerns will be taken seriously.

CR Fundamentals

CR Fundamentals are core to our purpose, our culture and our relationships. They guide us on how to conduct our business in the right way and are integrated into Millicom’s business, strategy and functions.

Purpose

Our CR purpose is our business purpose. All our CR focus areas stem from it.

Responsible Leadership in Action

Responsible Leadership in Action comprises our flagship programs which are aimed at empowering people and promoting social good. These are the areas where we believe we can make a distinctive impact. Our programs help children, women and communities thrive and participate in digital economies and societies.

Governance and Business Ethics

Corporate governance structure
 

Millicom’s Board of Directors was involved with many significant strategic, operational and compliance matters during 2018. These included further enhancement of governance structures related to the Group’s joint ventures, ongoing development of compliance and control programs, oversight of the process of acquiring the Cable Onda (Panama) operation, and preparation for re-listing on the Nasdaq Stock Market in the U.S..

Board of Directors


José Antonio Ríos García
Year of birth: 1945
First appointed: May 2017
Nationality: Venezuelan and American
José Antonio Ríos García
Mr. José Antonio Ríos GarcíaChairman, Director
Pernille Erenbjerg
Year of birth: 1967
First appointed: January 2019
Nationality: Danish
Pernille Erenbjerg
Ms. Pernille ErenbjergDeputy Chairman, Director
Odilon Almeida
Year of birth: 1961
First appointed: May 2015
Nationality: Brazilian
Odilon Almeida
Mr. Odilon Almeida Director
Janet Davidson
Year of birth: 1956
First appointed: May 2016
Nationality: American
Janet Davidson
Ms. Janet Davidson Director
Tomas Eliasson
Year of birth: 1962
First appointed: May 2014
Nationality: Swedish
Tomas Eliasson
Mr. Tomas Eliasson Director
Lars-Ã…ke Norling
Year of birth: 1968
First appointed: May 2018
Nationality: Swedish
Lars-Ã…ke Norling
Lars-Ã…ke NorlingDirector
Roger Solé Rafols
Year of birth: 1974
First appointed: May 2017
Nationality: Spanish
Roger Solé Rafols
Roger Solé RafolsDirector
James Thompson
Year of birth: 1961
First appointed: January 2019
Nationality: American
James Thompson
James ThompsonDirector

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Empowering Women: Our “Conectadas” Initiative

Responsible Leadership
 

Gender equality expands economic growth, promotes social development, and enhances business performance. Digital financial services can increase the participation of women in the workforce and create opportunities for women in the formal market economy. According to the United Nations, the full incorporation of women’s capacities into labor forces would add percentage points to most national growth rates—double digits in many cases.

Connectivity can also help women bypass social restrictions and step toward a new life, better education and health for themselves and their children.

Females comprise half of our potential consumer base and available talent pool for employment. In 2018, we stepped up our commitment to women’s empowerment by committing all country operations to the Connected Women Initiative. This program from Groupe Spéciale Mobile Association (GSMA) strives to reduce the gap in the use of mobile and internet between men and women by 2020. By providing women with our technologies and services, we unlock opportunities and knowledge that allow families, communities, and economies to prosper and thrive.

Build Cable

B2B Capabilities
 

Cable now represents 36 percent of our Latam service revenue with demand for high-speed data from both the business sector and individual customers driving continued revenue growth. To meet this demand, we are:

  • Accelerating the expansion of our hybrid fiber-coaxial (HFC) network;
  • Targeting acquisitions that complement our organic buildout, such as Panama’s Cable Onda, which increases our cable exposure and significantly enhances our B2B capabilities; and
  • Adding content and services to drive further growth in Average Revenue Per User (ARPU).

Diversity and Inclusion

People and Community
 

At Millicom, we take diversity and inclusion seriously across all levels throughout our operations.

To support gender equality, we continue to close the pay gap and we strive to develop and promote women from within, as well as facilitate mobility between our operations and corporate offices.

A few examples highlight our diversity and inclusion efforts in 2018:

  • Gender Pay Gap Analysis: We conducted a comprehensive gender pay gap analysis at our headquarters and across all Latam operations to ensure equal remuneration between men and women. In operations where we identified issues, we will implement corrective actions.
  • Leadership Training in Costa Rica: We have selected women within Millicom who have demonstrated strong leadership potential and enrolled them in the highly regarded INCAE Business School in Costa Rica for additional, advanced training.
  • Mentoring Program in El Salvador: We implemented a women’s mentoring program called Empodérate, where female managers mentor potential future female leaders using the VitalVoices.org mentoring framework.

