Millicom International Cellular Annual Report 2011

FY2011 Annual Report · Millicom International Cellular

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A world of
opportunities

Annual Report 2011
Millicom International Cellular S.A.

Annual Report 2011 Millicom International Cellular S.A.

Introduction to Millicom

Millicom is a dedicated emerging markets
telecoms operator. For our customers, present
and future, we provide access to the world
primarily through mobile devices. We develop
innovative products and services that are
aﬀ ordable, useful and fun, and sell them from
every street corner.

For our employees, we provide an exciting
working environment, an outstanding team
culture, progress on merit and attractive
international opportunities.

To our shareholders, we can demonstrate an
excellent track record of proﬁ table growth, based
on market-leading service innovation, a pioneering
commitment to emerging markets and signiﬁ cant
network investment.

Looking ahead, we believe that the signiﬁ cant
growth that is forecast across all our markets
in value-added services, from mobile internet
to mobile ﬁ nancial services and entertainment
products, represents an attractive long term
growth opportunity that we are very well
placed to capture.

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Overview
02 At a Glance
03 2011 Highlights
04 Chairman’s Statement
05 Chief Executive Oﬃ cer’s Statement

Review of Operations
07 Financial Review
13 Latin America
17 Africa

Corporate Governance
23 Board of Directors
25 Executive Committee
26 Integrity and Corporate

Responsibility
31 Directors’ Report
33 Risk Management

Financial Statements
39 Management’s Report on Internal
control over Financial Reporting
41 Consolidated Income Statements
42 Consolidated Statements
of Comprehensive Income
42 Consolidated Statements
of Financial Position
44 Consolidated Statements

of Cash Flows

45 Consolidated Statements
of Changes in Equity
47 Notes to the Consolidated

Financial Statement

Annual Report 2011 Millicom International Cellular S.A.

Overview
At a Glance

Millicom provides voice, data, cable TV and
value added services to 43 million customers in
emerging markets in Latin America and Africa.

Central America

Population under license

Customers

Revenue (US$m)

EBITDA (US$m)

Cell sites (‘000)

Outlets (‘000)

Cable (Central America)

RGUs (‘000)

Broadband customers as percentage
of cable TV customers

28 million

14.6 million

1,842

958

5.6

133

721

39.8%

Homes passed

1.37 million

South America

Population under license

Customers

Revenue (US$m)

EBITDA (US$m)

Cell sites (‘000)

Outlets (‘000)

Africa

Population under license

Customers

Revenue (US$m)

EBITDA (US$m)

Cell sites (‘000)

Outlets (‘000)

61 million

11.2 million

1,706

726

5.1

177

176 million

17.3 million

981

404

4.3

371

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Annual Report 2011 Millicom International Cellular S.A.

2011 Highlights

Financial Highlights

(cid:88) Revenues up 12.7% to $4.5 billion

(cid:88) Organic local currency revenue growth of 10.5%

(cid:88) EBITDA margin of 46.1%

(cid:88) Capex of $848 million, including spectrum

(cid:88) Operating free cash ﬂ ow of $1.2 billion

or 26.6% of revenues

Operational/Strategic Highlights

(cid:88) In the fourth quarter of 2011, 30% of mobile
customers had an ARPU above $10 and
contributed 80% of revenues

(cid:88) Value-added services generated in excess

of $1.1 billion in revenues

(cid:88) ROIC increased from 26% at YE 2010 to 28%
at YE 2011 versus an average WACC of 11.5%

(cid:88) Signiﬁ cant shareholder remuneration, close
to $1 billion, for the second year in a row

Share Price Performance

Millicom
MSCI Europe Telecom Services index
MSCI Emerging Markets index

800

700

K
E
S

600

500

400

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Key Performance Indicators

Revenue (US$m)

5000

4000

3000

2000

1000

EBITDA (US$m)

2500

2000

1500

1000

500

Capex (US$m)

1500

1250

1000

750

500

Annual Report 2011 Millicom International Cellular S.A.

Chairman’s Statement

I am pleased to report that
in 2011, Millicom once again
delivered both strong growth
and attractive returns to its
stakeholders. Top line growth
in local currency was 10.5% in
2011 thanks to continued
innovation, not only in
expanding our range of
value-added services, but also
in customer segmentation
and in the packaging and
pricing of traditional
communication products.
Innovation is the lifeblood
of Millicom. Millicom was also
able to achieve this growth by
being close to its customers,
understanding their needs
and wants and, every day
across 14 markets, oﬀ ering
them attractive solutions.

At the end of May 2011, the listing
of Millicom shares was consolidated
onto a single exchange, NASDAQ OMX
Stockholm, as we sought to eliminate
some of the administrative and time
demands related to a US listing and
second registration. Millicom expects
to meet the necessary criteria to seek
deregistration in the second half
of 2012 at the earliest. Th ereafter,
Millicom will continue to maintain
the high level of internal control as is
required under US second registration.

On behalf of the Board, I would like
to congratulate all Tigo Employees
and thank them for their outstanding
contribution to a successful year.
We look forward to taking the
company to new heights with them
in the years to come.

Allen Sangines-Krause
Non-Executive Chairman

Not only did Millicom once again
deliver above-sector average top line
growth, but this was done while
maintaining very high proﬁ tability
and cash ﬂ ow generation. In 2011,
for the second year in a row,
Millicom returned close to $1 billion
to shareholders through a combination
of a $1.80 per share ordinary dividend,
a $3.00 per share special dividend and
a $500 million share buy-back program.
We were pleased also to see the share
outperform its benchmarks for the
third consecutive year. Th e share
price rose circa 7% in 2011, while
the European Telecom benchmark
index declined by 10% and the MSCI
Emerging Markets index lost 20%.

Th e Board is now proposing an ordinary
dividend of $2.40 per share for 2011
to the Annual General Meeting to be
convened on May 29. Th e Board has
authorised a share buyback program
of up to $300 million. Moreover,
supported by the healthy growth of
normalized net proﬁ t, Millicom has
enhanced its dividend policy just
some two years after the declaration
of its ﬁ rst ordinary dividend in 2009.
Th e policy now comprises of a dividend
ﬂ oor of $2.00 per share, and a payout
ratio of no less than 30% of normalized
net proﬁ t. As we have done in the
past, in the absence of external growth
opportunities, we aim to return
excess cash to our shareholders.

“ Innovation
is the lifeblood
of Millicom”

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Annual Report 2011 Millicom International Cellular S.A.

Chief Executive Oﬃ cer’s Statement

Millicom’s focus throughout
2011 shifted further to
attracting and retaining higher
value customers by oﬀ ering
innovative products and services
in order to drive growth and
to increase our revenue market
share. In the fourth quarter, 30%
of our customers had an ARPU
of $10 or more and generated
80% of our revenues.

Our Strategy
We believe in local, in-market scale.
To continue to lead in our markets,
we constantly have to innovate to
oﬀ er our customers new services
that meet their needs now and in
the future. In 2012, we will focus
on deepening further our consumer
understanding skills in our markets
so that we can accelerate the
development of new products and
services in our ﬁ ve categories. With
our new organization structure, we
aim to shorten the ‘Time to Revenue’,
or the time between the moment one
idea proves successful in one market,
and the time it generates meaningful
revenues across the group. In 2012, we
will again aim to ﬁ nd the right balance
between growth and returns: growth
in revenues, EBITDA and operating free
cash ﬂ ow, return on invested capital
and return to our shareholders.

As we work towards achieving these
goals within the framework of our new
organization structure, we are focused
on maintaining 4 ‘A’s: the aﬀ ordability
and accessibility of our services, the
availability of our network and an
aﬃ nity with our customers. We believe
these are vital and inter-dependent
ingredients that are needed to sell our
services successfully in our markets.

Aﬀ ordability does not simply mean
oﬀ ering competitive prices for our
services but rather oﬀ ering services that
ﬁ t our customers’ wallets and represent
the best value for money. For example,
one of our most successful data
packages is our Social Plan in which
we provide access to social networking
sites. Th is package is primarily aimed at
meeting the needs of the youth market
in Latin America to stay connected.

Today our business is no longer only
about basic communication; voice
is maturing, demand for data is
accelerating and new mobility-related
services are emerging. In this fast-
moving industry, we have consistently
innovated to diﬀ erentiate ourselves
from our global competitors. While we
have grown rapidly in recent years, our
business has become more complex,
presenting many opportunities and
exciting challenges. Non-voice products
already account for more than one
ﬁ fth of group revenues and one third
of those in Latin America. We expect
these non-voice services to be our
primary source of revenues in Latin
America in a few years’ time.

Th is evolution in our business requires
that we accelerate the development
of new products and services, deepen
our consumer understanding skills and
innovate in our go-to-market strategies.
In order to support our strategic goals
we will, throughout the course of 2012,
be implementing a new organization
structure. Th is organization structure is
based on three key components; 1) our
14 in-market organizations, 2) our ﬁ ve
global categories of Communication,
Information, Entertainment, Solutions
and Mobile Financial Services (MFS)
and 3) centralised global support
functions. As we implement this new
organization structure, we will ensure
we have the best possible mix of local
experience and global expertise for our
next phase of growth.

“As we implement
our new organization
structure, we will ensure
we have the best possible
mix of local experience
and global expertise
for our next phase
of growth”

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Annual Report 2011 Millicom International Cellular S.A.

Chief Executive Oﬃ cer’s Statement (Continued)

Outlook
2012 will be a year of investment in
services, products, infrastructure and
people as we see numerous growth
opportunities in our markets. As a
result, we anticipate further erosion
of our EBITDA margin and guide for
an EBITDA margin around the mid-
40s in 2012 and an OFCF margin of
around 20% of revenues. We anticipate
capex to increase but not to exceed
20% of our revenues in 2012 excluding
spectrum acquisitions. As we invest to
bring further innovative and aﬀ ordable
services to our customers, we aim
to continue delivering above sector
average growth in revenues, cash ﬂ ow
generation and returns.

I would like to thank all our Tigo People
throughout the organization who
contributed to the success achieved in
2011, and who will continue to drive
the next phase of growth and returns.
I would also like to take this
opportunity to thank all our
shareholders for their continued
interest in and support of Millicom.

Mikael Grahne
President and CEO

Integrity and Corporate
Responsibility
By oﬀ ering access to communication,
data and mobile ﬁ nancial services
under the Tigo brand and ensuring
that these services are aﬀ ordable,
accessible and readily available,
Millicom is making an active and
positive contribution to the sustainable
economic and social development
of its markets. We value greatly
the reputation that the Tigo brand
has earned in our markets and the
trust that our customers place in it.
We endeavor to enhance this
reputation by continually improving
our service oﬀ ering and fulﬁ lling our
duty to be a responsible corporate
citizen, guided by our core values
of Passion, Integrity and Respect.

At our 2011 Capital Markets Day, we
presented our new Integrity strategy
which clearly articulates our ambition
and commitment to move beyond
compliance with applicable local laws
and company policy to seek social
return as a desired by-product of
our ﬁ nancial investment by 2016.
Th e Integrity strategy is based on
our core values and aligns with the
principles and aims of the United
Nations Global Compact.

Consistent with this strategy, it was
decided at the end of 2011 that the
Integrity function, working under the
Chief Integrity Oﬃ cer, would be tasked
to manage all of Millicom’s corporate
social and environmental responsibility
and health and safety activities in
addition to compliance. You will ﬁ nd
further information on our policies
and initiatives in the Integrity and
Corporate Responsibility section of
this report.

Accessibility means providing easy
access to our goods and services which
we are delivering through more than
680,000 Tigo points of sale, direct sales
forces, pre and post paid oﬀ erings and
simple activation processes. We also
have Tigo ambassadors whose job is to
demonstrate to customers how to use
our services as soon as they subscribe
to them.

Availability means providing our
customers with an extensive and robust
network and suﬃ cient capacity so that
mobile and ﬁ xed services are readily
available to them. In 2010, we came
to the conclusion that owning passive
infrastructure no longer conferred a
competitive advantage. We decided,
where possible, to outsource or share
towers with other operators in order
to bring additional beneﬁ ts to our
customers in the form of an even higher
quality of service and coverage, whilst
also improving the return on invested
capital for our shareholders. To date, in
addition to tower sharing agreements,
we have committed over 4,500 of our
towers in Ghana, Tanzania, DRC and
Colombia (representing one third of
the group total) to be outsourced to
tower companies. We continue to seek
further opportunities to share part of
our infrastructure and spectrum assets
when and where appropriate.

Lastly, and perhaps most importantly
of all, Aﬃ nity means being close to our
customers and creating an emotional
link with them that extends beyond
product functionality and value for
money. Tigo is developing solutions
that solve customers’ day to day issues,
such as four alternate ways to continue
talking when they run out of balance:
Tigo Lends You, Peer to Peer balance
lending, SMS Gift and SMS Collect,
and our bundled oﬀ ers, ‘paquetigos’,
tailored to customer usage proﬁ les.
Th ese solutions are the building blocks
to customers perceiving Tigo as a brand
that understands their needs and one
that they would recommend to friends
and family.

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Annual Report 2011 Millicom International Cellular S.A.

Review of Operations
Financial Review

Customer growth in 2011
was 12%, with 4.9 million new
customers added in the year,
bringing our total base to
43.1 million. Group revenues
were up 12.7% to $4,530
million. Restating for the full
consolidation of Honduras,
local currency organic revenues
increased by 10.5% which was
in line with our expectations.

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Our focus in 2011 remained on
up-selling and cross selling new services
to our existing customers rather than
increasing their absolute number.
As penetration of voice services is
already high in most of our markets,
we believe oﬀ ering innovative services
to our existing customers will enable
us to grow faster than our competitors.
In the fourth quarter, the categories
of Information, Solution and MFS
combined contributed in excess of 15%
of recurring revenues. Overall, non-voice
services grew by 33% year-on-year and
now account for more than 28% of
our recurring revenues.

In the fourth quarter, 30% of our
customers had an ARPU of $10 or
more and generated 80% of revenues
but only 12% of our customers were
data users. We therefore have the
opportunity to up-sell data services
to more than half of the addressable,
high value customer base who are
not currently enjoying these services.

ARPU remained a key focus for
management throughout 2011 and
this will continue in 2012. Th anks to
the development of innovative VAS,
we have seen a slow down in the rate
of ARPU erosion and we reported
only a -2.4% decline in ARPU in local
currency in 2011 versus -5.7% in 2010.

Despite our continued investments in
new services, we managed to achieve
a healthy EBITDA margin of 46.1%,

around one percentage point lower
than for the prior year. Most of this
decline is the result of a change in mix
with more revenues from regions and
categories with lower margins. We
expect this trend to continue as we
grow further in categories such as
Information and, in particular, MFS
which has a structurally lower EBITDA
margin than Communication services.
We also anticipate that growth will still
be faster for some time in South America
and Africa, where EBITDA margins are
slightly lower than the group average.

In 2011 we invested 18.6% of our
revenues or $848 million in capex, of
which $44 million was spent on spectrum.
Investment in our 3G network during
the year accounted for 30% of our
capex excluding spectrum acquisitions.
We also spent $40 million on upgrading
our IT and billing platforms in 2011.
Th is is a three year project in which
we will invest a total of $300 million.

We made considerable progress with
our asset productivity measures during
2011. By the end of the year we had
completed all tower closings in Ghana
and had transferred close to two-thirds
of committed towers in Tanzania
and Colombia.

We also completed the ﬁ rst closing
in the Democratic Republic of Congo
(DRC) with the transfer of 50% of
the towers.

