MERGERS, ACQUISITIONS AND FINANCIAL RESULTS

Millicom Profits Jump on Higher Revenues

Millicom International has reported that its second-quarter revenues rose by 14.6% to US$1.12 billion, boosted slightly by currency fluctuations. Revenues were up 20.7% excluding the impact of the full consolidation of Honduras a year ago. Net profit jumped to US$175 million from US$134 million a year ago, while EBTDA was up 10.6 % to $513 million The subscriber base rose by 12% versus Q2 10, bringing total customers to 41.3 million.

In Africa, revenues were up 12% year on year in local currency. The company has experienced more stable pricing activity in its African markets in H1 2011 compared with H2 2010 and it remain focused on maintaining the affordability of Tigo products and services across the region, whilst defending its margins.

Customers in Africa increased 17.2% year-on-year bringing the total at the end of June to 16.6 million. The net intake for the quarter was over 1 million. The highest intake of almost 270 thousand customers was recorded in Tanzania. In Rwanda we added 243 thousand customers bringing the total at the end of June close to 813 thousand. Although the customer registration deadline passed in May in Chad, requiring the disconnection of unregistered customers, we still added 132 thousand net new customers. In Ghana the customer registration deadline was extended from June 30th to September 30th and we added almost 125 thousand customers in the quarter.

Revenues in Africa were up 12.3% year-on-year to $246 million, with local currency revenues up 11.9%. For the region as a whole we have seen more stable pricing activity in the first half of 2011 compared with the second half of 2010 but we have not seen any real evidence of elasticity following last year‟s cross-net tariff reductions. We continue to maintain the affordability of Tigo products and services across Africa but our prime areas of focus are growth, cost management and returns, rather than pricing. VAS revenues increased by 34.1% year-on-year and now account for 10.5% of the region‟s recurring revenues.

Mobile ARPU declined 6% year-on-year in local currency compared with a decline of 13% in Q4 10 and in line with the previous quarter despite net customer additions in Q2 being twice as high as in Q1. The launch of 3G services in Rwanda, Ghana and Tanzania together with the development of VAS is supporting our strategy to focus on higher value customers.

The take-up of our Tigo Cash service is encouraging in Tanzania. At the end of June, eight months since launch, the penetration of Tigo Cash reached 6% of our customer base. We launched a 3G service in Ghana in July.

DRC seems to be experiencing tougher economic conditions with greater pressure on purchasing power. We have introduced a dynamic tariff scheme in light of market conditions, offering lower prices at off-peak times. The regulator revised the minimum tariff for all calls to 8 cents in April so advertised tariffs for on-net and cross-net calls were therefore reduced from 12 cents and 15 cents respectively, negatively impacting revenue growth.

In Senegal, we have alleviated some of the pressure we were experiencing on capacity by increasing our capex slightly which has enabled us to meet demand for more affordable offers, but our capex level is still constrained by the ongoing litigation over our license with the Senegalese government.

EBITDA for Africa for Q2 11 reached $100 million, up 23% year-on-year. The EBITDA margin was 40.4%, up 3.5 percentage points over Q2 10 but down quarter on quarter by 0.5 percentage points.

Capex in Africa amounted to $46 million in Q2 or 18% of revenues. We expect capex in Africa to be higher in H2 as we invest in order to capitalize on the region‟s growth potential and for the initial 3G build out.

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