Because we believe our differences unite us, we also actively recruit individuals with physical disabilities and hearing impairment at our facilities. True inclusion means acknowledging a diversity of needs, sometimes as basic as adjusting work environments to accommodate this diversity; for example, by adding ramps to the primary entrance at a call center or expanding aisle space in offices. We invite you to learn more about inclusivity efforts on this video from Tigo Guatemala.

Tigo Sports

Innovations
 

The 2018 FIFA World Cup Russia™ created the perfect convergence of mobility, content, and sports. The growing mobile penetration in Latin America, as well as the adoption of smart mobile devices, provided users in the region with a digital, mobile and interactive experience for the first time. We took this opportunity to offer our customers a new experience, to live the passion of the 2018 FIFA World Cup Russia™ from their smartphone and tablet, through our exclusive Tigo Sports App. We also launched the channel Tigo Sports+ in Paraguay to expand our transmission channels during the World Cup. In addition to having exclusive rights for the transmission of various matches country by country, the broadcasts were 100 percent HD.

Commitment to Tier III Datacenters

Responsible Operations
 

By setting up the first Tier III certified state-of-the-art datacenter in Bolivia and with the acquisition of Cable Onda, we continued the progress we have made in recent years in Paraguay, Colombia, and Africa to modernize our datacenters:

The goals for this program include:

  • Increase data protection measures;
  • Automate facility operations;
  • Optimize use of datacenter resources; and
  • Increase energy efficiency up to 40 percent for the new datacenters.

In 2019, we plan to add new cutting-edge datacenters in Nicaragua, Honduras, and El Salvador to fulfill the goal of having at least one highly energy-efficient datacenter in each of the countries we serve.

Schools in Latam

Connecting Classrooms
 

Internet connectivity has become an essential part of educational success. We support the ICT Alliance for the Americas and its efforts to connect all schools in Latam through joint action by 2030. As an example of that support, we are providing internet connectivity to 350 public education centers in El Salvador. In 2018, we also delivered 25,000 tablets across more than 1,450 public education centers that have benefited approximately 66,000 students.

Protecting Human Rights

Responsible Leadership
 

At Millicom, part of building digital highways for our customers includes retaining, handling and processing sensitive data. As companies like ours face increasing levels of scrutiny and regulation around information security and data protection, we are focused on building a culture of privacy both internally at Millicom and in our markets.

Internally, we have created a cross-functional task force to make sure these initiatives are being applied throughout the company. In 2018, we created a Global Privacy Policy and worked on compliance with the General Data Protection Regulation (GDPR) in the EU. The launch of the policy was followed by a company-wide Privacy Day Awareness Campaign stressing the policy’s key elements and the importance of strong privacy practices. The policy implementation includes the designation of privacy champions in each business function at corporate and operational level, the implementation of our Privacy Management Tool to manage personal data processing activities and reporting, and mandatory online trainings for new hires and on an annual basis for the entire organization.

UNICEF Partnership Against Violence

Responsible Leadership
 

We remain committed to protecting the rights of children and adolescents in our Latam markets as they develop and grow into active participants in digital economies and societies. We believe we can best solve complex problems through partnerships in which each party focuses on their strengths. For several years, we have worked closely with UNICEF to provide thought leadership and share best practices industry-wide on how to prevent violence against children. In May 2018, we renewed our strong commitment to work with UNICEF in Latam through an updated three-year collaboration agreement aimed at preventing violence and protecting children and teens in the region.

As part of the agreement, Millicom supports programs related to the promotion of child rights, the safe use of technology, and violence prevention against children and teens across our markets in Latin America. During the first year of the renewed partnership, Millicom supported projects in Paraguay, El Salvador and Guatemala and hosted a two-day workshop with UNICEF and other subject matter experts to help the telecommunications industry understand its impact on children’s rights, and explore opportunities to scale and deepen the impact of our joint programs.

In Guatemala and El Salvador, Millicom supported the creation of new child helplines in both countries, through which children can seek advice on online risks like cyberbullying, grooming, and harassment, and also receive assistance in cases where their rights are being violated

In Paraguay, the company supported a program that aims at using technology in classrooms and developing young leaders in the safe and responsible use of the internet. This program is being continued during 2019.