Revenue by Region (US$m)

EBITDA by Region (US$m)

1 Central America
2 South America
3 Africa

1,842
1,706
981

1 Central America
2 South America
3 Africa

958
726
404

Annual Report 2011 Millicom International Cellular S.A.

Financial Review (Continued)

We already have several direct
agreements in place with operators
in Latin America to share towers which
bring additional cost eﬃ ciencies.

We expect our tower outsourcing
deals to generate an NPV in excess
of $600 million, estimated on a
conservative DCF basis and including
cash proceeds. Total cash proceeds
for tower outsourcing in 2011 were
$163 million. Overall, we estimate that
we will receive about $360 million in
cash from the tower outsourcing deals
signed in Ghana, Tanzania, DRC and
Colombia from 2010 to 2013. We will
continue to pursue other opportunities
to share passive infrastructure which
could include 3G or 4G networks
and spectrum, enabling us to focus
on our core activities.

Despite the 20% year-on-year increase
in capex, our cash ﬂ ow generation
in 2011 was the highest ever, at over
$1.2 billion, even excluding the
contribution from tower disposals.
Our operating free cash ﬂ ow margin
for the year was 26.6%.

At the end of the year our cash position
was approximately $0.9 billion and our
leverage ratio stood at 0.7x net debt
to EBITDA, slightly up from YE 2010
when it was 0.6x.

In line with our strategy of ﬁ nding
the right balance between growth
and returns, in 2011, we delivered
revenue growth in excess of 10% in
local currency, a high EBITDA margin
at 46.1% and an increase in our
ROIC to 28%, up from 26% last year.
We returned around $1 billion to
shareholders for the second year
in a row through a combination
of dividends and share buy-backs.
In 2012, we will again aim to ﬁ nd
the right balance between revenue
growth, proﬁ tability, cash ﬂ ow
generation, return on invested
capital and returns to shareholders.

VAS as % of Revenue 2011

Contribution to 2011 Recurring
Revenue Growth by Category

OFCF for 2011 by Operation (US$m)

30%

29%

28%

27%

26%

25%

1 Communication
2 Information
3 Entertainment
4 Solutions
5 Mobile Financial Services

41%
40%
7%
10%
2%

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Annual Report 2011 Millicom International Cellular S.A.

Financial Review (Continued)

Focus on Regions

Central America

Central America ﬁ nancial highlights

US$m unless otherwise stated

Mobile customers (millions)

Mobile ARPU (local currency at constant exchange rates)

Revenue

EBITDA

EBITDA margin %

Capex

OFCF

OFCF margin %

Revenues in Central America totalled
$1,842 million in 2011, up 4.6% year-on-
year in local currency. Local currency
ARPU was down 1.1% on last year,
despite the addition of 1.1 million
customers, or close to twice the
number added in 2010, bringing
the total at year end to 14.6 million.

Our focus remains on cross-selling
and up-selling more services to existing
customers rather than growing their
absolute number, especially in Central
America where mobile voice
penetration is high.

Our cable business is demonstrating
good growth while maintaining a
healthy margin, reﬂ ecting the attractive
opportunity in cable broadband and
television services. We have signiﬁ cantly
increased the speed oﬀ ered to our
broadband customers. Today around
two thirds of broadband customers
are enjoying speeds in excess of 1Mbps,
compared to only one third two years
ago. Th is improved quality of service
enabled us to grow average revenue
per household by 8% in 2011.

EBITDA for the year was $958 million
and the EBITDA margin was 52%, down
year-on-year, due primarily to higher
subsidy levels in order to drive the
uptake of 3G data services and to
the decline of higher margin incoming
international calls in the overall
revenue mix.

2011

14.6

11.9

1,842

958

52.0%

222

541

29.4

2010

13.5

12.0

1,642

893

54.4%

208

586

35.7

% Change

8.1%

-1.1%

12.2%

7.3%

-2.4pp

6.7%

-7.7%

-6.3pp

Capex in 2011 amounted to
$222 million or 12% of revenues.

Cash generation continued to be
very good, with OFCF at $541 million
or 29.4% of revenues.

In 2012, we expect handset prices
to continue to decline enabling the
further penetration of 3G services.
We will continue to invest in our
2G and 3G networks in Central
America as we continue to see
strong demand for data services
with an attractive return on
invested capital for Millicom.

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Financial Review (Continued)

South America

South America ﬁ nancial highlights

US$m unless otherwise stated

Mobile customers (millions)

Mobile ARPU (local currency at constant exchange rates)

Revenue

EBITDA

EBITDA margin %

Capex

OFCF

OFCF margin %

2011

11.2

12.8

1,706

726

42.6%

324

425

24.9

2010

10.1

12.3

1,374

590

42.9%

244

311

22.6

% Change

10.9%

3.6%

24.2%

23.1%

-0.3pp

32.8%

36.7%

2.3pp

Revenues grew by 24% in 2011 to
$1,706 million or by 17.1% in local
currency, with all three markets
reporting a strong performance.
Mobile ARPU continued to increase
and was up by 3.6% in local currency
as a consequence of our ongoing focus
on mobile data and other VAS. Th e
aggressive marketing of 3G services
across the region and of Paquetigos
(bundles of minutes, SMS and data
access sold for use within a certain time
period) has also helped to increase
ARPU. In the fourth quarter of 2011,
growth derived from non-SMS VAS
amounted to 54% of our recurring
revenue growth.

EBITDA reached $726 million, up
23.1%, and the EBITDA margin was
42.6%, essentially ﬂ at year-on-year
as we continue to invest in handset
subsidiaries to drive mobile data
penetration higher.

We invested $324 million or 19.0% of
revenues in capex in South America
during the year. We spent a total of
$44 million on spectrum in all three
markets, with the bulk of the spectrum
acquired in Colombia during the year.

We expect several spectrum auctions
in South America in 2012, notably
in Colombia where spectrum in the
2.1GHz and 1.7GHz bands is expected
to be auctioned. We are interested
in acquiring additional spectrum to
provide 4G services and to improve the
quality of the service we provide to our
customers. Acquisition of spectrum,
like all our investments, will have
to meet our strict ﬁ nancial hurdles.

Cash generation in South America
was $425 million or 24.9% of revenues.

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Financial Review (Continued)

Africa

Africa ﬁ nancial highlights

US$m unless otherwise stated

Mobile customers (millions)

Mobile ARPU (local currency at constant exchange rates)

Revenue

EBITDA

EBITDA margin %

Capex

OFCF

OFCF margin %

2010

% Change

2011

17.3

4.9

981

404

15.0

5.3

905

358

41.2%

39.6%

297

268

27.3

278

145

16.0

15.3%

-7.1%

8.4%

12.8%

1.6pp

6.8%

84.8%

11.3pp

Revenues grew by 11.3% in local
currency or by 8.4% on a reported basis
to $981 million in 2011. We have seen
an encouraging slow down in the rate
of ARPU erosion over the course of the
year with a year-on-year decline of -5%
in the fourth quarter compared to -10%
in the third quarter in local currency.
We anticipate some further ARPU
erosion in 2012 in Africa as we focus on
aﬀ ordability of our services in a region
where penetration of mobile services
and usage remain relatively low.

During the year we recorded strong
performances in Chad, Rwanda,
Mauritius and Tanzania. In Rwanda,
our market share now exceeds one
third of the market and we have
reached EBITDA breakeven, just two
years since our launch. In the second
half of the year, we experienced a more
challenging operating environment in

both Ghana and Senegal. We had to
lower prices in Ghana in order to regain
our aﬀ ordability perception and, in
Senegal, we had to invest in back-up
generators as we experienced a growing
number of power outages.

Capex in Africa amounted to $297
million in 2011 or 29.8% of revenues.
We invested signiﬁ cantly in 3G in Africa
during 2011 (circa 17% of revenues)
which is testimony to our ambitions
for voice and data growth in the region.

Cash generation in Africa in 2011
was $268 million or 27.3% of revenues.

EBITDA reached $404 million, up 12.8%,
and the EBITDA margin was 41.2% up
1.6 percentage points year-on-year.
Our focus on aﬀ ordability, in particular
in Ghana and Senegal, combined
with an increase in cross net traﬃ c,
has however, had a dilutive impact
on quarterly margins in the second half
of the year and is expected to continue
to weigh on proﬁ tability in 2012. In the
fourth quarter we started beneﬁ ting
from our tower sharing activities
but, as we previously stated, beneﬁ ts
on margins from these activities
will be reinvested in revenue growth
going forward.

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Financial Review (Continued)

In 2011, we also launched new
initiatives and products in this
category which are showing promising
initial results as they are relevant
to customers’ needs: medical
appointments, agenda back-ups
or emergency calls, for example.

MFS: 2% of recurring revenue
growth in 2011
Our Mobile Financial Services (MFS)
category developed well in 2011
and oﬀ ers attractive potential in the
medium to long term. As at the end
of December 2011, this category
comprised domestic money transfer
services in Paraguay, El Salvador,
Guatemala, Honduras, Tanzania, Ghana
and Rwanda. By the end of the year,
Tigo Cash had reached a penetration
level of 20% of our customer base in
Paraguay and almost 18% in Tanzania
(up from 13% in the third quarter).
We expect to launch Tigo Cash in
at least three more markets in 2012:
Bolivia, Chad and DRC.

Th e development of MFS is highly
dependent upon market conditions
such as the regulatory framework,
diﬀ erent customer needs, for example,
for local or international remittances,
banking penetration and the image
of the telecom industry.

Focus on Categories

Our ﬁ ve global categories form
one of the three components of the
new organisation structure that we
are currently implementing.

Communication: 41% of recurring
revenue growth in 2011
In 2011, the Communication category
(voice and SMS) showed good
resilience with 6.6% growth in local
currency, thanks to our attractive
bundled oﬀ ers, tailored to ﬁ t the usage
patterns of speciﬁ c customer segments.

Information: 39% of recurring
revenue growth in 2011
In the second half of the year 2011, the
Information category (data services)
became the biggest single contributor
to our revenue growth, outgrowing
Communication which used to be the
largest contributor. Close to one ﬁ fth
of our net additions during the year
were 3G mobile data customers in Latin
America. We now have more than 4
million users of data services in Latin
America (2G and 3G) representing
almost 16% of our regional customer
base. Only about half of these data
users are 3G customers, while we know
that 38% of our customers in Latin
America in the fourth quarter of
2011 had an ARPU in excess of $10,
and hence the potential to become
data users.

We see the Information category
continuing to be the largest revenue
growth contributor for the next
two years. Th e price of entry level
smartphones is now below $100 in
some of our markets, a level that we
believe is closer to the inﬂ exion point
for mass market adoption. Aﬀ ordability
of quality smartphones is crucial for
adoption of 3G in Africa in particular.

In 2011, we invested close to $250
million in capex for 3G capacity and
coverage and we expect to invest
close to 50% more in 2012.

Entertainment: 7% of recurring
revenue growth in 2011
Revenues for the Entertainment
category (TV, Ringback tones, games)
were up by 10.7% year-on-year in
2011, following our strengthening
of the category’s management and
the identiﬁ cation of new innovative
products. Such growth has been
achieved despite our tighter control
over SMS lottery products in the latter
part of the year as we proactively
adopted a responsible approach to
protect our customers.

Solutions: 11% of recurring
revenue growth in 2011
Revenues for the Solutions category
(Zero Balance Products) increased by
63% in local currency in 2011.

Our most successful product in the
category in 2011 was our airtime
lending product: ‘Tigo Lends You’.
Th is product alone generated in excess
of $30 million in revenues and was
used by more than 15 million of our
customers. In December alone, 64
million transactions took place.

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Latin America

Our mobile and cable
operations in Central America
are located in El Salvador,
Guatemala, Honduras,
Costa Rica and Nicaragua.
Our Central American
mobile licenses in El Salvador,
Guatemala and Honduras
covered approximately 28 million
people as at December 31, 2011.

Our cable operation has a large
network in Central America with
approximately 1.4 million homes
passed, which, together with our
existing mobile network, gives
Millicom opportunities for future
growth with cost eﬃ ciencies.
Our cable operation has
approximately 721 thousand
Revenue Generating Units
(“RGUs”) across Central America
with cable and broadband
customers in Guatemala,
El Salvador, Honduras and Costa
Rica, as well as corporate data
customers in Guatemala,
Nicaragua, El Salvador
and Honduras.

Our mobile operations in South
America are located in Bolivia,
Colombia and Paraguay. Our
South American licenses covered
approximately 61 million people
as at December 31, 2011.

Macro-economic and
regulatory environment
Th e economies of our Latin American
markets are aﬀ ected by the economic
climate in the USA and Brazil and the
export of commodities. In Central
America in particular, our customers
beneﬁ t from remittances from
expatriate workers in the USA.
In El Salvador, remittances accounted
for 17% of GDP in 2011, and about a
third of all households receive these
transfers. While remittances to our
three markets in Central America were
up 6.7% year-on-year on average in
2011, there continues to be volatility
month on month. In South America,
the economies of our three markets
showed steady improvement with
GDP growth in 2011 of 5% on average.

In late 2011 however, there was an
outbreak of Foot and Mouth Disease
in Paraguay which impacted the
important beef export business.

“ Value-added
services are now
contributing more
than one third
of our revenues
in the region”

“Mobile data
reven ues grew by
76% year-on-year”

As at YE 2011

Population (m)

GDP per cap (2011 est)

Mobile penetration

Our market position

El Salvador Guatemala Honduras

Bolivia

Colombia

Paraguay

$7,600

112%

1 of 5

$5,000

$4,300

$4,800

$10,100

$5,500

89%

1 of 3

85%

1 of 4

68%

2 of 3

103%

3 of 3

96%

1 of 4

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Latin America (Continued)

Communication
Our core Communication business is
becoming increasingly commoditized
yet we managed to produce year-on-
year revenue growth of 2% in voice and
9% in SMS in Latin America through
the sale of Paquetigos (discounted
product and service bundles sold
for use within a certain time frame).
In Colombia for example, we managed
to increase monthly SMS revenues
more than tenfold during the year by
oﬀ ering SMS bundles with a longer,
15-day validity (rather than 1 day or a
week) in line with customers’ needs and
feedback. In 2011, we drove the sale of
bundles through our ‘Tag and Trigger’
system which automatically identiﬁ es
customers who are close to running
out of balance and oﬀ ers them the
opportunity to buy more packages
which are tailored to their speciﬁ c
usage patterns and ARPU bracket.
As well as bundled oﬀ ers, we are
increasingly oﬀ ering hybrid plans
combining pre and post paid elements.

While such initiatives enabled us to
produce growth in basic communication
services in 2011, our focus was on
attracting and retaining higher value
customer through value added services.
Value added services are now contributing
more than one third of our revenues in
the region and, in the fourth quarter of
2011, close to 10 million customers in
Latin America had an ARPU of $10
or more and generated 86% of
our revenues.

Information and Entertainment
Our information category was the
largest single contributor to group
revenue growth in 2011, predominantly
driven by the uptake of data services in
Latin America where, in 2011, mobile
data revenue grew year-on-year by 76%.
By the end of the year, 3.9 million or
close to 16% of our customers in Latin
America were subscribing to data
services and close to half of these (1.9
million) were 3G data users consuming
at least 250kb of capacity in a 30 day
period. Across the region, we are
oﬀ ering a variety of data packages
targeted towards speciﬁ c customer
groups. We have rolled out the Tigo
BlackCard, a packaged and conﬁ gured
BlackBerry card that includes a prepaid
service, following its success in driving
data penetration in Colombia. Th is
product is targeted at consumers
who cannot aﬀ ord a postpaid plan
but who want to use a BlackBerry.
We have also introduced the
SmartCard and AndroidCard for use
on other new or second hand devices.

