CORPORATES

CREDIT OPINION30 January 2020

Update

RATINGS

UNE EPM Telecomunicaciones, S.A.Domicile Colombia

Long Term Rating Baa3

Type LT Issuer Rating - FgnCurr

Outlook Stable

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Marcos Schmidt +55.11.3043.7310VP-Sr Credit Officermarcos.schmidt@moodys.com

Marianna Waltz, CFA +55.11.3043.7309MD-Corporate Financemarianna.waltz@moodys.com

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

UNE EPM Telecomunicaciones, S.A.Update to credit analysis

SummaryUNE EPM Telecomunicaciones, S.A.'s (Tigo) Baa3 issuer rating reflects the company's strongcompetitive position in Colombia as the second-largest telecom service provider in terms ofrevenue, and its diversification into a full suite of services, which supports its earnings andcash flow stability. The rating also takes into account the company's strong debt protectionmetrics and its adequate liquidity for a relatively comfortable debt maturity profile. Tigo'sstrong shareholder structure and positive free cash flow over the past years helped itsdeleveraging to 2.3x adjusted gross debt/EBITDA in the 12 months ended September 30,2019. We expect positive free cash flow for the next three years and a further deleveragingtoward 2.0x or less, which is already factored into the Baa3 rating.

At the same time, the Baa3 rating takes into account the intense competition in a price-sensitive environment, which weighs on profitability and organic growth, despite positiveunderlying subscriber trends. The company's positive free cash flow generation is expected tobe sustained but at only moderate levels. Tigo's rating also reflects its small scale relative toits global peers.

Credit strengths

» Good revenue diversification, which supports earnings and cash flow stability

» Strong competitive position as Colombia's second-largest telecom service provider

» Strong debt protection metrics, adequate liquidity and comfortable debt maturity profile

» Strong shareholder structure, which includes Millicom International Cellular S.A.(Millicom, Ba1 stable) and Empresas Publicas de Medellin E.S.P (EPM, Baa3 negative)

» Expectation of further deleveraging through positive free cash flow generation

Credit challenges

» Intense competition in a price-sensitive environment

» Regulatory initiatives, which have hurt profitability and increased competition

» Positive free cash flow generation to be sustained only at moderate levels

» Small scale relative to global peers

MOODY'S INVESTORS SERVICE CORPORATES

Rating outlookThe stable outlook reflects our expectation that Tigo's performance will be characterized by positive momentum as a consequenceof an expanding customer base in a more rational market environment, with decreasing regulatory interference and lower capitalspending. As such, we expect the company to maintain its debt protection metrics and liquidity at adequate levels.

Factors that could lead to an upgrade

» Increase in market share to a level closer to that of the market leader

» Better-than-expected improvements in credit metrics, while maintaining a good competitive position

» Sustained revenue growth and strong profitability

» Leverage declining to 2.0x or lower on a sustained basis

» Retained cash flow/total debt of 25% or higher on a sustained basis

Factors that could lead to a downgrade

» Inability to maintain its market position and profitability in a more aggressive competitive scenario

» Cash burn and increase in leverage to finance capital spending and activities

» Weaker liquidity and negative free cash flow generation from excessive dividend payouts

» Increase in leverage to a level higher than 3.5x for a prolonged period

Key indicators

Exhibit 1

UNE EPM Telecomunicaciones, S.A.

US Millions Dec-14 Dec-15 Dec-16 Dec-17 Dec-18

LTM

(Sep-19) Next 12 - 18 Months Forward View

Revenue 1,908.7 1,961.8 1,689.5 1,715.0 1,630.8 1,460.2 1,700 - 2,000

Debt / EBITDA 2.6x 2.3x 2.4x 2.4x 2.2x 2.3x 2.0x - 2.75x

RCF / Debt -15.3% 28.6% 16.7% 27.0% 32.7% 29.4% 25.0% - 35.0%

(EBITDA - CAPEX) / Interest Expense 2.2x 1.7x 0.9x 1.6x 1.5x 1.5x 1.0x - 2.0x

All figures and ratios are calculated using our estimates and standard adjustments. Our Forecasts (f) or Projections (proj.) are our opinion and do not represent the views of the issuer.Periods are fiscal year-end unless indicated. LTM = Last 12 months.Source: Moody's Financial Metrics™

ProfileUNE EPM Telecomunicaciones, S.A. (Tigo) is an integrated telecom service provider in Colombia offering mobile, fixed, pay TV andbusiness-to-business services. It is Colombia’s second-largest telecom company in terms of revenue, second-largest fixed and pay TVoperator (over 3.9 million revenue generating units) and third-largest mobile operator (over 8.6 million subscribers). The companyis Millicom International Cellular S.A.’s (Millicom) single-largest subsidiary in terms of revenue, accounting for around 30% of itsconsolidated sales in 2018, and second-largest in terms of EBITDA, accounting for around 24%, making Colombia Millicom’s largestmarket. For the 12 months ended September 2019, Tigo generated revenue of around $1.45 billion.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 30 January 2020 UNE EPM Telecomunicaciones, S.A.: Update to credit analysis

