Tigo - Millicom Annual Report 2011

Millicom provides affordable, accessible and available mobile services and solutions, including financial services, to those who have previously been left behind by such developments. This approach embodies Millicom’s wider ambition of placing social and economic benefits at the heart of its business. As an important corporate citizen in every country in which it operates, the company plays an active role in addressing the most pressing needs in local communities within the framework of ‘Tigo together’ and its three priority themes: education, well-being and the environment.

During 2011, the company took important steps to integrate its corporate social responsibility activities under the wider umbrella of “Integrity”. The new Integrity strategy was presented at the Capital Markets Day in September 2011 and encompasses the full spectrum of corporate responsibility, health and safety and compliance activities (see Governance). The Integrity strategy outlines the company’s aim, within the next five years, to move beyond compliance with applicable laws and company policy to a model where it actively seeks social return as a desired by-product of its financial investments. The strategy is based on the company’s core values of passion, integrity and respect, and aligns with the principles and aims of the United Nations Global Compact. Steered by these guidelines and related stakeholder engagement, Millicom is working to build a more sustainable, strategic approach to all Integrity activities.

The Integrity strategy has four key elements:

• Reduce cost and risk through preventative, corrective and detective measures, improved risk and issues management, and by identifying opportunities to combine cost benefit and social return, such as increasing energy efficiency of our networks and our office buildings.
• Gain competitive advantage with CSR that sets the company apart with fair employment practices and community activities that align closely to the company’s business strategy and core competencies.
• Develop legitimacy and reputational capital with strong relations with our communities, targeted stakeholder engagement and transparent reporting and communications.
• Create value by actively seeking to offer commercial solutions to the social issues in our communities, supporting local entrepreneurship and generally supporting capacity building of our local communities.

The responsibility for setting the global framework for all activities relating to compliance and corporate responsibility sits at Group level.

In March 2011, Millicom established a Compliance function with the mission to improve the company’s risk management and performance regarding anti-corruption compliance and business ethics. During the course of the year, the function was renamed “Tigo Integrity Office” and was tasked to manage all of Millicom’s corporate social and environmental responsibility and health and safety activities in addition to compliance under one organization.

The Board of Directors has established a CSR Committee that oversees management of all Integrity issues and the implementation of strategy and advises the Board of Directors. The CSR Committee comprises of Board members Mia Brunell Livfors and Donna Cordner, with Mikael Grahne, Group CEO and President and the Chief Integrity Officer, Enrique Aznar attending meetings of the Committee.

Enrique Aznar, as the Chief Integrity Officer, has the operational responsibility for compliance and corporate responsibility and reports to the CEO and the Chairman of the Audit Committee of the Board of Directors as well as to the CSR Committee. He is required to ensure that the Group complies with relevant laws and regulation, understands and manages related risks and seeks opportunities for social return.

The Integrity Office includes a team in the global headquarters with experts in anti-corruption, business ethics and compliance, corporate responsibility and health, safety and environment who work directly with relevant global teams such as Legal and Regulatory, Human Resources, Procurement, Investor Relations and Internal Communications and provide support to all local operations. The global team works on Group level policies, manages relevant stakeholder engagement and reporting, and supports local operations in implementing the Integrity strategy.

It is intended that, in 2012, each country of operation will have a dedicated Integrity Manager and a Corporate Responsibility Manager. Integrity Managers sit in their respective local management teams but remain independent by reporting directly to the Chief Integrity Officer. CSR Managers will have dual reporting lines to the global team and the local operation to ensure they stay in tune with the local requirements.

Millicom has a Group level Code of Ethics which is applicable to all employees globally. Every new employee signs a declaration that they have read the Code of Ethics. The Integrity Office carries out face to face training to employees on the code.

Millicom also has Supplier Code of Conduct with which our suppliers must comply. Assessing the compliance of our supplier base to these principles will be one of the main priorities of the new Integrity function, in collaboration with the Procurement team. By the end of 2011, the 20 most important suppliers in each operation had signed the Supplier Code of Conduct.

In 2011, the company reviewed its whistle-blower policy and introduced new channels for employees and third parties to report any potential ethical issues. Employees or external parties can reach the Integrity Office via email or phone or via a web-form, which also allows anonymous reporting. The channel is available in English, French and Spanish.

Millicom also introduced specific guidelines on conflict of interests, fair competition, third party due diligence and gifts and entertainment. The company also adopted a responsible approach towards SMS lotteries which are popular in many emerging markets. During 2011, Millicom significantly scaled down such activities and introduced a benchmark policy to protect the most vulnerable customers, namely anyone under the age of majority. In 2012, the company will carry out a review of the Code of Ethics and focus on creating a portfolio of more specific policies that will guide on the practical implementation of the Code.