Th e price of entry level smartphones
continued to decline in 2011, even to
below $100 in some of our markets,
and we saw data revenue generated
by handsets overtake that generated
by datacards in the second half of the
year. In Paraguay, the sale of
smartphones grew by 300% in the
fourth quarter due to the popularity
of social networking sites. In Bolivia,
Tigo was the only operator oﬀ ering
BlackBerry, Android and iPhone
options. In the latter part of the year,
following our detailed analysis of
returns on investments, we were able
to slow the rate of increase in handset
subsidies and be more selective to
focus on options delivering more
attractive ROIC.

Th e slowdown of neighbouring Brazil’s
economic growth in the latter part of
2011 also had some impact on the
Paraguayan economy.

Th ere were few signiﬁ cant changes
in the regulatory environment in our
Latin American markets in 2011 and
tax rises and regulatory changes, where
introduced, had little impact on our
revenues and proﬁ tability. In 2012,
however, several new taxes and
regulatory headwinds could impact
our businesses, including in particular,
the introduction of a ﬂ at tariﬀ structure
in Paraguay (whereby we have to charge
the same for on net and cross net calls),
Mobile Termination Rate (MTR) cuts
in Colombia and Bolivia and new
taxes in Bolivia, El Salvador and
Honduras. Th e extent of the impact
on our performance in 2012 will remain
dependent upon several factors such
as the timing of implementation, traﬃ c
elasticity and the evolution of the mix
in our revenues as we focus increasingly
on data services. We expect the impact
of such changes to be higher in 2012
than in 2011 but not greater than
what we have faced on average over
the past ﬁ ve years. As we have done
in the past, we are working to mitigate
this impact as much as possible.

Innovation in highly
penetrated markets
Th e operating environment in all our
Latin American markets remained
competitive in 2011. We believe in
constant innovation as a key success
factor for us to continue growing in
our relatively highly penetrated markets
in Latin America. In Central America,
consumers are demonstrating a
greater sensitivity to price and a
greater appetite for discounted and
personalized services, such that
aﬀ ordability is becoming one of the
most important attributes in the
industry. In South America, mobile
ARPU continued to increase thanks
to our focus on mobile data and
other value-added services, resulting
in a stabilization of ARPU for Latin
America as a whole.

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Latin America (Continued)

Our Cable business has produced
compound annual growth of 12% over
three years and continued to perform
very well. Th e ARPU of broadband
internet customers in Central America
increased by around 15% year-on-year
as we signiﬁ cantly increased the speed
oﬀ ered to our customers. We believe
that residential broadband oﬀ ers us
a signiﬁ cant growth opportunity.
Th e latent demand for internet access
is very substantial and customers are
increasingly demanding access at home
as well as on the move. Owning ﬁ xed
line infrastructure allows us to combine
broadband, TV, ﬁ xed line and mobile
services under a single brand and to sell
bundled services oﬀ ering good value
for the customer. In October, we added
VoIP to our list of services in Costa
Rica. Today our cable network passes
approximately 1.37 million homes
and provides services to 721 thousand
households, giving a penetration of
52.5% of homes passed. Customers
take on average 1.36 services each.
RGUs increased by 7.6% year-on-year
and we managed to increase the
average revenue per RGU by 6.2%
in 2011, thanks partly to our eﬀ orts
to improve our quality of service.

Our most successful mobile product
in our Entertainment category is Ring
Back Tones. In Bolivia, we introduced
further segmentation by oﬀ ering more
relevant local content in order to meet
the music preferences and trends in
speciﬁ c areas of the country.

Solutions and Mobile
Financial Services
Our most successful products in the
Solutions category are our Zero Balance
Products (ZBP) such as Tigo Lends You,
peer-to-peer balance lending and SMS
Gift & Collect. In 2011, we introduced
a feature to convert failed text
messages due to zero balance into
collect text messages which fuelled the
growth for our Gift & Collect product.
We also introduced an emergency
calls service as a new ZBP solution and
loyalty tool. In Colombia, we have
launched Tigo Assistance Services,
oﬀ ering plumbing, roadside assistance
and legal aid amongst other services.

We believe that mobile ﬁ nancial
services oﬀ er attractive potential in
the medium to long term, given the
fact that close to two thirds of the
population in the region is unbanked.
Paraguay was the ﬁ rst Latin American
market in which we launched domestic
money transfer services under the

“ Th ere are 310,000
Tigo points of sale
across our Latin
American markets,
or one for
approximately
every 300 people ”

‘Giros Tigo’ brand and, by the end of
2011, penetration of the service had
reached 20% of our customer base.
We have also recently extended our
MFS oﬀ ering in Paraguay with the
addition of cross-border money transfer
services through an agreement with
Western Union. Under this agreement,
Giros Tigo customers will be able to
receive money from Western Union
customers directly into their mobile
accounts. Th ey will also be able to
withdraw cash at any Tigo location
oﬀ ering the Giros Tigo facility. We
intend, over time, to roll out this
service in some other markets in
Latin America.

Accessibility and Availability
Branding and Distribution
At the end of the year, there were
310 thousand Tigo points of sale across
our six Latin American markets, or one
for approximately every 300 people
covered by our mobile licenses.
In several markets we undertook a
‘Go Blue’ campaign in which we
signiﬁ cantly improved our brand
presence and visibility at selected
strategic sites with wall painting,
marquees and totems. In Paraguay,
we have clearly identiﬁ ed all points
of sales oﬀ ering Giros Tigo (Tigo Cash)
by painting them yellow.

By the second half of the year, the
Amnet cable brand had been
completely withdrawn from our three
mobile markets in Central America and
we launched a rebranding campaign to
introduce the suite of cable services to
the Tigo family of products and services.

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Latin America (Continued)

We continue to reﬁ ne our Distribution
Management System (DMS) across our
markets in Latin America. As we have
extended our range of products and
services, we have also implemented
additional metrics with which to
measure our agents and dealers by
business unit. We are gaining additional
insights into their performance by
analysing these metrics.

We are increasingly focusing on
below-the-line advertising and
promotions and using social networks
to communicate with our customers.
‘Tag & Trigger’ for example, is a very
eﬀ ective communication channel
which is customer-oriented and
replaces the intrusiveness of
mass broadcasts.

We continually look for ways to make
our services as convenient and easy to
use as possible. In El Salvador, we are
now selling ePIN reloads at 700 cash
registers in 78 Wallmart stores across
the country. In Paraguay and Honduras
we have introduced a Rescue Chip as
a solution for recovering a phone
number in the event of the loss, theft
or malfunction of a SIM card. Th is
initiative has not only enhanced the
accessibility of our services by removing
the necessity to visit a branch to
eﬀ ect SIM card changes, it has also
produced savings in commissions
for new connections.

Network Developments
We continued to expand the coverage
and capacity of our 2G and 3G
networks in Latin America with the
emphasis on improving the 3G user
experience in urban areas and on
sustaining higher data speeds at peak
times. Our Fair User Policy, whereby
customers who have reached the limit
of their data plan experience
dramatically reduced speeds and are
redirected to a website so that they can
acquire additional capacity, is helping
to ensure that we manage our network
capacity and that usage of it grows
in line with revenues generated.

As part of our tower monetization
initiatives, in 2011 we transferred
approximately 1,340 or 65% of our sites
in Colombia to ATC Infraco, a
Colombian subsidiary of American
Tower and, in the fourth quarter, we
acquired a 40% stake in the company.
We are also increasingly sharing towers
directly with other operators whereby
both parties grant access, with
discretionary consent, to co-locate
equipment. Such initiatives help to
reduce the environmental impact of
telecoms infrastructure and bring
about cost eﬃ ciencies.

We also achieved cost and operational
eﬃ ciencies in our cable business in
2011 through region-wide tenders for
equipment and by outsourcing the
construction of ﬁ ber networks and the
maintenance of servers and data
equipment. We are consolidating sites
and sharing nodes and ﬁ ber optic
infrastructure with our mobile
operations where possible. In Colombia,
we have signed an agreement with
our local partner UNE, which gives us
access to their extensive ﬁ ber network.

In 2011, our operation in Paraguay
obtained cable licenses in the greater
Asunsción area. Th e core license in
Paraguay, in the 800Mhz band expired
in 2011 and was renewed for a further
ﬁ ve year period.

In 2011, $44 million was spent on
spectrum in Bolivia, Colombia and
Paraguay. In Colombia, the additional
spectrum, coupled with network
optimization initiatives, allowed Tigo
to become the leader in data download
speeds in the ﬁ ve largest cities. We
are interested in acquiring additional
spectrum in order to improve the
quality of the service we provide to our
customers through increased capacity
and in order to provide 4G services
in the future, but, as with all our
investments, acquisitions of spectrum
will have to meet strict ﬁ nancial
hurdles. In 2012, we expect several
spectrum auctions in South America,
notably in Colombia, where spectrum
in the 2.1GHz and 1.7GHz bands is
expected to be auctioned.

Outlook for 2012
In 2012, the focus for our Latin
American markets will be on driving
the growth of mobile data services by
investing further in our networks and
by continuing to provide innovative
services and bundled products targeted
to speciﬁ c customer segments in order
to meet the strong demand for data
services. Bundled services will also
continue to be used for our voice and
SMS products. We will continue to
develop our MFS business which
now includes cross-border as well
as domestic money transfer services.

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Africa

Our mobile operations in
Africa are located in Chad,
the Democratic Republic of
Congo, Ghana, Mauritius,
Rwanda, Senegal and Tanzania.
Our African licenses covered
approximately 176 million
people as at December 31, 2011.

“ We remain focused
on the aﬀ ordability
of our services as
mobile penetration
and minutes of use
are relatively low”

“ Th rough continued
innovation, we have
seen a reduction
in the rate of
ARPU decline”

Macro-economic and
Regulatory Environment
2011 was a relatively encouraging
year for most sub-Saharan African
economies, with growth for the
region as a whole of just under 5%
reﬂ ecting strong demand and elevated
commodity prices. Ghana in particular
beneﬁ ted from high prices for gold
and cocoa in 2011 which, coupled with
the country’s sound macro-economic
management, saw its GDP increase by
some 13%. Predominantly agricultural
economies such as Chad and Rwanda
continue to be supported by direct
foreign investment and aid, albeit at
lower levels since the downturn in the
global economy. In 2011, the US dollar
strengthened versus the Tanzanian
shilling, the Ghanaian cedi and the
euro-linked currencies.

In 2011, we recorded a strong
performance in Chad, Rwanda
and Mauritius and also in Tanzania
where growth was supported by
the positive development of MFS.
In DRC, the high minimum on-net
tariﬀ imposed by the government at
the end of 2010 was reduced slightly
in 2011 but nevertheless remained
high and impacted the number of net
customer additions during the year.
In Senegal, our capex levels have been
constrained by the ongoing litigation
over our license with the Senegalese
government. Th e ﬁ nal hearing on
the merits of the case took place in
December at the International Center
for the Settlement of Investment
Disputes (ICSID) in Paris and the
outcome is expected in 2012.

As at YE 2011

Population (m)

Chad

DRC

Ghana Mauritius

Rwanda

Senegal

Tanzania

GDP per cap (2011 est)

$1,900

$300

$3,100

$15,000

$1,300

$1,900

$1,500

Mobile penetration

Our market position

*only Kinshasa / Bas Congo area

29%

1 of 2

50%

66%

93%

1 of 5*

2 of 5

2 of 3

30%

2 of 2

65%

2 of 4

40%

2 of 7

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Africa (Continued)

Following the introduction of
mandatory SIM card registration
in several markets in recent years,
operators in these markets are now
obliged to register all new SIM cards
before activation which is reducing
the phenomenon of customers
having more than one SIM card.

Innovation in Competitive Markets
Across our African footprint, we remain
focused on the aﬀ ordability of our
services as mobile penetration and
minutes of use are relatively low and
competition is strong. We delivered
strong performances in Chad, Rwanda,
Mauritius and Tanzania in 2011, helped
by our market leading positions and
our focus on ﬁ nding the right balance
between growth and proﬁ tability.
In Rwanda, just two years since our
launch, we have reached EBITDA
breakeven and our market share now
exceeds one third of the market. In
Ghana we reduced our prices in 2011,
in response to the introduction of ﬂ at
tariﬀ s and speciﬁ c promotions by our
competitors. We also simpliﬁ ed our
tariﬀ structure with four call plans to
meet customer demand. In Senegal,
repeated power outages negatively
impacted our ability to drive traﬃ c
growth, resulting in losses of revenue
opportunities. Th ese issues impacted
our growth in these two markets
in 2011.

Communication
In the communication category, voice
revenues grew by 8% in Africa in 2011
in local currency. We have continued
to stimulate growth in voice and SMS
through attractively packaged oﬀ ers
and promotional activity and through
the development of new services such
as the Tigo USSD Menu which have
increased traﬃ c volumes. In several
markets we have introduced ‘Tigo
MiMi’, a low cost mobile identity for
customers who own neither a phone
nor a SIM card. Th rough this service,
customers can buy a personal number
and log-in code which they can use to
communicate on a borrowed phone
or SIM card. Th is service is increasing
brand loyalty and the penetration
of Tigo services. In DRC, as part of
our smart pricing strategy, we have
introduced a dynamic tariﬀ which
oﬀ ers discounts based on network
utilization. Similarly, in other markets,
we have introduced regional oﬀ ers
to drive penetration and usage in
speciﬁ c areas. In Rwanda we have
launched ‘Vuga’ (talk) packs, bundles
of attractively priced minutes and SMS
for use on a daily basis. Th is product
is improving our value perception
without decreasing ARPU and is
increasing minutes of use.

Th rough continued innovation across
our African markets, we have seen a
reduction in the rate of ARPU decline;
in the fourth quarter, ARPU was down
5.5% year-on-year, versus a decline
of 10% in the third quarter of 2011
(in local currency). Whilst we expect
ARPU to continue to decline in Africa
for some time, this slow-down is an
encouraging development and is driven
primarily by our focus on innovation.
In 2011, value-added services excluding
SMS grew by 60.8% and contributed
24.7% of the region’s overall growth.

Information and Entertainment
2011 saw the launch of 3G data
services in Tanzania in the ﬁ rst quarter
and in Ghana in the third quarter
with introductory price promotions
to increase awareness. In Rwanda,
we launched a variety of daily data
packages to replace volume based
packages and we started selling
high-end smartphones. In Mauritius,
where we have been providing 3G
services since 2004, we are increasingly
promoting prepaid data and BlackBerry
packages to complement the existing
postpaid services.

Until the aﬀ ordability of 3G data
improves in Africa through cheaper
access and lower handset prices, we
are helping to drive the appetite for
information services by oﬀ ering 2G
data services. In DRC, the penetration
of 2G data packages grew strongly as
we oﬀ ered free data service trials to
customers for a month before starting
to charge for the services with very high
retention rates. We are also providing
the unconnected with access to
information on demand through our
Tigo Search service whereby customers
can request an information search by
simply calling or texting a dedicated
team. Th is service has the added
beneﬁ t of turning our call centers
into proﬁ t centers.

Ring Back tones are the most important
product in the Entertainment category
in Africa and during the year we
enhanced the service with more local
content and with new features such as
‘Express Download’ and ‘Copy a Tune’.
In Chad, where the penetration of Ring
Back Tones is still low, we introduced
new content for our Tigo Life services
including religious content.

We have scaled back SMS lotteries and
mega promotions considerably as we aim
to adopt a responsible approach and
protect our most vulnerable customers.