MOODY'S INVESTORS SERVICE CORPORATES

Detailed credit considerationsMerger brought scale and revenue diversificationTigo is the result of the merger concluded in August 2014 between Millicom Spain Cable S.A. — a subsidiary of Millicom and theformer majority shareholder of the mobile telecom operator Colombia Móvil S.A. (Tigo) — and Une — a broadband internet, fixedtelephony and TV operator then owned by EPM, which is a wholly owned subsidiary of the City of Medellin (Baa2 negative). Now, Tigois controlled by Millicom, which holds 50% minus one share. While EPM does not control the company, it has a significant participationof 50% plus one share. Despite the size and importance of Tigo's shareholders, the Baa3 rating does not benefit from any formalsupport or rating uplift from its ownership structure.

Tigo has a small scale relative to its global peers, but the company is a solid competitor in Colombia's telecom market, positionedas the second-largest entity in the fixed telephony market and the third in mobile. The company's good revenue diversification andaccess to Millicom's branding strategy, emerging markets expertise, and regional purchasing and supply chains support its solid businessmodel. Its revenue is distributed somewhat evenly across all segments, with both home and mobile contributing with around 35%each, business-to-business segments with around 22%, and others with around 8%. Despite intense competition, we expect Tigo'sperformance over the next several quarters to be characterized by its positive momentum as a consequence of an expanding customerbase in a more rational market environment, with less regulatory impact, growing EBITDA and a steady capital spending of $300-$330million over the coming years.

Improving margins despite revenue pressureDespite ongoing top-line operational pressures for the last years — reflecting a mix of intense competition, unfavorable regulatoryimpact, slower economic expansion Tigo maintained its EBITDA margin above 30%, which we consider moderate compared with thoseof its peers in the region, but still aligned with the rating category. Now, with a positive momentum and the expansion of its customerbase specially in mobile data, pay TV and internet, we expect the company to maintain its EBITDA margin around 35% in 2020, whichwould be more aligned with its peers in the region. In addition, the company has been pursuing cost-cutting initiatives to achieve alighter cost structure.

Cash generation and lower dividend upstreamA more steady capital spending of $300-$330 million for the coming years and a more conservative shareholder policy will help thecompany to keep recording a positive free cash flow, although still sustained at moderate levels.

Despite Tigo’s history of upstreaming most of its excess cash to shareholders, the company has paid only a small amount of dividendsand has been focusing on debt reduction and lengthening its debt maturity profile, which is already up to 2036.

LeverageWe expect leverage to decline as the company directs its excess cash flow toward debt reduction through at least 2023. Thecombination of a lighter debt balance and organic EBITDA growth will bring gross debt/EBITDA to around 2.0x by year-end 2019 and1.9x by year-end 2020 from 2.4x in 2017, which will be more compatible with the company's Baa rating category.

3 30 January 2020 UNE EPM Telecomunicaciones, S.A.: Update to credit analysis

MOODY'S INVESTORS SERVICE CORPORATES

Exhibit 2

Evolution of gross adjusted leverage (in $ millions), as of September 2019UNE EPM Telecomunicaciones, S.A.

$568$524

$568 $557$517

$480

$1,103

$1,289$1,334

$1,138$1,085

$9072.3x

2.4x2.4x

2.2x 2.3x1.9x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2015 2016 2017 2018 LTM (Sep-19) 2020-proj

US

D M

illio

n

EBITDA Debt Debt/EBITDA

All ratios are based on 'Adjusted' financial data and incorporate our Global Standard Adjustments for Non-Financial Corporations.Source: Moody's Financial Metrics™

Regulatory environment to favor smaller entities, but competition remains intenseRegulations in Colombia have imposed asymmetric measures on incumbent entities, favoring smaller companies and new entrantsin any given segment. As a dominant company, America Movil, S.A.B de C.V. must meet the requirements for unbundling and theprovision of wholesale services. The company had been subject to asymmetric interconnection rates for mobile services from 2012 toyear-end 2016.

Other regulatory measures include capped spectrum tenancy, the elimination of mandatory contract terms through subsidizing and thesale of unlocked handsets so customers can easily switch between operators.

Although regulatory initiatives have attempted to weaken the competitive capacity of Colombia’s dominant mobile operator, otherinitiatives have hurt profitability and increased competition among smaller entities such as Tigo.

