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Long-term assets

12 Months Ended

Dec. 31, 2022

Subclassifications of assets, liabilities and equities [abstract]

Long-term assetsIntangible assets Millicom’s intangible assets mainly consist of goodwill arising from acquisitions, customer lists acquired through acquisitions, licenses and rights to operate and use spectrum.Accounting for intangible assets

Intangible assets acquired in business acquisitions are initially measured at fair value at the date of acquisition, and those which are acquired separately are measured at cost. Internally generated intangible assets, excluding capitalized development costs, are not capitalized but expensed to the statement of income in the expense category consistent with the function of the intangible assets. Subsequently intangible assets are carried at cost, less any accumulated amortization and any accumulated impairment losses.

Intangible assets with finite useful lives are amortized over their estimated useful economic lives using the straight-line method and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for intangible assets with finite useful lives are reviewed at least at each financial year end. Changes in expected useful lives or the expected beneficial use of the assets are accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates.

Amortization expense on intangible assets with finite lives is recognized in the consolidated statement of income in the expense category consistent with the function of the intangible assets.

Goodwill

Goodwill represents the excess of cost of an acquisition over the Group’s share in the fair value of identifiable assets less liabilities and contingent liabilities of the acquired subsidiary, at the date of the acquisition. If the fair value or the cost of the acquisition can only be determined provisionally, then goodwill is initially accounted for using provisional values. Within 12 months of the acquisition date, any adjustments to the provisional values are recognized. This is done when the fair values and the cost of the acquisition have been finally determined. Adjustments to provisional fair values are made as if the adjusted fair values had been

recognized from the acquisition date. Goodwill on acquisition of subsidiaries is included in intangible assets, net. Goodwill on acquisition of joint ventures or associates is included in investments in joint ventures and associates. Following initial recognition, goodwill is measured at cost, less any accumulated impairment losses. Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Where goodwill forms part of a cash-generating unit (or group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed of in this manner is measured, based on the relative values of the operation disposed and the portion of the cash-generating unit retained.

Licenses

Licenses are recorded at either historical cost or, if acquired in a business combination, at fair value at the date of acquisition. Cost includes cost of acquisition and other costs directly related to acquisition and retention of licenses over the license period. These costs may include up-front and deferred payments as well as estimates related to fulfillment of terms and conditions related to the licenses such as service or coverage obligations, especially when there is a clear objective evidence that the cost of fulfilling these obligations will be significantly onerous for the Group.

Licenses have a finite useful life and are carried at cost less accumulated amortization and any accumulated impairment losses. Amortization is calculated using the straight-line method to allocate the cost of the licenses over their estimated useful lives.

The terms of licenses, which have been awarded for various periods, are subject to periodic review for, among other things, rate setting, frequency allocation and technical standards. Licenses are initially measured at cost and are amortized from the date the network is available for use on a straight-line basis over the license period. Licenses held, subject to certain conditions, are usually renewable and generally non-exclusive. When estimating useful lives of licenses, renewal periods are included only if there is evidence to support renewal by the Group without significant cost.

Trademarks and customer lists

Trademarks and customer lists are recognized as intangible assets only when acquired or gained in a business combination. Their cost represents fair value at the date of acquisition. Trademarks and customer lists have indefinite or finite useful lives. Trademarks and customer lists used by the Group for its own activities are unlikely to generate largely independent cash inflows and therefore are tested for impairment annually together with other assets at each cash-generating unit level. Finite useful life trademarks are carried at cost, less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost of the trademarks and customer lists over their estimated useful lives. The estimated useful lives for trademarks and customer lists are based on specific characteristics of the market in which they exist. Trademarks and customer lists are included in Intangible assets, net.

Estimated useful lives are:


			Years
Estimated useful lives
Trademarks			1 to 15
Customer lists			4 to 20

Programming and content rights

Programming and content master rights which are purchased or acquired in business combinations which meet certain criteria are recorded at cost as intangible assets. The rights must be exclusive, related to specific assets which are sufficiently developed, and probable to bring future economic benefits and have validity for more than one year. Cost includes consideration paid or payable and other costs directly related to the acquisition of the rights, and are recognized at the earlier of payment or commencement of the broadcasting period to which the rights relate.

Programming and content rights capitalized as intangible assets have a finite useful life and are carried at cost, less accumulated amortization and any accumulated impairment losses. Amortization is calculated using the straight-line method to allocate the cost of the rights over their estimated useful lives.

Non-exclusive and programming and content rights for periods less than one year are expensed over the period of the rights.