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Africa (Continued)

Solutions and Mobile
Financial Services
In the Solutions category, we have
successfully driven growth in ‘Tigo
Lends You’ through the introduction
of a scoring system based on ARPU.
We are now lending airtime in slightly
larger increments to loyal customers
generating higher ARPU without
increasing the level of bad debt.
We continue to explore ways to
grow our product range in the
Solutions category. In particular,
we are looking at ways to capture
opportunities in the agribusiness
sector by providing smallholder
farmers with information and advice
through their mobile phones.

To date we have launched Tigo Pesa
(Tigo Cash), our domestic money
transfer service in Tanzania, Ghana and
Rwanda and we will be launching it in
Chad and DRC in 2012. In the fourth
quarter, penetration of the service
increased by 5 percentage points in
Tanzania to reach close to 18% of
our customer base. We now have
more than 10,000 Tigo Pesa agents in
Tanzania, compared to just 1,000 at the
end of 2010, contributing to the strong
growth in registered customers and the
number of transactions.

Th ere is strong competition amongst
the three largest operators in mobile
ﬁ nancial services in Tanzania and we
are very pleased to see that Tigo Pesa
customers tend to generate additional
ARPU in other categories which is
testimony to the trust they place in the
Tigo brand and the solutions it provides
them in their everyday lives.

Enhancing the visibility of the Tigo
brand was also an important part of
our DMS strategy in 2011. In Tanzania,
we introduced trade marketing
supervisors and a gazebo monitoring
tool into the system to oversee brand
visibility at our points of sale and at
temporary sites (where gazebos are
erected) operated by freelancers. In
Senegal we introduced kiosks for direct
sales at strategic locations. Elsewhere,
we have signiﬁ cantly increased our
presence on the streets through larger
direct sales forces and the use of
motorbike taxis selling ePIN reloads.

As in Latin America, we are making
more use of direct marketing through
targeted SMS broadcasts and below-
the-line methods of communication
with our customers. In 2011 the oﬃ cial
Tigo Tanzania Facebook page was
launched and it has become one of the
most visited web pages in Tanzania.
In Ghana we launched Tigo Ads,
the ﬁ rst mobile advertising product
in the country.

Th e development of MFS is highly
dependent upon market conditions
and we have seen a slower uptake of
Tigo Cash in Ghana where the industry
as a whole has more work to do to
build reciprocal trust with consumers.
In 2012, we will therefore focus on
educating both customers and agents
about the service as well as continuing
to invest in its visibility.

Accessibility and Availability
Branding and Distribution
We have continued to make good
progress in rolling out our Distribution
Management System (DMS) across
our African footprint. Our dealers,
understanding the beneﬁ t of the DMS
strategy, have generally invested the
required resources to support it and,
through coaching in the ﬁ eld, we have
managed to build strong direct sales
forces working eﬃ ciently within their
designated territories. We are also
deploying our inventory management
system which is enhancing our internal
control environment. In Senegal for
example, we can now monitor
inventory levels on an hourly basis
through a dedicated Distribution
Operating Center (DOC). We will
continue to improve the detail of
the reports and real-time observations
that the system can generate as these
are essential decision-making tools
which ensure Tigo products and
services remain accessible.

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Africa (Continued)

Network Developments
We continued to expand our networks
in Africa in 2011 with the emphasis
on capacity deployment in key urban
areas and 3G investments. We have also
deployed Single RAN in a number of
our markets which has enabled us to
increase capacity with fewer sites
and less power consumption.

In Senegal, we took steps in the
latter part of the year to alleviate
some constraints associated with
power shortages. We have deployed
secondary back-up diesel generators
and deep cycle batteries in areas with
the most volatile power supply.

We invested around 17% of revenues
in 3G capex in Africa in 2011 which
is testimony to our ambitions for data
growth in the region. Our initial focus
is on building coverage in major cities.
We managed to achieve signiﬁ cant
savings in the procurement of 3G and
core network equipment through
global supply chain negotiations
with vendors.

In Tanzania, we created a ﬁ ber
optics consortium with two other
operators whereby we will jointly build
a nationwide backbone infrastructure
as well as metro ﬁ ber networks in ﬁ ve
key urban areas. In 2011 we deployed
the ﬁ rst metro ring in Dar es Salaam.
Th is project will boost capacity
and improve the reliability of
our transmission backbone.

During the year we completed the
transfer of all the towers committed
to be outsourced in Ghana and by the
end of the year, there was an average
of 1.8 tenants per tower. We also
transferred 727 towers or around 70%
of the committed total in Tanzania and
about 50% in DRC and we are seeing
improvements in site availability from
already high levels as a result.

We signed site and tower sharing
agreements with other operators
in Chad and Mauritius during the
year. We will look to sign additional
agreements when and where possible
as we believe sharing infrastructure is
appropriate in a high cost environment.

Outlook
In 2012, as we have done in 2011,
we will focus on the smart pricing
of our products and services to
reinforce our value for money and
aﬀ ordability perception in what is a
competitive environment. We will
also look to leverage our existing
customer base and complement
traditional communication revenue
streams through the development
of value-added services, many of
which reduce churn and contribute
positively to ARPU. Our main VAS
priorities are Mobile Financial Services
and Information, for which we see the
greatest demand and growth potential
over the medium to long term.

“ We invested around
17% of revenues in 3G
capex in Africa in 2011
which is testimony
to our ambitions
for data growth”

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Corporate Governance

Compliance with the Swedish
Code of Corporate Governance
since May 30, 2011
On May 30, 2011, Millicom voluntarily
delisted its ordinary shares from
NASDAQ in the United States and
consolidated the listing of its shares
onto one single exchange, NASDAQ
OMX Stockholm. Th e Company
maintains the current listing of its
shares as Swedish Depository Receipts
(“SDRs”) on NASDAQ OMX Stockholm,
which became Millicom’s primary
listing on June 3, 2011.

With the primary listing in Stockholm,
Millicom is subject to NASDAQ OMX
Stockholm’s listing rules and reporting
requirements and the high standards
of corporate governance prevalent in
Sweden. Th e Company has been bound
by the Swedish Code of Corporate
Governance (the “Code”) as from May
30, 2011. Before that date, Millicom
applied the corporate governance
rules of the NASDAQ Stock Market
in the US.

Board of Directors
Millicom’s Board of Directors has
developed and continuously evaluates
its work procedures in line with the
corporate governance rules of NASDAQ
in the US, and since May 30, 2011 the
Swedish Code, regarding reporting,
disclosure and other requirements
applicable to listed companies. Th e
Board’s work procedures also take
into account the requirements of
the US Sarbanes-Oxley Act of 2002 to
the extent it applies to the Company.

Th e Board of Directors has adopted
a corporate policy manual, Millicom’s
central reference for all matters
relating to its corporate governance
policy. Regional policies that are more
stringent or detailed than those set
out in the corporate policy manual are
adopted as necessary. Th e Company’s
Code of Ethics is a part of the corporate
policy manual. All senior managers
and members of the Board of Directors
must sign a statement acknowledging
that they have read, understood and
will comply with the Code of Ethics.

Th e Board has adopted work
procedures to divide the work between
the Board and the President and
Chief Executive Oﬃ cer (“the CEO”).

Th e Chairman has discussions with
each member of the Board regarding
the work procedures and evaluates
the Board’s work. Th e other members
of the Board evaluate the performance
of the Chairman each year. Th e Board
also evaluates yearly the performance
of the CEO. In 2011, the Board had
ﬁ ve meetings in person and three
by telephone.

Th e work of the Board is divided
between the Board and its principal
committees:

(cid:88) the Audit Committee,
(cid:88) the Compensation Committee,
(cid:88) the Corporate Social Responsibility

(“CSR”) Committee, and
(cid:88) the Nominations Committee.

Th e main task of the Board committees
is to work on behalf of the Board within
their respective areas of responsibility.
From time to time, the Board delegates
authority to an “ad hoc” committee so
that it may resolve a speciﬁ c matter on
its own without having to go before the
full Board for approval.

At the AGM in May 2011, Mr Daniel
Johannesson and Mr Michael Massart
stood down from the board after eight
years of service.

Name

Allen Sangines-Krause
Non-Executive Chairman
Hans-Holger Albrecht
Non-Executive Director
Mia Brunell Livfors
Non-Executive Director
Donna Cordner
Non-Executive Director
Paul Donovan
Non-Executive Director
Kim Ignatius
Non-Executive Director
Omari Issa
Non-Executive Director

Year of Birth

Start of term

Committees

1959

1963

1965

1956

1958

1956

1947

On the Board since May 2008
Chairman since May 2010
Elected in May 2010

Chairman of the Compensation Committee
Nominations Committee
Compensation Committee

Elected in May 2007

Elected in May 2004

Elected in May 2009

Chairman of the CSR Committee
Compensation Committee
Audit Committee
CSR Committee
Audit Committee

Elected in May 2011

Chairman of Audit Committee

Elected in May 2010

Audit Committee

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Board Committees

Audit Committee
Millicom’s directors have established
an Audit Committee that convenes
at least four times a year, comprising
four directors, Mr. Ignatius (Chairman
and ﬁ nancial expert) from May 31,
2011 (replacing Mr. Michel Massart
who was the Chairman and ﬁ nancial
expert until May 31, 2011), Mr.
Donovan, Mr. Issa and Ms. Cordner.
Th is committee has responsibility for
planning and reviewing the ﬁ nancial
reporting process together with the
preparation of the annual and quarterly
ﬁ nancial reports and accounts and
the involvement of external auditors
in that process. Th e Audit Committee
focuses particularly on compliance
with legal requirements (including
compliance with Sarbanes Oxley Act),
accounting standards, independence
of external auditors, audit fees, the
internal audit function, the fraud risk
assessment, risk management and
ensuring that an eﬀ ective system of
internal ﬁ nancial controls exists. Th e
ultimate responsibility for reviewing
and approving Millicom’s annual report
and accounts remains with the Board.
Th e Audit Committee met nine
times during 2011 and Millicom’s
external auditors participated in
each such meeting.

Compensation Committee
Millicom’s Compensation Committee
is chaired by Mr. Sanguines-Krause who
replaced Mr. Johannesson on May 31,
2011. Th e two other members of the
committee are Mr. Albrecht and Ms.
Brunell Livfors. Ms. Brunell became a
member of the Committee after the
Annual Meeting of Shareholders on
May 29, 2007 and Mr. Albrecht became
a member after the Annual Meeting
of Shareholders on May 2011 replacing
Mr. Donovan. Ms. Brunell Livfors is
a non-independent director and
Mr. Albrecht is an independent director.

Th e Compensation Committee reviews
and makes recommendations to the
Board regarding the compensation of
the Chief Executive Oﬃ cer, reviews
the compensation of the other senior
executives and oversees management
succession planning. Millicom’s share
options program terminated in May
2006 and was replaced by grants of
restricted shares to management under
Long-Term Incentive Plans. Th e grants
of restricted shares to management
under these plans are determined
by the Committee and approved
by the Board.

CSR Committee
Millicom’s directors have established a
Corporate Social Responsibility (CSR)
Committee that convenes at least
twice a year, comprising two directors,
Ms. Brunell Livfors (Chairman) and
Ms. Cordner. Th is committee has
responsibility for overseeing and
making recommendations to the Board
regarding the management of CSR.

Nominations Committee
From January 1, 2011 until May 31, 2011
Millicom’s Nominations Committee
was chaired by Mr. Johannesson.
Th e two other members were
Mr. Albrecht and Mr. Sangines Krause.

On May 31, 2011, for the purpose
of compliance with the Swedish
Code of Corporate Governance,
the Shareholders decided on a new
procedure to appoint the members
of the Nomination Committee, in
substance as follows: a Nomination
Committee of major shareholders in
Millicom was formed during October
2011 in consultation with the larger
shareholders of the Company as per
September 30, 2011 and in accordance
with the resolution of the 2011 Annual
General Meeting. Th e Nomination
Committee should consist of at least
three members, with a majority
representing the larger shareholders
of the Company. Th e Nomination
Committee is comprised of Cristina
Stenbeck, on behalf of Investment AB
Kinnevik, Kerstin Stenberg on behalf
of Swedbank Robur funds and Allen
Sangines-Krause in his capacity as
Chairman of the Board of Directors
in Millicom (Mr. Allen Sangines
Krause is also a member of the Board
of Investment AB Kinnevik). Th e
Nomination Committee is responsible
for preparing proposals for the election
of Directors of the Board, Chairman of
the Board and auditor, in the case that
an auditor should be elected, and their
remuneration as well as a proposal
on the Chairman of the Annual
General Meeting.

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Board of Directors

Allen Sangines-Krause (born 1959)

Non-Executive Chairman

Chairman of the Compensation Committee and member of the Nominations Committee

Allen Sangines-Krause was elected to the Board of Millicom in May 2008, and elected Chairman of the Board in May 2010.
He worked for Goldman Sachs between 1993 and 2007, working in a variety of senior positions from COO for Latin America
based in Mexico City and New York and most recently as Managing Director out of London. Prior to joining Goldman Sachs,
Mr Sangines-Krause was with Casa de Bolsa Inverlat, in Mexico, and before that he was a Founding Partner of Fidem, S.C.,
a Mexican investment bank, which was acquired by Casa de Bolsa Inverlat in 1991. Mr Sangines-Krause currently sits on
the Board of Investment AB Kinnevik and is Chairman of Rasaland, a real estate investment fund. He is a member of the
Council of the Graduate School of Arts and Sciences of Harvard University.

Hans Holger Albrecht (born 1963)

Non-Executive Director

Member of Compensation Committee

Hans-Holger Albrecht was elected to the Board of Millicom in May 2010. He is President and CEO of Modern Times Group
MTG AB, a position he has held since 2000. During this period, MTG’s broadcasting operations have expanded strongly from
its core Nordic and Baltic regions to become one of the leading commercial broadcasters in Europe. Before joining MTG
in 1997, Mr Albrecht worked for Daimler-Benz and for the Luxembourg-based media group CLT, where he was responsible
for all television activities and for business development in Germany and Eastern Europe. Mr Albrecht is co-Chairman
of CTC Media Inc, the largest commercial television broadcaster in Russia, in which MTG has a 38.9% stake, and a member
of the Board of the International Emmy Association in New York.

Mia Brunell Livfors (born 1965)

Non-Executive Director

Chairman of the CSR Committee and Member of the Compensation Committee

Mia Brunell Livfors was elected a board member at the AGM 2007. From August 2006, Ms Brunell Livfors has been Chief
Executive Oﬃ cer of Investment AB Kinnevik (“Kinnevik”), a Swedish public company managing a portfolio of long-term
investments in a number of public companies such as Millicom. Ms Brunell Livfors joined Kinnevik owned company Modern
Times Group MTG AB in 1992, and was appointed CFO in 2001. As CFO, she played a central role in MTG’s development.
Currently, she is the Chairman of the Board of Metro International S.A. and a member of the Board of Tele2 AB, Transcom
WorldWide S.A., Modern Times Group MTG AB and H&M (Hennes & Mauritz) AB. Between 2006 and 2008 Mia was a
member of the Board of CTC Media, Inc. – a Russian associated company of MTG.

Donna Cordner (born 1956)

Non-Executive Director

Member of the Audit and CSR Committees

Donna Cordner was elected to the Board of Millicom in May 2004. She was formerly a Managing Director and Global Head
of Telecommunications and Media Structured Finance group at Citigroup. She has also held senior management positions
at Société Générale and ABN Amro Bank N.V. in the U.S. and Europe, including as Director of ABN’s Latin American
Telecommunications Project Finance and Advisory Group. Ms Cordner was the CEO of HOFKAM Limited, the largest rural
microﬁ nance company in Uganda until July 2005 and she continues to advise HOFKAM as a consultant. From March 2007
until July 2009 she held senior positions at Tele2 AB including Executive Vice President of Corporate Finance and Treasury
as well as CEO for Tele2 Russia.

