Millicom International Cellular SA (TIGO) Risk Factors

The amount, structure and obligations connected with our debt could impair our liquidity and our ability to expand or finance our future operations. As of December 31, 2023, our consolidated indebtedness excluding lease liabilities was $6,697 million, of which MIC S.A. incurred $2,388 million directly, and MIC S.A. guaranteed $505 million of indebtedness incurred by its subsidiaries. Including lease liabilities, our consolidated indebtedness was $7,739 million as of December 31, 2023. In addition, at December 31, 2023 our joint venture in Honduras, which is non-recourse to MIC S.A., had $360 million of debt and lease liabilities of $61 million. We may incur additional debt in the future. Although certain of our outstanding debt instruments contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions and, under certain circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial. The acquisition of additional debt could, among other things, require us to dedicate a substantial portion of our cash flow to payments on our debt, place us at a competitive disadvantage compared to competitors who might have less debt, restrict us from pursuing strategic acquisitions or reduce our ability to pay dividends or implement share buybacks and prevent us from complying with our dividend policy. We have incurred and assumed, and expect to incur and assume, additional indebtedness in connection with recent acquisitions. We funded our acquisitions in Panama and Nicaragua mainly by incurring additional indebtedness, including through the issuance of a $750 million 6.25% bond on March 25, 2019, and the issuance by our subsidiary Telecomunicaciones Digitales, S.A. (formerly known as Cable Onda S.A.) of a $600 million 4.5% bond in November 2019. Additionally, during 2022, we refinanced the $2,150 million bridge loan that we obtained to fund the acquisition of the remaining 45% equity interest in our joint venture business in Guatemala with the issuance of new long-term debt by our local subsidiary and new equity. Our increased indebtedness following consummation of these or other acquisitions could have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions as well as reducing funds available for capital expenditures or acquisitions, and creating competitive disadvantages for us relative to other companies with lower indebtedness levels.

We may not be able to fully mitigate the risk of inappropriate conduct by our employees, business partners and counterparties. Millicom's employees interact with customers, contractors, suppliers and counterparties, and with each other, every day. All employees are expected to respect and abide by the Group's values and Code of Conduct, commonly referred to as the "Sangre Tigo" culture. While Millicom takes numerous steps to prevent and detect inappropriate conduct by employees, contractors and suppliers that could potentially harm the Group's reputation, customers, or investors, such behavior may not always be detected, deterred or prevented. The consequences of any failure by employees to act consistently with the "Sangre Tigo" expectations could include litigation, regulatory or other governmental investigations or enforcement actions. We are subject to anti-corruption and anti-bribery laws. We are subject to a number of anti-corruption laws in the countries in which we operate and are located, in addition to the Foreign Corrupt Practices Act ("FCPA") in the United States and the Bribery Act in the United Kingdom. Our failure to comply with anti-corruption laws applicable to us could result in penalties, which could harm our reputation and harm our business, financial condition, results of operations, cash flows or prospects. The FCPA generally prohibits covered companies, their officers, directors and employees and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business and/or other benefits. We operate in countries which pose elevated risks of corruption violations, and in certain of our markets, we have been and may continue to be subject to governmental investigations that include the telecommunications sector. If we are not in compliance with anti-corruption laws and other laws governing the conduct of business with government entities and/or officials (including local laws), we may be subject to criminal and civil penalties and other remedial measures. Moreover, investigations of any actual or alleged violations of such laws or policies related to us could be time consuming, distracting to management and expensive, with the potential to harm our business, financial condition, results of operations, cash flows or prospects. For example, in late 2015 we reported to the U.S. Department of Justice ("DOJ"), as well as to law enforcement authorities in Sweden, potential improper payments made on behalf of our joint venture in Guatemala. In 2016 we received notification from the Swedish Public Prosecutor that its preliminary investigation had been discontinued. In 2018, the DOJ informed us that it was closing its investigation without action. More recently, in April 2022, we received a subpoena from the DOJ requesting information concerning our business in Guatemala ("Tigo Guatemala"), including information related to the purchase in 2021 of our former joint venture partner's interest in Tigo Guatemala and information related to any contacts with certain Guatemalan government officials. The subpoena also requested information concerning our operations in other countries in Latin America. In May 2023, we received a second subpoena from the DOJ requesting additional information regarding Tigo Guatemala. We are cooperating with the DOJ. At this time, we cannot predict the ultimate scope, timing or outcome of this matter. Our anti-corruption policies, procedures and internal controls may not be effective in complying with anti-corruption laws. We regularly review and update our policies, procedures and internal controls designed to provide reasonable assurance that we, our employees, joint ventures, distributors and other intermediaries comply with the anti-corruption laws to which we are subject. For example, our business in Guatemala retained external legal counsel to review its policies and procedures related to