Indefeasible rights of use

There is no universally-accepted definition of an indefeasible rights of use (IRU). These agreements come in many forms. However, the key characteristics of a typical arrangement include:

• The right to use specified network infrastructure or capacity;

• For a specified term (often the majority of the useful life of the relevant assets);

• Legal title is not transferred;

• A number of associated service agreements including operations and maintenance (O&M) and co-location agreements. These are typically for the same term as the IRU; and

• Any payments are usually made in advance.

IRUs are accounted for either as a lease, or service contract based on the substance of the underlying agreement.

IRU arrangements will qualify as a lease if, and when:

• The purchaser has an exclusive right for a specified period and has the ability to resell (or sublet) the capacity; and

• The capacity is physically limited and defined; and

• The purchaser bears all costs related to the capacity (directly or not) including costs of operation, administration and maintenance; and

• The purchaser bears the risk of obsolescence during the contract term.

If all of these criteria are not met, the IRU is treated as a service contract.

An IRU of network infrastructure (cables or fiber) is accounted for as a right of use asset (see E.3.), while capacity IRU (wavelength) is accounted for as an intangible asset.

The costs of an IRU recognized as service contract is recognized as prepayment and amortized in the statement of income as incurred over the duration of the contract.Impairment of non-financial assets

At each reporting date Millicom assesses whether there is an indication that a non-financial asset may be impaired. If any such indication exists, or when annual impairment testing for a non-financial asset is required, an estimate of the asset’s recoverable amount is made. The recoverable amount is determined based on the higher of its fair value less cost to sell, and its value in use, for individual assets, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Where no comparable market information is available, the fair value, less cost to sell, is determined based on the estimated future cash flows discounted to their present value using a discount rate that reflects current market conditions for the time value of money and risks specific to the asset. The foregoing analysis also evaluates the appropriateness of the expected useful lives of the assets. Impairment losses related to assets of continuing operations are recognized in the consolidated statement of income in expense categories consistent with the function of the impaired asset.

At each reporting date an assessment is made as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. Other than for goodwill, a previously recognized impairment loss is reversed if there has been a change in the estimate used to determine the asset’s recoverable amount since the last impairment loss was recognized. If so, the carrying amount of the asset is increased to its recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in profit or loss.

After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.Movements in intangible assets

Movements in intangible assets in 2022


	Goodwill	Licenses	Customer Lists	IRUs	Trademark	Other (i)	Total
	(US$ millions)
Opening balance, net	4,098	1,120	970	71	920	379	7,558

Additions	—	195	—	1	—	150	345
Amortization charge	—	(96)	(106)	(14)	(1)	(130)	(345)
Impairment (ii)	—	—	—	—	—	(6)	(6)
Disposals, net	—	(9)	—	—	—	—	(9)
Transfer to/from held for sale	(12)	(18)	—	(17)	(10)	(2)	(57)
Transfers	—	(7)	—	3	—	28	24

Exchange rate movements	(26)	(91)	—	(4)	—	(25)	(147)
Closing balance, net	4,059	1,094	864	40	910	394	7,361
Cost or valuation	4,059	1,786	1,199	158	1,237	1,133	9,573
Accumulated amortization and impairment	—	(692)	(335)	(118)	(327)	(740)	(2,212)
Net	4,059	1,094	864	40	910	394	7,361

Movements in intangible assets in 2021


	Goodwill	Licenses	Customer Lists	IRUs	Trademark	Other (i)	Total
	(US$ millions)
Opening balance, net	1,659	870	423	86	77	289	3,403
Change in scope (see note A.1.2.)	2,472	370	605	2	910	25	4,384
Additions	—	29	—	—	—	135	164
Amortization charge	—	(82)	(56)	(14)	(67)	(100)	(320)
Impairment	—	—	—	—	—	(1)	(1)
Disposals, net	—	—	—	—	—	(1)	(1)
Transfers	—	—	—	2	1	46	49
Exchange rate movements	(33)	(67)	(1)	(5)	—	(15)	(121)
Closing balance, net	4,098	1,120	970	71	920	379	7,558
Cost or valuation	4,098	1,778	1,209	206	1,251	1,059	9,602
Accumulated amortization and impairment	—	(658)	(239)	(135)	(331)	(681)	(2,044)
Net	4,098	1,120	970	71	920	379	7,558

(i) Other includes mainly software costs

(ii) During the year ended December 31, 2022, Millicom early terminated an IT software contract and also decommissioned the existing software. As a result, Millicom recorded a settlement provision of $7 million under operating expenses and recorded a decommissioning cost of this software for a total amount of $12 million, as accelerated amortization and impairment charges.