Migration to competing operators is easier now than it was in previous years, following the elimination of handset subsidies, ceasingof mandatory contract duration terms and the sale of unlocked handsets. The sale of unlocked handsets has resulted in a decline inequipment revenue, given that phones are now sold more frequently through indirect channels. Most recently, Tigo’s revenue and cashflow declined, following a regulatory shift involving a combination of lower mobile termination rates, mobile virtual network operatorsand national roaming tariffs, as well as the mandated decommissioning of its fixed wireless network.

Environmental, social and governance considerationsTelecommunications service providers, such as Tigo, have overall a fairly low direct business exposure to environmental and socialrisks. In terms of corporate governance, Tigo’s is controlled by Millicom, which holds 50% minus one share, while Empresas Publicas deMedellin E.S.P does not control the company but has a significant participation of 50% plus one share. Tigo’s ownership structure hasbeen key for Millicom historically due to its significant contribution in revenue and EBITDA, making Colombia Millicom’s largest market.

Liquidity analysisTigo's liquidity is adequate. As of September 2019, the company had around $135 million in cash and equivalents, with $43 millionin short-term debt. In accordance with our forecast through 2020, its cash generation will be more than sufficient to cover all basicobligations, capital spending and debt maturities. The company's next major debt maturities of around $382 million are due in 2024.Tigo does not have any committed credit facilities.

4 30 January 2020 UNE EPM Telecomunicaciones, S.A.: Update to credit analysis

MOODY'S INVESTORS SERVICE CORPORATES

Exhibit 3

As of September 2019, Pro-forma for the new syndicated loan issued in December 2019UNE EPM Telecomunicaciones, S.A.

$136 $43 $46

$110 $9 $36

$215 $300

$43 $52

$382 $324

$-

$100

$200

$300

$400

$500

$600

$700

$800

$900

Cash & Equivalents 2020 2021 2022 2023 2024 2025+

US

D M

illio

n

Cash & Equivalents Bonds Banks Syndicated Loan

All ratios are based on 'Adjusted' financial data and incorporate our Global Standard Adjustments for Non-Financial Corporations.Source: Company's financials

Rating methodology and scorecard factorsThe grid-implied rating from our 12-18-month forward view under the Telecommunications Service Providers rating methodology isBa1, one notch below Tigo's current issuer rating of Baa3. The one-notch difference reflects the company's significant market share andscale in the Colombian telecom market, and its smaller size than its international peers.

Exhibit 4

Rating factorsUNE EPM Telecomunicaciones, S.A.

Telecommunications Service Providers Industry Scorecard [1][2]

Factor 1: Scale (12.5%) Measure Score Measure Score

a) Revenue (USD Billion) $1.4 Caa $1.7 - $2 Caa

Factor 2: Business Profile (27.5%)

a) Business Model, Competitive Environment and Technical Positioning Ba Ba Ba Ba

b) Regulatory Environment Ba Ba Ba Ba

c) Market Share Baa Baa Baa Baa

Factor 3: Profitability and Efficiency (10%)

a) Revenue Trend and Margin Sustainability Ba Ba Ba Ba

Factor 4: Leverage and Coverage (35%)

a) Debt / EBITDA 2.3x Baa 2x - 2.75x Baa

b) RCF / Debt 29.4% Baa 25% - 35% Baa

c) (EBITDA - CAPEX) / Interest Expense 1.5x B 1x - 2x B

Factor 5: Financial Policy (15%)

a) Financial Policy Baa Baa Baa Baa

Rating:

a) Indicated Outcome from Scorecard Ba2 Ba1

b) Actual Rating Assigned Baa3

Current

LTM 9/30/2019

Moody's 12-18 Month Forward

View

As of 12/13/2019 [3]

[1] All ratios are based on 'Adjusted' financial data and incorporate our Global Standard Adjustments for Non-Financial Corporations.[2] As of 9/30/2019(L).[3] This represents our forward view, not the view of the issuer; and unless noted in the text, does not incorporate significant acquisitions and divestitures.Source: Moody's Financial Metrics™

5 30 January 2020 UNE EPM Telecomunicaciones, S.A.: Update to credit analysis

MOODY'S INVESTORS SERVICE CORPORATES

Appendix

Exhibit 5

Peer comparison tableUNE EPM Telecomunicaciones, S.A.