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Board of Directors (Continued)

Paul Donovan (born 1958)

Non-Executive Director

Member of the Audit Committee

Paul Donovan was elected to the Board of Millicom in May 2009. Mr Donovan has signiﬁ cant telecom management and
senior leadership experience from several markets in the world, including Asia Paciﬁ c and Africa. As of 1 July 2009,
Mr Donovan is Group CEO of Eircom and prior to this he was Chief Executive, EMAPA Region for the Vodafone Group
until 2008. Mr Donovan’s background includes a decade in the fast moving consumer goods industry, before he moved
into the technology sector, principally with BT and Vodafone. His career with Vodafone began in 1999 and, since 2004,
he has overseen Vodafone’s operations in subsidiaries in Eastern Europe, Middle East and Asia Paciﬁ c. Africa, the US,
India and China were added to his remit in 2006. He is presently on the boards of Eircom Group Limited, Eircom Ltd
and Valentia Telecommunications.

Kim Ignatius (born 1956)

Non-Executive Director

Chairman of the Audit Committee

Kim Ignatius was elected to the Board of Millicom in May 2011. He is the CFO of Sanoma Corporation, the European media
group, which he joined in 2008. Previously, Mr Ignatius was EVP and CFO of TeliaSonera AB between 2003 and 2008 and
EVP and CFO of Sonera Oyj between 2000 and 2002. Before joining Sonera, Mr. Ignatius was Group CFO and a member
of the Executive Board of Tamro Oyj, a leading pharmaceutical distributor listed on the Helsinki Stock Exchange, between
1997 and 2000. From 1984 to 1996 he worked for Amer Group in a variety of ﬁ nance and general management roles in
both North America and Europe. He started his career with Oy Hanke-Palsbo Ab and Fruehauf Corporation in a series
of ﬁ nance roles.

Omari Issa (born 1947)

Non-Executive Director

Member of the Audit Committee

Omari Issa was elected to the Millicom Board in May 2010. He is the CEO of Investment Climate Facility for Africa. He is a
Tanzanian citizen who is responsible for managing the ICF’s seven year program to improve Africa’s investment climate and
remove barriers to growth. Mr. Issa has extensive business experience in the public and private sectors, having worked in
both Africa and abroad. He has ﬁ rst-hand experience of the realities of doing business in Africa, having previously worked
as Executive Director and Chief Operating Oﬃ cer of Celtel International, where he played an instrumental role in managing
the company’s growth and expansion across the continent. Prior to working at Celtel, Mr Issa spent fourteen years with the
IFC and six years with the World Bank.

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Executive Committee

Mikael Grahne

President and Chief Executive Officer

Mikael Grahne was appointed President and CEO of Millicom in March 2009. He joined Millicom in February 2002 as
COO having previously been President of Seagram Latin America. Prior to joining Seagram, he was a Regional President
for a division in the EMEA region at PepsiCo and held various senior management positions with Procter & Gamble.
Mikael Grahne has an MBA from the Swedish School of Economics in Helsinki, Finland.

François-Xavier Roger

Chief Financial Officer

François-Xavier Roger was appointed as CFO of Millicom in September 2008. Previously, he served as Vice-President
Corporate Finance of Danone Group from 2006 to 2008 and as CFO of Danone Asia from 2000 to 2005. He also held
various CFO positions in Asia, Africa and LATAM within the Sanofi Group. He majored in Marketing for his MBA at
The Ohio State University and has a master’s degree in Major Accounting from Audencia Business School in France.

Mario Zanotti

COO Categories & Global Sourcing

Mario Zanotti was appointed as COO Categories & Global Sourcing in late 2011. He joined Millicom in 1992 as General
Manager of Telecel in Paraguay. Following this, he became Managing Director of Tele2 Italy and CEO of YXK Systems.
In 2002, he served as Head of Central America for Millicom and became Chief Officer LATAM in 2008. Prior to joining
Millicom, he worked as an electrical engineer at Itaipu Hydroelectric Power Plant and later as Chief Engineer of the biggest
electrical contractor company in Paraguay. He has a degree in Electrical Engineering from the Pontifica Universidade
Catolica in Porto Alegre, Brazil and a MBA from INCAE and the Universidad Catolica de Asunción, Paraguay.

Regis Romero

COO Global Markets

Regis Romero was appointed as COO Global Markets in late 2011. He joined Millicom in 1998 as Commercial Manager
in Bolivia. He then became COO in Paraguay and Co-Head of Africa before becoming Chief Officer Africa in 2008. Prior to
joining Millicom, he worked as an investment consultant for Interamerican Development Bank. He has a bachelor’s degree
in Business Administration from National University, USA, and a master’s degree in Business Management from EDAN
in Asunción and has completed the S.E.P at London Business School.

Jo Leclère

Chief HR Officer

Jo Leclère was appointed Chief HR Officer of Millicom in 2011. He joined Millicom in February 2009 as Head of Reward &
Performance, having previously been VP Operations Europe at NorthgateArinso, a global HR consulting and outsourcing
provider. Prior to this position, he was HR Services Director at PricewaterhouseCoopers. He holds a master’s degree in Law,
a postgraduate degree in Tax and a bachelor’s degree in Economics.

Review of OperationsFinancial StatementsCorporate GovernanceOverview
Annual Report 2011 Millicom International Cellular S.A.

Integrity and Corporate Responsibility

During 2011, Millicom took
important steps towards
improving the management
of the ﬁ nancial, social and
environmental risks relating
to compliance and corporate
responsibility.

“ Our core values
are Passion,
Integrity and
Respect”

Strategy
Millicom provides aﬀ ordable, accessible
and available mobile services and
solutions, including ﬁ nancial services,
to those who have previously been
left behind by such developments.
Th is approach embodies Millicom’s
wider ambition of placing social and
economic beneﬁ ts 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”.
Th e 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).
Th e Integrity strategy outlines the
company’s aim, within the next ﬁ ve
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 ﬁ nancial investments.
Th e 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.

Th e Integrity strategy has four
key elements:

(cid:88) Reduce cost and risk through
preventative, corrective and
detective measures, improved
risk and issues management, and
by identifying opportunities to
combine cost beneﬁ t and social
return, such as increasing energy
eﬃ ciency of our networks and
our oﬃ ce buildings.

(cid:88) 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.

(cid:88) Develop legitimacy and

reputational capital with strong
relations with our communities,
targeted stakeholder engagement
and transparent reporting and
communications.

(cid:88) Create value by actively seeking
to oﬀ er commercial solutions to
the social issues in our communities,
supporting local entrepreneurship
and generally supporting capacity
building of our local communities.

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Integrity and Corporate Responsibility (Continued)

Th e Integrity Oﬃ ce 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. Th e 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 Oﬃ cer.
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.

Governance
Th e 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 Oﬃ ce” 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.

Th e 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.
Th e CSR Committee comprises of
Board members Mia Brunell Livfors
and Donna Cordner, with Mikael
Grahne, Group CEO and President
and the Chief Integrity Oﬃ cer,
Enrique Aznar attending meetings
of the Committee.

Enrique Aznar, as the Chief Integrity
Oﬃ cer, 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.

Policies
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.
Th e Integrity Oﬃ ce 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 Oﬃ ce via email
or phone or via a web-form, which
also allows anonymous reporting.
Th e channel is available in English,
French and Spanish.

Millicom also introduced speciﬁ c
guidelines on conﬂ ict of interests,
fair competition, third party due
diligence and gifts and entertainment.
Th e company also adopted a
responsible approach towards SMS
lotteries which are popular in many
emerging markets. During 2011,
Millicom signiﬁ cantly 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 speciﬁ c policies that will guide
on the practical implementation of
the Code.

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Integrity and Corporate Responsibility (Continued)

Human Rights
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 signiﬁ cant
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 deﬁ ne how the
UN principles should be applied in
our sector, especially as they relate
to freedom of expression and privacy.
Th ese are areas where we, due to the
nature of our business, can be subject
to government requests that can put
us in a diﬃ cult 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.
Th e 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 diﬀ erent ways.
(see Charitable Activities).

Social Beneﬁ ts of
Mobile Communications
By operating in emerging markets,
Millicom is in an exceptional position
to empower people with its services
and to positively inﬂ uence economic
development. Th e premise of Millicom’s
business strategy is to make mobile
communications and other mobility
related services as aﬀ ordable, accessible
and available as possible to consumers
in its markets.

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

Research helps us understanding how
the services we provide can aﬀ ect
some speciﬁ c groups. In 2011, Tigo
Paraguay took part in a study by the
GSM Association into children’s use of
mobile phones. Th e aims of the study
were to understand how children use
mobile phones, the role technology
plays in child-parent relationships and
how their use inﬂ uences children’s
social attitudes. Some of the ﬁ ndings
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 beneﬁ t
from mobile communications.

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Integrity and Corporate Responsibility (Continued)

Environment
Improved energy eﬃ ciency has been
identiﬁ ed 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 eﬃ ciency
strategy to reach this target.

Alternative energies, especially solar
power and diﬀ erent 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
emissions data through the CDP.

Radio Waves and Health
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 eﬀ ects.
Th is 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
ﬁ elds. 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
scientiﬁ cally sound information and
recommendations regarding the safety
of radio waves. Such information
is available for example from the
World Health Organization.

Charitable Activities
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 diﬀ erent
charitable activities. Th e ‘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 speciﬁ c day,
the company will direct revenues
from bought credit towards a speciﬁ c
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.

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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.
Th e most extensive program related
to education we are running is in
Guatemala within the framework
of UN Millenium Schools and in
collaboration with USAid. Th rough
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, Th e 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 eﬀ ectiveness
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 beneﬁ ts 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 oﬃ ces, 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. Th e ‘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 aﬀ ected 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 ﬁ gure
among the poorest of the world, to
proﬁ t from the beneﬁ ts that mobile
communications and mobile ﬁ nancial
services can bring. Supporting local
entrepreneurship and innovation is
key to creating this new value. As a
ﬁ rst 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. Th is
collaboration will be expanded in 2012
with joint projects in other countries
in Africa.

Reporting
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 ﬁ rst 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. Th e 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.

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Directors’ Report

Principal Activities
and Background

Millicom is a global
telecommunications group with
mobile telephony operations
in 13 emerging markets and
number 1 or 2 market positions
in 12 of these. We also operate
various combinations of ﬁ xed
telephony, cable and broadband
businesses in ﬁ ve countries
in Central America. As at
December 31, 2011, Millicom
had mobile operations in
13 countries in Central America,
South America, and Africa.
Millicom operates its mobile
businesses in El Salvador,
Guatemala and Honduras in
Central America; in Bolivia,
Colombia and Paraguay in
South America; and in Chad, the
Democratic Republic of Congo,
Ghana, Mauritius, Rwanda,
Senegal and Tanzania in Africa.

Our operation in Laos was sold in
March 2011. We sold our operations in
Sri Lanka, Sierra Leone and Cambodia
in October and November 2009.

In 2008, Millicom acquired 100% of
Amnet Telecommunications Holding
Limited, a provider of broadband and
cable television services in Costa Rica,
Honduras and El Salvador, of ﬁ xed
telephony in El Salvador and Honduras,
and of corporate data services in the
above countries as well as Guatemala
and Nicaragua. Since its acquisition,
Amnet has generated revenue growth
of around 12% per annum. Return on
Invested Capital increased by 3% at
YE2011 and is on the right track to
exceed local Cost of Capital over the
medium term, in line with our strict
ﬁ nancial hurdles for external growth.

On May 30, 2011, Millicom voluntarily
delisted its ordinary shares from
NASDAQ in the United States and
consolidated the listing of its shares
onto one single exchange, NASDAQ
OMX Stockholm. Th e Company
maintains the current listing of its
shares as Swedish Depository Receipts
(“SDRs”) on NASDAQ OMX Stockholm,
which became Millicom’s primary
listing eﬀ ective on June 3, 2011. Shares
are still traded over the counter in
the US, under the ticker MIICF. PK
(denoting pink sheets). Th e Company
has its registered oﬃ ce at 15, Rue Léon
Laval, L-3372, Leudelange, Grand Duchy
of Luxembourg and is registered with
the Luxembourg Register of Commerce
under the number RCS B 40 630.

“ Th e Group’s consistent
performance demonstrates
the strength of our business
model and our ability to
react quickly to changing
market conditions”

Close to
US$1bn
returned to
shareholders

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Directors’ Report (Continued)

Group Performance
Results for 2011
Th e Group continued to experience
good growth in 2011 despite more
challenging economic conditions
towards the end of the year. Th e total
mobile customer base increased by
close to 12% to 43.1 million compared
to 38.6 million at YE2010. In 2011,
our emphasis was on up-selling and
cross selling more services to existing
high-value customers in Latin America
and Africa, whilst growing further the
penetration of basic mobile services,
particularly in Africa. In the last quarter
of the year, we generated 28.5% of
revenues from services other than
voice.

Our revenues were up circa 12.7% to
$4,530 million year-on-year. Including
the full consolidation of Honduras in
2010, local currency revenues in Central
America increased by 4.6% in 2011 to
$1,842 million. Local currency revenues
in South America increased by 17.1%
to $1,706 million. In Africa, local
currency revenues increased by 11.3%
to $981 million.

Total operating proﬁ t for the year
ended December 31, 2011 increased
by 16% to $1,257 million from $1,083
million for the year ended December
31, 2010. Th e normalized net proﬁ t
attributable to equity holders of the
company grew 22% in 2011 to reach
$738 million versus $607 million
in 2010. Normalized earnings per
share grew 26% year-on-year in
2011, supported by our share
buyback program.

Th e Group generated operating free
cash ﬂ ow of $1,204 million in 2011,
equivalent to 26.6% of revenues,
compared to $1,047 million in 2010.
Cash and cash equivalents decreased
to $881 million compared to $1,023
million for 2010. As at December 31,
2011, the Group had total equity of
$2.5 billion compared to $2.4 billion
as at December 31, 2010.

Th e Group’s consistent performance
throughout 2011 demonstrates the
strength of our business model and
our ability to react quickly to changing
market conditions. We have delivered
strong revenue growth and only a slight
decline in margins as we invested in
new business opportunities, notably
in mobile data and Mobile Financial
Services, and delivered a rigorous
capital discipline and strong cash
ﬂ ow generation.

Operational/Strategic
Developments in 2011
In March 2011, Millicom announced
the completion of the sale of its
operation in Laos following the initial
signing of the transaction in September
2009. Th e disposal of the 74.1% stake
Millicom owned in the business was
conducted on materially the same
terms as those initially agreed.

On April 19, 2011, Millicom announced
its intention to consolidate the listing
of its shares onto one single exchange:
NASDAQ OMX Stockholm. Th e
voluntary delisting was eﬀ ective on
May 30 and NASDAQ OMX became
Millicom’s primary listing, eﬀ ective
June 3, 2011. Millicom remains
registered with the SEC and is therefore
complying with all relevant regulatory
requirements that apply to foreign
issuers in the US.

In July 2011, Millicom’s joint operation
in Colombia announced the disposal
of 2,156 towers to a subsidiary of
American Tower in Colombia for a cash
consideration of $182 million. Millicom
subsequently invested in the subsidiary
to acquire a 40% stake in the local
tower company.

During the year, and as in 2010, we
returned close to $1 billion to our
shareholders, half through dividends
(a $1.8/share ordinary dividend and
a $3/share exceptional dividend) and
half through a share buyback program.
On February 8, 2012, we enhanced the
ordinary dividend policy to no less
than $2 per share or a minimum
pay out ratio of 30%.