Cash used for the purchase of intangible assets

Cash used for intangible asset additions


	2022	2021	2020
	(US$ millions)
Additions	258	127	419
Change in accruals and payables for intangibles	(79)	(29)	(315)
Cash used for additions	179	98	101

Goodwill and indefinite useful life trademarks

Allocation of Goodwill to cash generating units (CGUs)


	2022	2021
	(US$ millions)
Guatemala (see note A.1.2.)	2,470	2,472
Panama	907	907
El Salvador	194	194
Costa Rica	118	110
Paraguay	44	47
Colombia	123	149
Tanzania	—	12
Nicaragua	199	203
Bolivia	3	3
Total	4,059	4,098

Allocation of indefinite useful life trademarks to cash generating units (CGUs)


	2022	2021
	(US$ millions)
Guatemala	910	910
Tanzania	—	10
Total	910	920

Goodwill and indefinite useful life trademarks from CGUs are tested for impairment at least once a year and more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment losses on goodwill are not reversed.

Goodwill arising on business combinations is allocated to each of the Group’s CGUs or groups of CGUs that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is allocated:

• Represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and

• Is not larger than an operating segment.

Impairment is determined by assessing the value-in-use and, if appropriate, the fair value less costs to sell of the CGU (or group of CGUs), to which goodwill relates.

Impairment testing at December 31, 2022

Goodwill and indefinite useful life trademarks were tested for impairment by assessing the recoverable amount against the carrying amount of the CGU based on discounted cash flows. The recoverable amounts are based on value-in-use. The value-in-use is determined based on the method of discounted cash flows. The cash flow projections used (operating profit margins, income tax, working capital, capex and license renewal cost) are extracted from business plans approved by management and presented to the Board, covering a fifteen-year planning horizon. The Group uses a fifteen-year planning horizon to obtain a stable business outlook, in particular due to the long investment cycles in the industry and the long-term planned and expected investments in licenses and spectrum. Cash flows beyond this period are extrapolated using a perpetual growth rate. Management validates the reasonableness of the results of the test by comparing the share price implied by the 'sum of the parts' with the market share price. Any gap is reviewed, analyzed and documented. When value-in-use results are lower than the carrying values of the CGUs, management determines the recoverable amount by using the fair value less cost of disposal (FVLCD) of the CGUs. FVLCD is usually determined by using recent offers received from third parties (Level 1).

For the year ended December 31, 2022, management concluded that no impairment should be recorded in the Group consolidated financial statements.

Impairment testing at December 31, 2021

For the year ended December 31, 2021, management concluded that no impairment should be recorded in the Group consolidated financial statements.

Key assumptions used in value in use calculations

The process of preparing the cash flow projections considers the current market condition of each CGU, analyzing the macroeconomic, competitive, regulatory and technological environments, as well as the growth opportunities of the CGUs. Therefore, a growth target is defined for each CGU, based on the appropriate allocation of operating resources and the capital investments required to achieve the target. The foregoing forecasts could differ from the results obtained through time; however, the Company prepares its estimates based on the current situation of each of the CGUs. Relevance of budgets used for the impairment test is also reviewed annually, with management performing regressive analysis between actual figures and budget/Long Range Plans (LRPs) used for previous year impairment test.

The cash flow projections for all CGUs is most sensitive to the following key assumptions:

•EBITDA margin is determined by dividing EBITDA by total revenues.

•CAPEX intensity is determined by dividing CAPEX by total revenues.

•Perpetual growth rate does not exceed the countries' GDP.

•Weighted average cost of capital (“WACC”) is used to discount the projected cash flows.

The most significant estimates used for the 2022 and 2021 impairment test are shown below:


CGU	Average EBITDA margin (%) (i)		Average CAPEX intensity (%) (i)		Perpetual growth rate (%)		WACC rate after tax (%)
	2022	2021	2022	2021	2022	2021	2022	2021
Bolivia	41.2	42.7	15.2	16.6	1.0	1.0	9.8	11.6
Colombia	36.0	36.1	17.2	17.4	2.0	2.0	11.4	8.9
Guatemala	51.2	54.7	11.6	12.3	1.0	1.0	10.1	8.4
Costa Rica	37.5	35.5	15.5	15.1	2.0	2.0	11.8	11.1
El Salvador	41.0	39.3	13.0	12.9	1.0	1.0	14.1	14.7
Nicaragua	46.8	45.9	14.5	16.0	2.5	3.0	15.0	12.5
Panamá	46.9	47.0	14.9	17.2	1.0	1.0	8.8	7.0
Paraguay	44.5	42.6	14.9	15.4	1.0	1.0	10.0	8.3
Tanzania	n/a	38.0	n/a	12.5	n/a	1.0	n/a	13.2

(i) Average is computed over the period covered by the plan.