(in US millions)

FYE

Dec-17

FYE

Dec-18

LTM

Sep-19

FYE

Dec-17

FYE

Dec-18

LTM

Sep-19

FYE

Dec-17

FYE

Dec-18

LTM

Sep-19

FYE

Dec-17

FYE

Dec-18

LTM

Sep-19

FYE

Dec-17

FYE

Dec-18

LTM

Sep-19

Revenues $1,715 $1,631 $1,460 $22,403 $22,366 $20,627 $58,762 $57,502 $54,915 $4,038 $6,419 $3,583 $54,166 $54,054 $52,819

EBITDA $568 $557 $517 $10,788 $10,324 $9,594 $19,635 $20,283 $19,673 $1,660 $2,920 $1,431 $15,844 $17,733 $16,951

Total Debt $1,334 $1,138 $1,182 $44,514 $42,782 $39,110 $77,672 $72,178 $70,128 $1,029 $2,369 $2,653 $45,858 $43,154 $42,284

Cash & Cash Equivalents $188 $169 $135 $5,485 $3,479 $3,546 $6,235 $7,237 $9,570 $346 $183 $652 $1,240 $1,100 $812

EBITDA Margin 33.1% 34.2% 35.4% 48.2% 46.2% 46.5% 33.4% 35.3% 35.8% 41.1% 45.5% 39.9% 29.3% 32.8% 32.1%

(EBITDA-CAPEX) / Interest Expense 1.6x 1.5x 1.5x 2.6x 2.6x 2.8x 3.1x 3.7x 3.5x 4.9x 5.9x 2.3x 4.2x 4.4x 3.7x

Debt / EBITDA 2.4x 2.2x 2.3x 3.9x 4.3x 4.2x 3.7x 3.7x 3.7x 0.7x 1.2x 2.6x 3.0x 2.5x 2.5x

FCF / Debt 2.7% 2.7% 0.0% -0.5% 0.7% 8.5% 4.2% 4.3% 4.8% -4.4% -42.4% 5.8% 6.0% 6.3% 3.6%

RCF / Debt 27.0% 32.7% 29.4% 17.9% 15.6% 16.3% 20.0% 19.1% 15.9% 116.7% 18.4% 31.8% 23.5% 26.9% 27.1%

UNE EPM Telecomunicacion Telecom Italia S.p.A. Telefonica S.A. Telecom Argentina S.A. America Movil, S.A.B. de C.V

Baa3 Stable Ba1 Negative Baa3 Stable Caa1 RUR-DNG A3 Stable

All figures & ratios calculated using Moody’s estimates & standard adjustments. FYE = Financial Year-End. LTM = Last Twelve Months. RUR* = Ratings under Review, where UPG = forupgrade and DNG = for downgrade.Source: Moody's Financial Metrics™

Exhibit 6

Moody's-adjusted debt breakdownUNE EPM Telecomunicaciones, S.A.

(in US Millions)FYE

Dec-14

FYE

Dec-15

FYE

Dec-16

FYE

Dec-17

FYE

Dec-18

LTM Ending

Sep-19

As Reported Debt 1,160.2 964.5 1,142.8 1,130.3 1,016.3 1,135.4

Pensions 0.0 0.0 -57.7 -59.6 -54.4 -50.8

Operating Leases 90.7 138.1 203.7 263.1 176.3 0.0

Non-Standard Adjustments 0.0 0.0 0.4 0.0 0.0 0.0

Moody's-Adjusted Debt 1,250.9 1,102.5 1,289.1 1,333.8 1,138.2 1,084.6

All figures are calculated using Moody’s estimates and standard adjustments.Source: Moody's Financial Metrics™

Exhibit 7

Moody's-adjusted EBITDA breakdownUNE EPM Telecomunicaciones, S.A.

(in US Millions)FYE

Dec-14

FYE

Dec-15

FYE

Dec-16

FYE

Dec-17

FYE

Dec-18

LTM Ending

Sep-19

As Reported EBITDA 500.4 418.5 476.4 514.1 479.4 458.3

Operating Leases 36.1 33.5 64.4 59.2 60.8 14.1

Unusual 37.6 116.2 -16.9 -5.6 17.0 45.1

Moody's-Adjusted EBITDA 574.0 568.1 523.9 567.7 557.3 517.5

All figures are calculated using Moody’s estimates and standard adjustments.Source: Moody's Financial Metrics™

6 30 January 2020 UNE EPM Telecomunicaciones, S.A.: Update to credit analysis

MOODY'S INVESTORS SERVICE CORPORATES

Ratings

Exhibit 8

Category Moody's RatingUNE EPM TELECOMUNICACIONES, S.A.

Outlook StableIssuer Rating Baa3

PARENT: MILLICOM INTERNATIONAL CELLULAR S.A.

Outlook StableCorporate Family Rating Ba1Senior Unsecured Ba2

Source: Moody's Investors Service

7 30 January 2020 UNE EPM Telecomunicaciones, S.A.: Update to credit analysis

MOODY'S INVESTORS SERVICE CORPORATES

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REPORT NUMBER 1207050

8 30 January 2020 UNE EPM Telecomunicaciones, S.A.: Update to credit analysis

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Contacts

Nikolas Pinto +55.11.3043.7340Associate Analystnikolas.pinto@moodys.com

Marcos Schmidt +55.11.3043.7310VP-Sr Credit Officermarcos.schmidt@moodys.com

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

9 30 January 2020 UNE EPM Telecomunicaciones, S.A.: Update to credit analysis