Outlook for the Group
2012 will be a year of investment in
services, products, infrastructure
and people as we see numerous
growth opportunities in our markets.
Supported by reinforced focus on
innovation and investment in our
new organization structure, we believe
we are prepared to seize new growth
opportunities as they arise in the
coming months and years. In 2012, we
anticipate some erosion of our EBITDA
margin and guide for an EBITDA margin
around the mid-40s and an OFCF
margin of around 20% of revenues.
We expect capex to increase but not
to exceed 20% of our revenues in 2012
excluding spectrum acquisitions.

As we invest to bring further
innovative and aﬀ ordable services
to our customers, we aim to continue
delivering above sector average
growth in revenues, cash ﬂ ow
generation and returns.

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Risk Management

A number of factors aﬀ ect or
may in the future aﬀ ect the
operations of Millicom. Th ese
factors are either directly related
to Millicom or relate indirectly
to the company as they deal
with the business environment
in which we operate.

We deﬁ ne risks as any uncertainties
regarding the achievement of our main
objectives as outlined at our September
2011 Capital Markets Day. As stated, we
aim to strike the right balance between
proﬁ table growth and returns in the
form of revenues and EBITDA growth,
operating FCF margin and Return on
Invested Capital.

Millicom’s Risk
Management Function
Millicom has always had a risk
management process in place. Th is
process has recently been reinforced in
order to move it beyond the traditional
asset protection and risk-exposure
management towards performance
enablement and decision-making
support. Th e audit committee has
tasked a risk management team to
deﬁ ne and implement a strengthened

approach to risk management.
Risks are inherent in business and
Millicom accepts these risks as long
as we have the adequate systems in
place to mitigate them and as long as
the business opportunities that come
along with the risks generate suﬃ cient
returns for our shareholders, measured
in the form of Return on Invested
Capital over a speciﬁ c period of time.

In the table below, we provide a
summary of the risks we face operating
in various emerging markets and the
actions we are taking to mitigate
them. Th is analysis is not intended to
be extensive and comprehensive of all
existing and/or possible future risks.
Th e principal risks are presented in
this table in no particular order.
An extended list of risks can be
found in our Form 20F.

Risks

Financial risks

How could they
impact us?

How do we
handle them?

Opportunities

We generate revenues in local
currencies and there are limited
hedging instruments available in
our markets.

We now have 100% of our debt
at the local, operating level and
at YE2011, close to 40% of our
debt was denominated in local
currencies.

Our ability to receive funds from
and to exercise management
control over some of our operations
is dependent upon the consent of
shareholders who are not under
our control. Disagreements or
unfavorable terms in agreements
governing our joint ventures may
adversely aﬀ ect our operations.

Certain insiders own a signiﬁ cant
number of Millicom shares, giving
them a substantial amount of
inﬂ uence over management.

External factors beyond our control
or current knowledge may adversely
impact our business and hence
our ability to deliver on previously
communicated short term guidance
and mid term ambitions.

A sustained challenging macro
economic outlook in the Eurozone
could eventually reduce our ability
to access funding when we need to
roll forward our debt or may make
it more expensive.

We are in constant dialogue with
our local partners in Honduras,
Guatemala, Colombia, Mauritius
and Rwanda.

Local partners have local expertise
and know-how which can be
turned into revenue and margin
opportunities for the beneﬁ t of all.

Millicom's management team owns
a material number of Millicom
shares, aligning their interests with
those of minority shareholders.

Th e put and call agreement
we signed with our partner in
Honduras has enabled us to fully
consolidate the asset in Honduras.

Our Board of Directors comprises
7 members, 5 of whom are
independent Directors.

We report immediately on known
possible risks that may arise and on
any material deviation between our
previously communicated targets
and revised market expectations.

We are diversifying our sources of
funding from banks to institutional
investors, governments and non
proﬁ t organizations. We aim to
achieve the right balance between
local funding in local currency
versus USD and at ﬁ xed rates
versus variable rates.

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Risk Management (Continued)

Risks

How could they
impact us?

How do we
handle them?

Opportunities

Acquisition of spectrum
and renewal of licences

We face substantial competition in
obtaining, funding and renewing
mobile telephone licenses.

Tower outsourcing

We may not be able to acquire
the required frequency blocks of
spectrum in some markets or we
may have to pay too high a price
for them.

We have signed agreements to
outsource around one third of our
towers globally to tower companies
and lease back access to this passive
infrastructure. We have also entered
into some site sharing agreements
with some of our competitors in
some markets. Related risks could
include: 1) lower quality of service,
2) delays in roll-out to new areas,
3) reduction of our competitive
advantage in the form of network
coverage/quality.

We negotiate with governments
and regulators well in advance of
the expiry dates of our spectrum
and licences.

With high levels of penetration
in our Latin American footprint
and in the urban areas of our
African markets, we believe that
even if there could be some new
entrants in our markets, the
opportunity for them to make
in-roads and jeopardize our
established position is smaller
than it was a couple of years ago.
It is our responsibility constantly
to innovate to ensure customers
are satisﬁ ed with Tigo services.

We always carefully evaluate any
investment we make in light of the
possible returns (ROIC) and risks
as well all potential alternatives.

Over the years, we have gained
considerable experience in
negotiating license renewals
and spectrum prices.

We have been in a legal dispute
in Senegal for the past 3 years over
the validity of our license. Despite
the ongoing legal process, we have
been able to continue operating
eﬃ ciently.

We believe that passive
infrastructure is no longer a
strategic asset as any operator
with suﬃ cient ﬁ nancial resources
could replicate what we have built
in our markets over time.

We have entered into 1) Service
Level Agreements (SLAs) with all
tower companies to ensure quality
of service for our customers is high
and 2) Build to Suit agreements to
cater for the capacity and coverage
expansion needs of our local
businesses.

We have retained a 40% stake
in the diﬀ erent tower companies
we have set up locally with our
partners. As a shareholder in these
tower companies, we therefore
have some say in the prospects
for these companies, in terms of
their investments and strategy.

We consider spectrum an
attractive and scarce resource.
It is a pre requisite to operating
as a mobile telecommunication
service provider.

Sharing towers provides an
opportunity to improve the quality
of service we oﬀ er to our customers.
Tower companies are focused purely
on managing the passive part of the
network and that focus, along with
SLAs we have in place, delivers an
enhanced quality of service.

By reducing our costs associated
with the management of passive
infrastructure, we are saving money
that can be redirected to the beneﬁ t
of our customers in the form of
1) investment in new services and
products and 2) attractive pricing.

We estimate we have created in
excess of $600m of value through
our tower monetization activities.

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Risk Management (Continued)

Risks

How could they
impact us?

How do we
handle them?

Opportunities

Macro economic risks

An economic downturn, a
substantial slowdown in economic
growth or deterioration in
consumer spending could adversely
aﬀ ect Millicom's operating results
and ﬁ nancial conditions.

Our business could be impacted
by a deteriorating economic
environment in developed
markets as some countries in
which we operate rely to a certain
extent on international aid.

Regulation and taxes

Th e mobile telephony market is
heavily regulated and taxed.

Our business model is focused on
cross selling and up-selling more
services to our high value customers
and therefore should enable us to
be more immune than peers on
average. In fourth quarter 2011,
we generated 80% of our revenues
from 30% of our customers at the
top of the pyramid, i.e. with an
ARPU of $10 or more. We believe
these customers are more immune
than the average to the economic
slowdown.

One third of our customer base
generates less than 1% of our
revenues and these customers are
the most likely to be impacted ﬁ rst.
We believe that our current revenue
base and cash ﬂ ow generation
shall be relatively immune in the
event of a material impact on
these customers.

Taxes and regulatory pressures are
part of the constraints we have to
deal with in the telecom industry
and we constantly look for cost
cutting and other opportunities
to oﬀ set them.

Th e mobile telephony sector may
be forced to open up access to its
spectrum which may create further
competition.

As we operate in emerging markets,
many of the countries where we
conduct business have weak legal
and telecommunications regulatory
regimes compared to those in
developed markets.

We believe that our present
and future success is very much
correlated to our understanding
of our customers. We are used
to competition and expect it
to remain strong.

To mitigate this risk, we are in
constant dialogue with regulators
and governments.

Most of the countries in which
we operate do not have universal
service obligations. If such
obligations were introduced the
proﬁ tability of our operations may
be negatively impacted.

Taxes and regulatory pressures are
part of the constraints we have to
deal with in the telecom industry
and we constantly look for cost
cutting and other opportunities
to oﬀ set them.

We have one of the strongest
ﬁ nancial positions in the telecom
industry with low leverage and
strong cash ﬂ ow generation.

If some of our global competitors
face challenging environments in
some markets due to the economic
downturn in developed markets,
they may focus less than in the past
on emerging markets where we
compete with them.

We are smaller than our global
competitors and hence, we believe,
more agile to adapt to changing
regulatory requirements. Regulatory
pressures might even open up
some opportunities for us to serve
our customers better through
continuous innovation, especially
in our products and pricing.

As a global player operating across
two very diﬀ erent geographies;
Latin America and Africa, we believe
it is part of our duty to contribute
positively to building an improved
regulatory framework in the
markets in which we operate.

If Universal Service Obligations were
to be implemented, we believe this
may present some opportunities to
fulﬁ ll one of our ambitions when it
comes to social responsibility. As
described in the Integrity section,
we aim, by 2016, to move beyond
compliance with applicable laws
and company policy to a model
where we actively seek social return
as a desired by-product of our
ﬁ nancial investments.

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Risk Management (Continued)

Risks

How could they
impact us?

How do we
handle them?

Opportunities

Regulation and taxes
(continued)

Our failure to comply with
local and international laws and
regulations could result in liabilities
and sanctions which could have
a material adverse impact on our
business.

Increased Competition

In some of our markets we could
face increased competitive pressure
in the provision of voice and data
services from existing or new players.

Increased competitive pressure
could lead to more diﬃ cult
negotiation with our distributors,
resulting in some pressure on our
margins.

Our Integrity function has been
tasked with ensuring not only that
we have the adequate levels of
Corporate Governance and controls
and comply with local laws as they
apply to us, but that we take a
proactive approach to ensuring risks
and potential future liabilities are
mitigated.

We are used to operating in challenging
and competitive environments. We
invest in personnel, infrastructure,
innovation and customer relationship
management to try to stay ahead
of competition in our markets.
Our strong ﬁ nancial position with
low leverage means that we have
the required resources to increase
investments as and when necessary.

We engage in proactive and regular
dialogue with our distributors.
Given our leading market positions
in most of our markets, we believe
we are relatively well hedged against
possible aggressive initiatives from
some smaller competitors.

Some of our competitors have
recently merged in some Central
American markets which may
present opportunities.

Emerging Market risks

Many of the countries in which we
operate have a history of political
instability and any current or future
instability may negatively aﬀ ect
our revenues or our ability to
conduct business.

We have contingency plans in place
that enable us to operate under
challenging/constrained business
environments as we have done
successfully in Senegal during the
ongoing litigation over our license.

As we contribute positively as an
industry to the societies in which
we operate, the reduction in the
risks in our markets could lead to
an appreciation of the value of
our businesses.

Some of the countries in which
we operate have political regimes
that may not view foreign business
interests favorably and may attempt
to expropriate all or part of our local
assets or impose controls.

We have a balanced approach
towards leverage. We raise debt at
the operating local level and, where
possible, on a non recourse basis.

Many of the countries in which we
operate lack infrastructure or have
infrastructure in relatively poor
condition.

We make use of back up generators
at many of our tower sites to ensure
our services are constantly available
to our customers.

We are exploring alternative
energies, especially solar power
and diﬀ erent hybrid solutions as
a means of powering sites in
remote areas.

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Risk Management (Continued)

Risks

Entering into
new businesses

How could they
impact us?

How do we
handle them?

Opportunities

Our growth strategy is supported
by constant innovation. As we
enter into new business areas
such as Mobile Financial Services
and Entertainment, we face new
risks: regulatory requirements
are diﬀ erent, employee skills are
diﬀ erent, reputation risk could be
higher and key success factors diﬀ er
from those we have been used to in
telecom business.

Our future growth is dependent
upon our ability to innovate.

In 2012, we are implementing a new
organization structure to ensure we
have the right skills in place to realise
our innovation strategy while
containing and mitigating new risks
that might arise from these new
business opportunities.

When necessary, we partner with
experts in the business areas we are
exploiting. Our legal and compliance
department reviews new business
plans before they are launched. We
have a step-by-step approach to
entering into new business areas;
we trial ﬁ rst and assess the risks and
potential rewards before taking any
decision to launch.

We are investing in retaining and
recruiting talented people to deliver
in the areas of opportunity we have
identiﬁ ed and to ﬁ nd new ones.

We face risks related to IT systems
and billing, in particular as we move
away from pure voice services and
diversify into new businesses with
diﬀ erent technical requirements.

We have announced a meaningful
investment in IT and billing systems
of $300m over 2011-13.

We aim to derive 50% of revenues
from non voice services in Latin
America by 2015 and 25% in Africa.

Th e organization structure we are
implementing in 2012 will enable us
to roll-out successful products across
our footprint more eﬀ ectively and
within a shorter timeframe, enabling
us to shorten the time to revenue.

Th is new state of the art billing and
CRM IT platform will enable us to
serve our customers better in many
diﬀ erent areas from communication
to mobile ﬁ nancial services.

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Financial Statements

Signatures
Under the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certiﬁ es that it meets all of the
requirements for ﬁ ling on Form 20-F and has duly caused this annual report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Dated: March 1, 2012

MILLICOM INTERNATIONAL CELLULAR S.A.

By:

Mikael Grahne
Chief Executive Oﬃ cer

François Xavier Roger
Chief Financial Oﬃ cer

Index to Financial Statements
Audited Consolidated Financial Statements of Millicom and its Subsidiaries for
the Years Ended December 31, 2011, 2010 and 2009

Management’s Report on Internal control over Financial Reporting

Consolidated Income Statements for the years ended December 31, 2011, 2010 and 2009

Consolidated Statements of Comprehensive Income for the years ended December 31, 2011, 2010 and 2009

Consolidated Statements of Financial Position as at December 31, 2011 and 2010

Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009

Consolidated Statements of Changes in Equity for the years ended December 31, 2011, 2010 and 2009

Notes to the Consolidated Financial Statements

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Management’s Report on Internal Control over Financial Reporting
Th e management of Millicom International Cellular S.A. is responsible for establishing and
maintaining adequate internal control over ﬁ nancial reporting. Internal control over ﬁ nancial
reporting is a process designed to provide reasonable assurance regarding the reliability of
ﬁ nancial reporting and the preparation of ﬁ nancial statements for external reporting purposes
in conformity with International Financial Reporting Standards as issued by the International
Accounting Standards Board and as adopted by the European Union.

Because of its inherent limitations, internal controls over ﬁ nancial reporting may not prevent
or detect misstatements.

Management has assessed the eﬀ ectiveness of Millicom International Cellular S.A. internal
control over ﬁ nancial reporting as of December 31, 2011. In making its assessment,
management has utilized the criteria set forth by the Committee of Sponsoring Organizations
of the Treadway Commission in Internal Control–Integrated Framework. Management
concluded that based on its assessment, Millicom International Cellular S.A. internal control
over ﬁ nancial reporting was eﬀ ective as of December 31, 2011.

PricewaterhouseCoopers S.à.r.l has issued an unqualiﬁ ed report on our 2011 ﬁ nancial
statements as a result of the audit and also has issued an unqualiﬁ ed report on our internal
control over ﬁ nancial reporting which is attached hereto.