Sensitivity analysis to changes in assumptions

Management performed a sensitivity analysis on key assumptions within the test. The following maximum increases or decreases, expressed in percentage points, were considered for all CGUs:


Reasonable changes in key assumptions (%)
Financial variables	2022	2021
WACC rates	+/- 2	+/-1
Perpetual growth rates	+/-1	+/-1
Operating variables
EBITDA margin	+/-2	+/-2
CAPEX intensity	+/-1	+/-1

At December 31, 2022, the sensitivity analysis shows a comfortable headroom between the recoverable amounts and the carrying values for all CGUs, except for Colombia and Nicaragua.

If the assumptions used in the impairment test were changed to a greater extent than as presented in the following table, the changes would, in isolation, trigger a potential impairment loss being recognised in the year ended December 31, 2022.


Change required for carrying value to equal recoverable amount	CGU
	Colombia	Nicaragua
Financial variables
WACC rate	+82bps	+117bps
Perpetual growth rates	n/a	n/a
Operating variables
Average EBITDA margin	-107bps	n/a
CAPEX intensity	+13bps	n/a

At December 31, 2021the sensitivity analysis shows a comfortable headroom between the recoverable amounts and the carrying values for all CGUs.

Property, plant and equipmentAccounting for property, plant and equipment

Items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment. Historical cost includes expenditure that is directly attributable to acquisition of items. The carrying amount of replaced parts is derecognized.

Depreciation is calculated using the straight-line method over the shorter of the estimated useful life of the asset and the remaining life of the license associated with the assets, unless the renewal of the license is contractually possible.


Estimated useful lives			Duration
Buildings			Up to 40 years
Networks (including civil works)			5 to 15 years
Other			2 to 7 years

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The assets’ residual value and useful life is reviewed, and adjusted if appropriate, at each statement of financial position date. An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.

Construction in progress consists of the cost of assets, labor and other direct costs associated with property, plant and equipment being constructed by the Group, or purchased assets which have yet to be deployed. When the assets become operational, the related costs are transferred from construction in progress to the appropriate asset category and depreciation commences.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Ongoing routine repairs and maintenance are charged to the statement of income in the financial period in which they are incurred.

Costs of major inspections and overhauls are added to the carrying value of property, plant and equipment and the carrying amount of previous major inspections and overhauls is derecognised.

Equipment installed on customer premises which is not sold to customers is capitalized and amortized over the customer contract period.

A liability for the present value of the cost to remove an asset on both owned and leased sites (for example cell towers) and for assets installed on customer premises (for example set-top boxes), is recognized when a present obligation for the removal exists. The corresponding cost of the obligation is included in the cost of the asset and depreciated over the useful life of the asset, or lease period if shorter.

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of that asset when it is probable that such costs will contribute to future economic benefits for the Group and the costs can be measured reliably.

Movements in tangible assets

Movements in tangible assets in 2022


	Network Equipment	Land and Buildings	Construction in Progress	Other(i)	Total
	(US$ millions)
Opening balance, net	2,691	200	428	63	3,382

Additions	157	3	655	9	823
Impairments/reversal of impairment, net	—	—	—	1	—
Disposals, net	(16)	(5)	(8)	—	(29)
Depreciation charge	(791)	(21)	—	(28)	(840)
Asset retirement obligations	17	—	—	—	18
Transfers	577	22	(632)	12	(21)
Transfer from/(to) assets held for sale (see note E.4)	(141)	(6)	(13)	(6)	(166)
Exchange rate movements	(153)	(12)	(11)	(2)	(178)
Closing balance, net	2,340	180	418	50	2,989
Cost or valuation	8,071	348	418	345	9,183
Accumulated depreciation and impairment	(5,731)	(168)	—	(296)	(6,194)
Net at December 31, 2022	2,340	180	418	50	2,989

Movements in tangible assets in 2021


	Network equipment	Land and buildings	Construction in progress	Other(i)	Total
	(US$ millions)
Opening balance, net	2,175	185	308	87	2,755
Change in Scope (see note A.1.2.)	657	35	29	6	727