By operating in emerging markets, Millicom is in an exceptional position to empower people with its services and to positively influence economic development. The premise of Millicom’s business strategy is to make mobile communications and other mobility related services as affordable, accessible and available as possible to consumers in its markets.

Millicom has expanded its services beyond mobile access to providing mobile financial solutions, which in many cases represent the first access to any form of financial service for our customers. Mobile finance is replacing current unreliable and risky “manual” methods of transferring and saving money. Millicom is also involved in providing further financial services, such as insurance and microfinance. Supporting local entrepreneurship will play a central role in our charitable activities going forward.

Research helps us understanding how the services we provide can affect some specific groups. In 2011, Tigo Paraguay took part in a study by the GSM Association into children’s use of mobile phones. The aims of the study were to understand how children use mobile phones, the role technology plays in child-parent relationships and how their use influences children’s social attitudes. Some of the findings fed into a campaign to promote responsible use of mobile phones by children and youths in Paraguay. Tigo Ghana participated in a study by the Cherie Blair Foundation for Women on how women entrepreneurs in emerging markets benefit from mobile communications.

Millicom welcomes the United Nations Guiding Principles on Business and Human Rights and the “Protect, Respect and Remedy” framework, endorsed in June 2011, as a significant milestone bringing clarity to the responsibilities of business with regard to human rights.

Freedom of Expression and Privacy

Millicom will now, together with other stakeholders, need to define how the UN principles should be applied in our sector, especially as they relate to freedom of expression and privacy. These are areas where we, due to the nature of our business, can be subject to government requests that can put us in a difficult position with regard our duty to respect human rights.

Millicom has started, together with a number of other telecommunications operators and vendors, to work together to address these issues jointly. An Industry Dialogue was initiated during the summer of 2011 with the ambition to explore the interaction and boundaries between the state duty to protect and the business responsibility to respect human rights. The participating companies want to develop and provide – jointly – broadly accepted principles, tools and due diligence mechanisms to ensure the respect for privacy and freedom of expression.

An important part of the joint dialogue is seeking input, ideas and feedback from a wide range of stakeholders at these very early stages to ensure that its work is built on a good understanding of stakeholder expectations, rather than to develop industry principles in isolation.

Child Labor

Child labor is another human rights concern for Millicom, given its prevalence in almost every country in which we operate. In the light of this reality, Millicom is particularly watchful of the risk of child labor in our distribution network. Despite company policy to only hire persons over the legal age of majority, receiving appropriate documentation for proof of age remains a key challenge. In line with the ILO and UNICEF recommendations, we also acknowledge that there may exist cases where light work is acceptable for teenagers.

Given the importance of this issue for its operations, Millicom is also focusing many of its charitable activities towards improving local educational infrastructure or supporting underprivileged children to complete their education in different ways. (see Charitable Activities).

Improved energy efficiency has been identified as a key focus for Millicom’s environmental activities going forward as reducing energy consumption has a direct impact on the company’s operating expenditure. As the great majority of the energy is consumed in running mobile networks, the company has set an ambitious target of reducing CO₂ emissions per base station by 50% by the year 2020, compared to baseline year of 2009. A cross-functional task force is overseeing an energy efficiency strategy to reach this target.

Alternative energies, especially solar power and different hybrid solutions, are increasingly attractive for powering sites in remote areas with unreliable energy supply. At the end of 2011, Millicom had 71 sites running with solar power. In addition, 998 sites had hybrid power systems utilizing Deep Cycle Battery technology, which has the potential of reducing diesel use by up to 75%.

Millicom responded to the Carbon Disclosure Project for the second year running in 2011. Participation in the CDP is a valuable exercise in improving measurement and reporting processes and understanding the key concerns of stakeholders. Millicom reports its CO₂ emmissions data through the CDP.

Although numerous studies have found no conclusive evidence to suggest that radio waves are harmful to health, we recognize that some people remain concerned over their effects. This is an issue that also concerns our customers and one that Millicom takes very seriously. We require that the base station equipment and mobile phones we purchase comply with the international safety limits set by ICNIRP and/or any other local requirements.

As part of site location, Millicom engages with the local communities and concerned citizens regarding radio frequency electromagnetic fields. In 2011, we sponsored educational material on radio waves and health - videos and cartoons featuring “Antenor” – and organized neighborhood meetings on the topic in local communities in Bolivia and Paraguay.