anti-corruption issues, including examining certain allegations of improper payments made several years ago. However, anti-corruption policies, procedures and internal controls are not always effective against this risk. We cannot assure you that such policies or procedures or internal controls work effectively at all times or protect us against liability under these or other laws for actions taken by our employees, joint ventures, distributors and other intermediaries with respect to our business or any businesses that we may acquire. Our MFS service is complex and increases our exposure to fraud and money laundering. Our MFS product has been developed through different distribution channels, and despite measures that we have taken or will take to adequately secure our payment systems, we remain susceptible to potentially illegal or improper uses of our payment services. Risks may include the use of our payment services in connection with fraudulent sales of goods or services, sales of prohibited or restricted products and money laundering. Our policies and procedures may not be fully effective in identifying, monitoring and managing these risks. For example, we are not able to monitor the sources and uses of funds that flow through our MFS application, Tigo Money, in every case. As a result, we may be held liable for fraudulent transactions or transactions that violate trade sanctions or other legal or regulatory requirements, and an increase in negative publicity regarding our payment systems could harm our reputation and reduce consumer confidence in our services. In addition, we may face legal actions or regulatory sanctions as a result of any such activity. Our services also involve cash handling, which exposes us to the risk of fraud and money laundering. In certain of our markets, we must keep our customers' MFS cash in local currency demand deposits in local banks and ensure customers' access to MFS cash, exposing us to local banking risk. Anti-money laundering laws are often complex. We endeavor to conform to the highest standards but cannot be certain that we will be able to fully meet all applicable legal and regulatory requirements at all times. Violations of anti-money laundering laws or other regulations applicable to our MFS offerings could expose us to monetary fines or other legal actions or regulatory sanctions, which could have a material adverse effect on our business, financial condition and results of operations. We may incur significant costs from fraud, which could adversely affect us. Our high profile and the nature of the products and services that we offer make us a target for fraud. Many of the markets in which we operate lack fully developed legal and regulatory frameworks and have low conviction rates for fraudulent activities, decreasing deterrence for such schemes. We have been in the past and may in the future be susceptible to fraudulent activity by our employees or third-party contractors despite having robust internal control systems in place across our operations, which could have a material adverse effect on our results of operations. We also incur costs and revenue losses associated with the unauthorized or unintended use of our networks, including administrative and capital costs associated with the unpaid use of our networks as well as with detecting, monitoring and reducing incidences of fraud. Fraud also impacts interconnection costs, capacity costs, administrative costs and payments to other carriers for unbillable fraudulent roaming charges. In 2023, our most significant impact from fraudulent activity was in the Home business, where irregular activations and reconnections led to fraud and to certain subscribers obtaining services that should not have been activated. Any continued or new fraudulent schemes could have an adverse effect on our business, financial condition and results of operations. Our risk management and internal controls may not prevent or detect fraud, violations of law or other inappropriate conduct. If any of our customers, suppliers, or other business partners receive or grant inappropriate benefits or use corrupt, fraudulent or other unfair business practices, we could be subject to legal sanctions, penalties and harm to our reputation. Given our international operations, group structure, and size, our internal controls, policies and our risk management practices may not be adequate in preventing, detecting or responding to any such incidents which could have a material negative impact on our reputation, business activities, financial position and results of operations. We may be directly or indirectly affected by U.S. or other international sanctions laws, which may place restrictions on our ability to interact with business partners or government officials. We operate in certain countries in which international sanctions may be imposed by the U.S., the U.K. or the European Union, and we may be required to comply with such sanctions. Such sanctions may restrict our ability to implement our strategy or conduct our business in the manner in which we expect. For example, in response to the November 2021 presidential election in Nicaragua, the U.S., the EU and the U.K. announced sanctions against the Nicaraguan Public Ministry and various Nicaraguan institutions and government officials, including the deputy director general and director general of TELCOR, the nation's principal telecommunications regulator. In October 2022, these sanctions were subsequently expanded by the United States, and the U.S. government also imposed visa restrictions on over 500 Nicaraguan individuals with ties to the Nicaraguan government. Concurrently, the European Union broadened its existing sanctions to TELCOR and seven Nicaraguan individuals, including the director of TELCOR. Finally, several Nicaraguan government officials and other key actors are currently included on the Specially Designated Nationals and Blocked Persons list of the U.S. Office of Foreign Assets Control, as well as the U.K. and EU sanctions lists. While it remains uncertain what impact current and future sanctions may have on our operations in Nicaragua and other markets, they may have a material adverse effect on our ability to maintain and expand our networks and business.