Additions	30	—	752	4	787
Impairments/reversal of impairment, net	—	—	(3)	(1)	(4)
Disposals, net	(10)	—	(4)	—	(14)
Depreciation charge	(651)	(16)	—	(73)	(739)
Asset retirement obligations	31	1	—	—	32
Transfers	572	5	(646)	41	(28)
Exchange rate movements	(114)	(10)	(7)	(2)	(133)
Closing balance, net	2,691	200	428	63	3,382
Cost or valuation	8,512	358	428	385	9,683
Accumulated depreciation and impairment	(5,821)	(158)	—	(322)	(6,301)
Net at December 31, 2021	2,691	200	428	63	3,382

(i) Other mainly includes office equipment and motor vehicles.

Borrowing costs capitalized for the years ended December 31, 2022, 2021 and 2020 were not significant.Cash used for the purchase of tangible assets

Cash used for property, plant and equipment


	2022	2021	2020
	(US$ millions)
Additions	823	787	649
Change in advances to suppliers	(3)	(6)	(4)
Change in accruals and payables for property, plant and equipment	(20)	(40)	(22)
Other	—	(1)	(1)
Cash used	800	740	622

Right of use assets

Right-of-use assets are measured at cost comprising the following:

•the amount of the initial measurement of lease liability

•any lease payments made at or before the commencement date less any lease incentives received

•any initial direct costs, and

•restoration costs

Refer to note C.4. for further details on lease accounting policies.

Movements in right of use assets in 2022


Right-of-use assets	Land and buildings	Sites rental	Tower rental	Other network equipment	Capacity	Other	Total
	(US$ millions)
Opening balance, net	169	201	587	25	29	13	1,024

Additions	23	23	77	2	—	2	127
Modifications	11	18	104	1	—	1	135
Impairments	(1)	—	—	—	—	—	(1)
Disposals	(3)	(1)	(5)	—	—	—	(9)
Depreciation	(38)	(42)	(83)	(4)	(5)	—	(173)
Asset retirement obligations	—	2	—	1	—	—	3
Transfer to/from held for sale	(3)	(2)	(158)	—	—	—	(163)
Transfers	—	(14)	17	(7)	3	—	(2)

Exchange rate movements	(16)	(4)	(34)	—	—	—	(54)
Closing balance, net	142	181	505	16	28	13	884
Cost of valuation	249	325	780	28	39	22	1,442
Accumulated depreciation and impairment	(107)	(144)	(275)	(11)	(11)	(9)	(558)
Net at 31 December 2022	142	181	505	16	28	13	884

Apart from the impact of the disposal of our operations in Tanzania, there have been no unusual significant events affecting lease liabilities (and right-of-use assets) during the year ended December 31, 2022.

Movements in right of use assets in 2021


Right-of-use assets	Land and buildings	Sites rental	Tower rental	Capacity	Other network equipment	Other	Total
	(US$ millions)
Opening balance, net	147	93	607	14	31	2	895
Change in scope	16	107	48	17	3	13	204
Additions	37	14	53	—	—	1	106
Modifications	14	8	3	—	1	(1)	25
Impairments	(1)	—	—	—	—	—	(1)
Disposals	(2)	(2)	(2)	—	(1)	—	(7)
Depreciation	(36)	(22)	(81)	(1)	(4)	(2)	(145)
Asset retirement obligations	1	—	—	—	—	—	—
Transfers	—	4	(17)	(1)	(5)	—	(18)
Exchange rate movements	(9)	(1)	(24)	—	—	—	(34)
Closing balance, net	169	201	587	29	25	13	1,024
Cost of valuation	254	317	908	34	40	21	1,573
Accumulated depreciation and impairment	(85)	(116)	(320)	(5)	(14)	(8)	(549)
Net at 31 December 2021	169	201	587	29	25	13	1,024

E.4. Assets held for sale If Millicom decides to sell subsidiaries, investments in joint ventures or associates, or specific non-current assets in its businesses, these items qualify as assets held for sale if certain conditions are met and necessary regulatory approvals obtained.ClassificationNon-current assets (or disposal groups) are classified as assets held for sale and stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is expected to be recovered principally through sale, not through continuing use. Liabilities of disposal groups are classified as Liabilities directly associated with assets held for sale.Millicom’s assets held for sale

As of December 31, 2022 and 2021 no assets qualified as assets held for sale.

For further details on assets held for sale and discontinued operations, please refer to note A.4.

Allocation of goodwill to cash generating units