It is important that any concerned persons look for independent and scientifically sound information and recommendations regarding the safety of radio waves. Such information is available for example from the World Health Organization.

During 2011, the company continued to support a wide range of charitable activities in all countries of operation within the focus areas of the ‘Tigo together’ framework: education, well-being and environment. In total US $6,210,000 (inclusive of US $1,000,000 grant from USAid for the Millenium Schools Program in Guatemala) was spent across our markets in different charitable activities. The ‘Tigo together’ themes have been broadly interpreted in each country of operation to best respond to the most pressing local issues. Often, the activities include an employee volunteering component that strengthens our ties with our communities and contributes to positive team building inside the company.

To engage our customers in our charity activities, in some countries we hold “Tigo Solidarity Hour”, where during one hour on a specific day, the company will direct revenues from bought credit towards a specific charitable cause. In 2011 such campaigns collected funds to provide IT education to under-privileged groups in El Salvador, to build houses for the poor in Honduras and to buy books for schools in Tanzania.

Education

Many of the educational activities under ‘Tigo together’ focused on supporting underprivileged children and youths to complete their primary education and on improving the educational environment for children. The most extensive program related to education we are running is in Guatemala within the framework of UN Millenium Schools and in collaboration with USAid. Through this program in 2011, we participated in building 127 new classrooms and improved basic kitchen and toilet facilities in 90 schools, reaching nearly 20,000 children. Several activities in Tanzania, The Democratic Republic of Congo, Senegal, Ghana and Honduras improved the educational environment for children: renovating and providing furniture to classrooms and donating school supplies.

Technology also plays an important part in the education activities we support. In Paraguay we created mobile applications for the Ministry of Education to measure the effectiveness of their summer school programs. Similarly in Paraguay, we provided “telecentros”, mobile containers with computers and Internet access, to 100 schools across the country. Similarly we sponsored the purchasing of IT equipment for schools across several markets, for example in Rwanda, where we work with ‘One Laptop per Child’ to equip local schools with computers and Internet connections.

Well-being

In the area of health and well-being, our ‘Tigo together’ activities in 2011 have harnessed the benefits of mobile communications. Our networks were used to disseminate AIDS awareness information in a campaign together with USAid and to build awareness of children’s rights together with UNICEF in the Democratic Republic of Congo.

In Latin America, our operations in Colombia built a system in Braille to improve our accessibility to blind customers. In Paraguay, in conjunction with new camera technology developed for early detection of eye disease, our technology was used to communicate test results to laboratories immediately.

In Guatemala, we worked with UNICEF, UNDP and the Ministry of Health to develop a mobile system to monitor malnutrition in children in the country. We will help to build a database of 55,000 children with a simple SMS system, which allows the Ministry of Health to receive real time information from four departments in order to respond with immediate assistance to urgent cases.

Environment

In the area of environment, the focus in 2011 has been in employee volunteering activities relating to reducing our environmental footprint in our offices, promoting recycling and waste reduction. Electronic billing has been introduced in Paraguay and Bolivia and mobile phone recycling was promoted in Guatemala, El Salvador and Colombia.

In Bolivia, focus was put on conservation and biodiversity through two initiatives aimed at building public awareness of the importance of preserving the country’s nature reserves and forests. The ‘Tigo Forest’ campaign brought employment to 60 families through planting of 7,000 trees to restore native forests and protect habitat for species in danger of extinction.

Employees also participated in tree planting in Rwanda and cleaned streets in Dar Es Salaam and Kinshasa. Millicom also provided emergency aid to families affected by natural disasters in Tanzania and Paraguay.

Going forward, ‘Tigo Together’ activities will be directed to favor a limited number of longer term activities that have close links to the company’s business strategy. One of the aims is for the company’s charitable activities to enable more people in our countries of operation, many of whom figure among the poorest of the world, to profit from the benefits that mobile communications and mobile financial services can bring. Supporting local entrepreneurship and innovation is key to creating this new value. As a first step in this direction, Millicom in Ghana has initiated collaboration with Playing for Change foundation to seek and provide funding and support to social entrepreneurs who improve the lives of children and youths. This collaboration will be expanded in 2012 with joint projects in other countries in Africa.

In 2010, Millicom published a CSR report that focused for the most part on reviewing our charitable activities in key markets. In 2011, Millicom took its first steps towards integrated corporate responsibility reporting by introducing reporting of its activities under the ‘Integrity’ umbrella into its quarterly reports, starting with fourth quarter 2011. The information covered in this Annual report 2011 constitutes Millicom Group’s global consolidated corporate responsibility reporting for the year 2011. No separate Corporate Responsibility report will be published.