Dated: March 1, 2012

By:

Mikael Grahne
Chief Executive Oﬃ cer

François Xavier Roger
Chief Financial Oﬃ cer

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Annual Report 2011 Millicom International Cellular S.A.

Report of independent registered public accounting ﬁ rm
To the shareholders of Millicom International Cellular S.A.

In our opinion, the accompanying consolidated statements of ﬁ nancial position and the related consolidated statements of
income, comprehensive income, cash ﬂ ows and changes in equity present fairly, in all material respects, the ﬁ nancial position
of Millicom International Cellular S.A. (the “Company”) and its subsidiaries and joint ventures (together the “MIC Group”) at
31 December 2011 and 2010, and the results of their operations and their cash ﬂ ows for each of the three years in the period
ended 31 December 2011 in conformity with International Financial Reporting Standards as issued by the International Accounting
Standards Board and in conformity with International Financial Reporting Standards as adopted by the European Union. Also
in our opinion, the MIC Group maintained, in all material respects, eﬀ ective internal control over ﬁ nancial reporting as of
31 December 2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Th e Company’s management is responsible for these consolidated
ﬁ nancial statements, for maintaining eﬀ ective internal control over ﬁ nancial reporting and for its assessment of the eﬀ ectiveness
of internal control over ﬁ nancial reporting, included in “Management’s Report on Internal Control Over Financial Reporting”
appearing on page F-2 of the accompanying consolidated ﬁ nancial statements. Our responsibility is to express opinions on these
consolidated ﬁ nancial statements and on the MIC Group’s internal control over ﬁ nancial reporting based on our integrated audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Th ose standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated
ﬁ nancial statements are free of material misstatement and whether eﬀ ective internal control over ﬁ nancial reporting was
maintained in all material respects. Our audits of the consolidated ﬁ nancial statements included examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated ﬁ nancial statements, assessing the accounting principles
used and signiﬁ cant estimates made by management, and evaluating the overall ﬁ nancial statement presentation. Our audit
of internal control over ﬁ nancial reporting included obtaining an understanding of internal control over ﬁ nancial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating eﬀ ectiveness of internal
control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in
the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 4 to the consolidated ﬁ nancial statements, the Company has restated its 2010 consolidated ﬁ nancial
statements to correct a misstatement.

A company’s internal control over ﬁ nancial reporting is a process designed to provide reasonable assurance regarding the
reliability of ﬁ nancial reporting and the preparation of ﬁ nancial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over ﬁ nancial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reﬂ ect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of ﬁ nancial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with authorizations of management and directors of
the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material eﬀ ect on the ﬁ nancial statements.

Because of its inherent limitations, internal control over ﬁ nancial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of eﬀ ectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers S.à r.l.
Réviseur d’entreprises agréé

Luxembourg, March 1, 2012

PricewaterhouseCoopers S.à r.l.,
400 Route d’Esch, B.P. 1443,
L-1014 Luxembourg
T: +352 494848 1,
F:+352 494848 2900,
www.pwc.lu

Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°95992)
R.C.S. Luxembourg B 65 477 -
Capital social EUR 516 950 -
TVA LU17564447

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Annual Report 2011 Millicom International Cellular S.A.

Consolidated Income Statements for the years ended
December 31, 2011, 2010 and 2009

Revenues
Cost of sales
Gross proﬁ t
Sales and marketing
General and administrative expenses
Other operating expenses
Other operating income
Operating proﬁ t
Interest expense
Interest and other ﬁ nancial income
Revaluation of previously held interests
Other non operating expenses, net
(Loss) proﬁ t from associates
Proﬁ t before tax from continuing operations
Credit (charge) for taxes
Proﬁ t for the year from continuing operations
Proﬁ t for the year from discontinued operations, net of tax
Net proﬁ t for the year
Attributable to:
Equity holders of the company
Non-controlling interest
Earnings per share for the year (expressed in US$ per common share)
Basic earnings per share
– from continuing operations attributable to equity holders
– from discontinued operations attributable to equity holders
– for the year attributable to equity holders
Diluted earnings per share
– from continuing operations attributable to equity holders

– from discontinued operations attributable to equity holders

– for the year attributable to equity holders

Notes
10

10,11

5
13
18

2011
US$ ’000
4,529,597
(1,564,401)
2,965,196
(816,715)
(839,423)
(95,737)
43,700
1,257,021
(186,523)
14,576
–
(4,290)
(9,591)
1,071,193
18,347
1,089,540
39,465
1,129,005

2010
(As Restated)(i)
US$ ’000
3,920,249
(1,330,308)
2,589,941
(737,691)
(738,779)
(74,933)
3,192
1,041,730
(214,810)
14,748
1,060,014
(61,658)
(1,817)
1,838,207
(227,096)
1,611,111
11,857
1,622,968

924,515
204,490

1,620,277
2,691

8.50
0.37
8.87

8.49

0.37

8.86

14.89
0.08
14.97

14.87

0.08

14.95

2009
US$ ’000
3,372,727
(1,202,902)
2,169,825
(647,009)
(606,213)
(65,580)
–
851,023
(173,475)
11,573
32,319
(32,181)
2,329
691,588
(187,998)
503,590
300,342
803,932

850,788
(46,856)

5.09
2.75
7.84

5.08

2.74

7.82

(i) Restatement – see note 4
Th e accompanying notes are an integral part of these consolidated ﬁ nancial statements.

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Annual Report 2011 Millicom International Cellular S.A.

Consolidated Statements of Comprehensive Income for
the years ended December 31, 2011, 2010 and 2009

Net proﬁ t for the year

Other comprehensive income:
Exchange diﬀ erences on translating foreign operations
Cash ﬂ ow hedges
Total comprehensive income for the year:
Attributable to:

Equity holders of the Company

Non-controlling interests

(i) Restatement – see note 4

2011
US$ ’000

1,129,005

2010
(As Restated)(i)
US$ ’000

1,622,968

(46,698)
(3,262)
1,079,045

881,694

197,351

(5,785)
(1,700)
1,615,483

1,617,487

(2,004)

2009
US$ ’000

803,932

(14,529)
–
789,403

837,124

(47,721)

Consolidated Statements of Financial Position as at
December 31, 2011 and 2010

ASSETS

Non-Current Assets

Intangible assets, net
Property, plant and equipment, net
Investments in associates
Pledged deposits
Deferred taxation
Other non-current assets
Total Non-Current Assets
Current Assets

Inventories

Trade receivables, net
Amounts due from non controlling interests and joint ventures
Prepayments and accrued income
Current income tax assets
Supplier advances for capital expenditure
Other current assets
Cash and cash equivalents (ii)
Total Current Assets
Assets held for sale
TOTAL ASSETS

(i) Restatement – see note 4
(ii)

Including $20 million of restricted cash at December 31, 2011

Notes

16
17
18
19,27
14

21
22

2011
US$ ’000

2010
(As Restated)(i)
US$ ’000

2,170,353
2,865,117
62,984
49,371
316,966
37,359
5,502,150

74,593

276,944
158,782
119,362
23,645
32,324
146,615
881,279
1,713,544
66,252
7,281,946

2,282,845
2,767,667
18,120
49,963
23,959
17,754
5,160,308

62,132

253,258
99,497
89,477
10,748
36,189
75,311
1,023,487
1,650,099
184,710
6,995,117

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Annual Report 2011 Millicom International Cellular S.A.

Consolidated Statements of Financial Position as at
December 31, 2011 and 2010 (Continued)

EQUITY AND LIABILITIES
Equity

Share capital and premium

Treasury shares

Put option reserve

Other reserves

Retained proﬁ ts

Proﬁ t for the year attributable to equity holders

Parents ownership interests

Non-controlling interests

TOTAL EQUITY

Liabilities

Non-current Liabilities

Debt and ﬁ nancing

Derivative ﬁ nancial instruments

Provisions and other non-current liabilities

Deferred taxation

Total non-current liabilities

Current Liabilities

Debt and ﬁ nancing

Put option liability

Payables and accruals for capital expenditure

Other trade payables

Amounts due to joint venture partners

Accrued interest and other expenses

Current income tax liabilities

Provisions and other current liabilities

Total current liabilities

Liabilities directly associated with assets held for sale

TOTAL LIABILITIES

TOTAL EQUITY AND LIABILITIES

(i) Restatement – see note 4
Th e accompanying notes are an integral part of these consolidated ﬁ nancial statements.

Notes

2011
US$ ’000

2010
(As Restated)(i)
US$ ’000

662,527

(378,359)

(737,422)

(103,492)

1,886,615

924,515

2,254,384

681,559

(300,000)

(737,422)

(54,685)

1,134,354

1,620,277

2,344,083

2,445,554

2,389,633

1,816,852

1,796,572

8,016

113,613

199,066

18,250

79,767

195,919

2,137,547

2,090,508

621,426

745,145

333,551

224,089

92,677

263,747

105,217

303,335

555,464

769,378

278,063

202,707

97,919

228,360

79,861

242,457

2,689,187

2,454,209

9,658

4,836,392

7,281,946

60,767

4,605,484

6,995,117

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Annual Report 2011 Millicom International Cellular S.A.

Consolidated Statements of Cash Flows for the years ended
December 31, 2011, 2010 and 2009

Proﬁ t before tax from continuing operations
Adjustments for non-operating items:
Interest expense
Interest and other ﬁ nancial income
Revaluation of previously held interests

Loss (proﬁ t) from associates

Other non operating expenses, net
Adjustments for non-cash items:
Depreciation and amortization
Loss (gain) on disposal and impairment of assets
Share-based compensation

Decrease (increase) in trade receivables, prepayments
and other current assets
Decrease (increase) in inventories
Increase (decrease) in trade and other payables
Changes to working capital
Interest expense paid
Interest received
Taxes paid
Net cash provided by operating activities
Cash ﬂ ows from investing activities:
Acquisition of subsidiaries, JV, associates, net of cash acquired
Proceeds from disposal of subsidiaries, joint ventures and associates
Purchase of intangible assets and license renewals
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Disposal (purchase) of pledged deposits
Disposal (purchase) of time deposits
Cash (used) provided by other investing activities
Net cash used by investing activities
Cash ﬂ ows from ﬁ nancing activities:
Proceeds from issuance of shares
Purchase of treasury shares
Proceeds from issuance of debt and other ﬁ nancing
Repayment of debt and ﬁ nancing
Advance payments to non controlling interests
Payment of dividends
Net cash (used) provided by ﬁ nancing activities
Cash provided by discontinued operations
Exchange gains (losses) on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

Notes

2011
US$ ’000
1,071,193

2010
(As Restated)(i)
US$ ’000
1,838,207

186,523
(14,576)
–

9,591

4,290

738,980
(21,785)
17,264
1,991,480

214,810
(14,748)
(1,060,014)

1,817

61,658

676,986
16,257
30,718
1,765,691

(56,668)

(31,282)

10,11,16,17
10,11
24

(13,143)
84,350
14,539
(141,138)
14,647
(268,071)
1,611,457

(20,369)
1,000
(56,473)
(699,681)
126,832
8,683
2,837
(35,307)
(672,478)

1,319
(498,274)
703,073
(791,940)
(27,542)
(493,909)
(1,107,273)
53,102
(27,016)
(142,208)
1,023,487
881,279

(12,606)
44,773
885
(170,604)
14,639
(238,723)
1,371,888

(5,284)
5,335
(26,238)
(596,900)
36,617
2,462
46,953
9,334
(527,721)

3,276
(300,000)
1,147,585
(1,396,997)
–
(788,526)
(1,334,662)
–
2,820
(487,675)
1,511,162
1,023,487

16
17

27
27

2009
US$ ’000
691,588

173,475
(11,573)
(32,319)

(2,329)

32,181

611,435
7,246
10,175
1,479,879

73,380

8,812
(4,669)
77,523
(148,038)
11,316
(195,851)
1,224,829

(53,086)
–
(46,004)
(726,565)
3,708
(45,652)
(50,061)
(12,275)
(929,935)

2,856
–
627,872
(506,588)
–
–
124,140
416,755
1,178
836,967
674,195
1,511,162

(i) Restatement – see note 4
Th e accompanying notes are an integral part of these consolidated ﬁ nancial statements.

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Consolidated Statements of Changes in Equity for
the years ended December 31, 2011, 2010 and 2009

Balance as of January 1, 2009
Proﬁ t for the year
Currency translation diﬀ erences
Total comprehensive income for the year
Transfer to legal reserve
Dividends(vii)
Shares issued via the exercise of share options
Share-based compensation(iii)
Directors’ shares(iii) (viii)
Issuance of shares–2006, 2007 and 2009 LTIPs(iii)
Acquisition of non-controlling interests in Chad(ix)
Balance as of December 31, 2009
For the year ended December 31, 2010 (x)
Proﬁ t for the year(x)
Cash ﬂ ow hedge

Currency translation diﬀ erences

Total comprehensive income for the year(x)
Transfer to legal reserve
Dividends (vii)
Purchase of treasury shares
Shares issued via the exercise of share options
Share-based compensation(iii)
Directors’ shares(iii) (viii)
Issuance of shares – 2007, 2008, 2009 and 2010 LTIPs(iii)
Change in scope of consolidation (ix)
Dividend to non-controlling shareholders
Put option of non-controlling interest(iv)(x)
Balance as of December 31, 2010 (As Restated)(x)

Number of
shares
’000
108,297
–
–
–
–
–
139
–
7
205
–
108,648

Number of
shares held
by the Group
’000
–
–
–
–
–
–
–
–
–
–
–
–

–
–

–

–
–
–
–
145
–
5
255
–
–
–
109,053

–
–

–

–
–
–
(3,254)
–
–
–
–
–
–
–
(3,254)

Share
Capital (i)
US$ ’000
162,446
–
–
–
–
–
208
–
10
307
–
162,971

–
–

–

–
–
–
–
218
–
8
381
–
–
–
163,578

Share
Premium (i)
US$ ’000
480,098
–
–
–
–
–
3,536
–
358
13,584
–
497,576

–
–

–

–
–
–
–
3,874
–
424
16,107
–
–
–
517,981

Attributable to equity holders

Treasury
shares
US$ ’000
–
–
–
–
–
–
–
–
–
–
–
–

–
–

–

–
–
–
(300,000)
–
–
–
–
–
–
–
(300,000)

Retained
proﬁ ts(ii)
US$ ’000
1,082,548
850,788
–
850,788
(880)
(134,747)
–
–
–
–
(9,523)
1,788,186

1,620,277
–

–

1,620,277
(53)
(653,779)
–
–
–
–
–
–
–
–
2,754,631

Put option
reserve (iv)
US$ ’000
–
–
–
–
–
–
–
–
–
–
–
–

Other
reserves (v)
US$ ’000
(47,174)
–
(13,664)
(13,664)
880
–
(888)
9,807
–
(13,891)
–
(64,930)

–
–

–

–
–
–
–
–
–
–
–
–
–
(737,422)
(737,422)

–
(1,700)

(1,090)

(2,790)
53
–
–
(816)
30,286
–
(16,488)
–
–
–
(54,685)

Total
Parent’s
interests
US$ ’000
1,677,918
850,788
(13,664)
837,124
–
(134,747)
2,856
9,807
368
–
(9,523)
2,383,803

1,620,277
(1,700)

(1,090)

1,617,487
–
(653,779)
(300,000)
3,276
30,286
432
–
–
–
(737,422)
2,344,083

Non-
controlling
interests (vi)
US$ ’000
(25,841)
(46,856)
(865)
(47,721)
–
–
–
–
–
–
(111)
(73,673)

2,691
–

(4,695)

(2,004)
–
–
–
–
–
–
–
130,843
(9,616)
–
45,550

Total
equity
US$ ’000
1,652,077
803,932
(14,529)
789,403
–
(134,747)
2,856
9,807
368
–
(9,634)
2,310,130

1,622,968
(1,700)

(5,785)

1,615,483
–
(653,779)
(300,000)
3,276
30,286
432
–
130,843
(9,616)
(737,422)
2,389,633

Th e accompanying notes are an integral part of these consolidated ﬁ nancial statements.

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Consolidated Statements of Changes in Equity
the years ended December 31, 2011, 2010 and 2009

Balance as of January 1, 2011
Proﬁ t for the year
Cash ﬂ ow hedge reserve movement
Currency translation diﬀ erences
Total comprehensive income for the year
Transfer to legal reserve
Dividends (vii)
Purchase of treasury shares
Cancellation of treasury shares
Shares issued via the exercise of stock options
Share-based compensation(iii)
Issuance of shares under the LTIPs(iii)
Sale of Amnet Honduras to non-controlling interests
Disposal of Laos
Dividend to non-controlling shareholders
Balance as of December 31, 2011

Number of
shares
’000
109,053
–
–
–
–
–
–
–
(4,200)
40
–
46
–
–
–
104,939

Number of
shares held
by the Group
’000
(3,254)
–
–
–
–
–
–
(4,646)
4,200
6
–
187
–
–
–
(3,507)

Share
Capital (i)
US$ ’000
163,578
–
–
–
–
–
–
–
(6,300)
59
–
70
–
–
–
157,407

Share
Premium (i)
US$ ’000
517,981
–
–
–
–
–
–
–
(20,070)
1,184
–
6,025
–
–
–
505,120

Attributable to equity holders

Treasury
shares
US$ ’000
(300,000)
–
–
–
–
–
–
(498,274)
401,415
592
–
17,908
–
–
–
(378,359)

Retained
proﬁ ts(ii)
US$ ’000
2,754,631
924,515
–
–
924,515
(61)
(493,909)
–
(375,045)
(435)
–
(773)
2,207
–
–
2,811,130

Put option
reserve (iv)
US$ ’000
(737,422)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(737,422)

Other
reserves (v)
US$ ’000
(54,685)
–
(3,015)
(39,806)
(42,821)
61
–
–
–
(81)
17,264
(23,230)
–
–
–
(103,492)

Total
Parent’s
interests
US$ ’000
2,344,083
924,515
(3,015)
(39,806)
881,694
–

(493,909)
(498,274)

–
1,319
17,264
–
2,207
–
–
2,254,384

Non-
controlling
interests (vi)
US$ ’000
45,550
204,490
(247)
(6,892)
197,351
–
–
–
–
–
–
–
11,974
(6,493)
(57,212)
191,170

Total
equity
US$ ’000
2,389,633
1,129,005
(3,262)
(46,698)
1,079,045
–

(493,909)
(498,274)

–
1,319
17,264
–
14,181
(6,493)
(57,212)
2,445,554

Retained Proﬁ ts – includes proﬁ t for the year attributable to equity holders, of which $94 million (2010: $60 million; 2009: $46 million) are undistributable to equity holders.

(i) Share Capital and Share Premium – see note 23.
(ii)
(iii) Share-based compensation – see note 24.
(i) Put option reserve – see note 25.
(v) Other reserves – see note 26.
(vi) Non-controlling interests – as at January 1, and December 31, 2009, non controlling interest was negative as the non-controlling shareholders of Colombia Móvil S.A.

ESP have a binding obligation to cover their share of the losses of this entity.

(vii) Dividends – see note 29.
(viii) Directors shares – see note 30.
(ix) Change of scope of consolidation – see note 5.
(x) Restatement – see note 4.

Th e accompanying notes are an integral part of these consolidated ﬁ nancial statements.

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Annual Report 2011 Millicom International Cellular S.A.

Notes to the Consolidated Financial Statements
as of December 31, 2011, 2010 and 2009

1. Corporate Information
Millicom International Cellular S.A. (the “Company”), a Luxembourg Société Anonyme, and its subsidiaries, joint ventures and
associates (the “Group” or “Millicom”) is a global group providing communications, information, entertainment, solutions and
ﬁ nancial services in emerging markets. We operate various combinations of mobile and ﬁ xed telephony, cable and broadband
businesses in 15 countries in Central America, South America and Africa. Th e Group was formed in December 1990 when
Investment AB Kinnevik (“Kinnevik”), formerly named Industriförvaltnings AB Kinnevik, a company established in Sweden, and
Millicom Incorporated (“Millicom Inc.”), a corporation established in the United States of America, contributed their
respective interests in international mobile telephony joint ventures to form the Group.

Millicom operates its mobile businesses in El Salvador, Guatemala and Honduras in Central America; in Bolivia, Colombia and
Paraguay in South America; in Chad, the Democratic Republic of Congo, Ghana, Mauritius, Rwanda, Senegal and Tanzania in
Africa. Millicom’s operations in Laos were sold in March 2011, in Sierra Leone and Cambodia in November 2009; and in Sri
Lanka in October 2009 (see notes 6, 7).

In 2008, Millicom acquired 100% of Amnet Telecommunications Holding Limited, a provider of broadband and cable television
services in Costa Rica, Honduras and El Salvador, of ﬁ xed telephony in El Salvador and Honduras, and of corporate data
services in the above countries as well as Guatemala and Nicaragua. In addition, in December 2008, Millicom was successful in
the tender for the third national mobile license in Rwanda. Services in Rwanda were launched in early December 2009.

Th e Company’s shares are traded on the Stockholm stock exchange under the symbol MIC and over the counter in the US
under the symbol MICC. Th e Company has its registered oﬃ ce at 15, Rue Léon Laval, L-3372, Leudelange, Grand Duchy of
Luxembourg and is registered with the Luxembourg Register of Commerce under the number RCS B 40 630.

Th e Board of Directors (“Board”) approved these consolidated ﬁ nancial statements on March 1, 2012. Th e approval of the
consolidated ﬁ nancial statements will be submitted for ratiﬁ cation by the shareholders at the Annual General Meeting on May
29, 2012.

2. Summary of Consolidation and Accounting Policies
2.1 Basis of preparation
Th e consolidated ﬁ nancial statements of the Group are presented in US dollars and all values are rounded to the nearest
thousand (US$ ’000) except when otherwise indicated. Th e consolidated ﬁ nancial statements have been prepared on a
historical cost basis except for certain ﬁ nancial assets and liabilities that have been measured at fair value.

In accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the
application of international accounting standards, the consolidated ﬁ nancial statements for the year ended December 31, 2011
have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union
(“IFRS”).

As of December 31, 2011, International Financial Reporting Standards as adopted by the European Union are similar to those
published by the International Accounting Standards Board (“IASB”), except for IAS 39–Financial Instruments that has been
partially adopted by the European Union and for new standards and interpretations not yet endorsed but eﬀ ective in future
periods. Since the provisions that have not been adopted by the European Union are not applicable to the Group, the
consolidated ﬁ nancial statements comply with both International Financial Reporting Standards as issued by the IASB and as
adopted by the European Union.

Th e preparation of ﬁ nancial statements in conformity with IFRS requires management to exercise its judgment in the process
of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions
that aﬀ ect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
ﬁ nancial statements and the reported amounts of revenues and expenses during the reporting period. Although these
estimates are based on management’s best knowledge of current events and actions, actual results may ultimately diﬀ er from
these estimates. Areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are
signiﬁ cant to the consolidated ﬁ nancial statements are disclosed in note 3.

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Annual Report 2011 Millicom International Cellular S.A.

2. Summary of Consolidation and Accounting Policies (Continued)

2.2 Consolidation
Th e consolidated ﬁ nancial statements of the Group are comprised of the ﬁ nancial statements of the Company and its
subsidiaries and joint ventures as at December 31 each year. Th e ﬁ nancial statements of the subsidiaries and joint ventures
are prepared for the same reporting year as the Company, using consistent accounting policies.

All intra-group balances, transactions, income and expenses, and proﬁ ts and losses resulting from intra-group transactions
are eliminated.

Th e acquisition method of accounting is used to account for acquisitions where there is a change in control. Th e cost of an
acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the
date of exchange. Identiﬁ able assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Th e
excess of the cost of acquisition over the fair value of the Group’s share of the identiﬁ able net assets acquired is recorded as
goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the diﬀ erence is
recognized directly in the income statement (see accounting policy for Goodwill). All acquisition related costs are expensed.

Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the ﬁ nancial and
operating policies generally accompanying a shareholding of more than one half of the voting rights. Th e existence and eﬀ ect
of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group
controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. Th ey are
de-consolidated from the date that control ceases.

Non-controlling interests
Th e Group treats transactions with non-controlling interests as transactions with equity owners of the Group. Gains or losses
on disposals to non-controlling interests are recorded in equity. For purchases from non-controlling interests, the diﬀ erence
between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is also
recorded in equity. Non-controlling interest is measured at the proportionate interest in the net assets of the subsidiary.

Joint ventures
Millicom determines the existence of joint control by reference to joint venture agreements, articles of association, structures
and voting protocols of the Boards of Directors of those ventures.

Entities that are jointly controlled are consolidated in the ﬁ nancial statements using the proportionate method which includes
the Group’s share of the assets, liabilities, income and expenses of the joint ventures.

Th e Group recognizes the portion of gains or losses on the sale of assets to joint ventures that are attributable to other parties
in the joint venture. Th e Group does not recognize its share of proﬁ ts or losses from purchase of assets by the Group from a
joint venture until it resells the assets to a third party. However, if a loss on a transaction provides evidence of a reduction in
the net realizable value of current assets or an impairment loss, the loss is recognized immediately.

Associates
Associates are all entities over which the Group has signiﬁ cant inﬂ uence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights.

Investments in associates are accounted for using the equity method of accounting and are initially recognized at cost. Th e
Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identiﬁ ed on acquisition.

Th e Group’s share of post-acquisition proﬁ ts or losses of associates is recognized in the consolidated income statement, and its
share of post-acquisition movements in reserves is recognized in reserves. Cumulative post-acquisition movements are
adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its
interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless the
Group has incurred obligations or made payments on behalf of the associates.

Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in
the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies
adopted by the Group. Dilution gains and losses arising in investments in associates are recognized in the income statement.

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Annual Report 2011 Millicom International Cellular S.A.

2. Summary of Consolidation and Accounting Policies (Continued)

2.3 Foreign currency translation
Functional and presentation currencies
Items included in the ﬁ nancial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (“the functional currency”). Th e functional currency of each subsidiary,
joint venture and associate reﬂ ects the economic substance of the underlying events and circumstances of these entities. Th e
Company is located in Luxembourg and its subsidiaries, joint ventures and associates operate in diﬀ erent currencies. Th e
Group’s consolidated ﬁ nancial statements are presented in U.S. dollars (the “presentation currency”). Th e functional currency
of the Company is the U.S. dollar because of the signiﬁ cant inﬂ uence of the U.S. dollar on its operations.

Transactions and balances
Transactions denominated in a currency other than the functional currency are translated into the functional currency using
exchange rates prevailing on transaction dates. Foreign exchange gains and losses resulting from the settlement of such
transactions, and on translation of monetary assets and liabilities denominated in currencies other than the functional
currency at year-end exchange rates, are recognized in the consolidated income statement, except when deferred in equity as
qualifying cash ﬂ ow, or net investment hedges.

Translation diﬀ erences on non-monetary ﬁ nancial assets and liabilities such as equities held at fair value through proﬁ t or loss
are recognized in the consolidated income statement as part of fair value gain or loss. Translation diﬀ erences on non-monetary
ﬁ nancial assets such as investments classiﬁ ed as available for sale are included in fair value reserve in equity.

Translation into presentation currency
Th e results and ﬁ nancial position of all Group entities (none of which operate in an economy with a hyperinﬂ ationary
functional currency) with functional currency other than the US dollar presentation currency are translated into the
presentation currency as follows:

Assets and liabilities are translated at the closing rate at the date of the statement of ﬁ nancial position;

ii)

Income and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of
the cumulative eﬀ ect of the rates prevailing on the transaction dates, in which case income and expenses are translated
at the dates of the transactions); and

iii) All resulting exchange diﬀ erences are recognized as a separate component of equity (“Currency translation reserve”),

in the caption “Other reserves”.

On consolidation, exchange diﬀ erences arising from the translation of net investments in foreign operations, and of borrowing
and other currency instruments designated as hedges of such investments, are taken to equity. When a foreign operation is
sold, exchange diﬀ erences that were recorded in equity are recognized in the consolidated income statement as part of gain
or loss on sale.

Goodwill and fair value adjustments arising on acquisition of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.

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Annual Report 2011 Millicom International Cellular S.A.

2. Summary of Consolidation and Accounting Policies (Continued)

Th e following table presents relevant currency translation rates to the US dollar as of December 31, 2011 and 2010 and average
rates for the year ended December 31, 2011.

Country
Bolivia
Chad and Senegal
Colombia
Costa Rica
Ghana
Guatemala
Honduras
Luxembourg
Mauritius
Nicaragua
Paraguay
Rwanda
Sweden
Tanzania
UAE (Dubai)

Currency
Boliviano
CFA Franc
Peso
Costa Rican Colon
Cedi
Quetzal
Lempira
Euro
Rupee
Gold Cordoba
Guarani
Rwandese Franc
Krona
Shilling
Dirham

2011
Average rate
6.95
471.65
1,858.95
507.32
1.54
7.81
18.91
0.72
28.81
22.42
4,226.12
600.29
6.45
1,576.83
3.67

2011
Year-end rate
6.91
506.98
1,942.70
511.84
1.64
7.81
19.12
0.77
29.33
22.97
4,478.00
604.14
6.88
1,578.15
3.67

2010
Year-end rate
6.99
489.70
1,918.75
512.97
1.49
8.02
18.90
0.75
30.45
21.88
4,645.00
594.00
6.72
1,459.50
3.67

Th e eﬀ ect of exchange rate changes on cash and cash equivalents held or due in a foreign currency is reported in the cash ﬂ ow
statement in order to reconcile cash and cash equivalents at the beginning and end of the year. Millicom’s functional currency
in both El Salvador and DRC is the US$.

2.4 Segment reporting
Operating segments are reported in a manner consistent with internal reporting to the Chief Operating Decision-Maker
(“CODM”). Th e CODM, who is responsible for allocating resources and assessing performance of the operating segments, has
been identiﬁ ed as the executive committee that makes strategic decisions.

2.5 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. Th e carrying amount of
replaced parts is derecognized. Repairs and maintenance are charged to the income statement in the ﬁ nancial period in which
they are incurred.

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 are:

Buildings – 40 years or lease period, if lower
Networks (including civil works) – 5 to 15 years
Other – 2 to 7 years

Th e 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. Th e assets’ residual value and useful life is reviewed, and adjusted if
appropriate, at each statement of ﬁ nancial position date. An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

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Annual Report 2011 Millicom International Cellular S.A.

2. Summary of Consolidation and Accounting Policies (Continued)

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. Once the assets become operational, the related costs are transferred from
construction in progress to the appropriate asset category and start to be depreciated.

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 beneﬁ ts associated with the item will ﬂ ow to the Group and the cost of the item can be
measured reliably. All repairs and maintenance are charged to the income statement in the ﬁ nancial period in which they are
incurred.

A liability for the present value of the cost to remove an asset on both owned and leased sites is recognized when a present
obligation for the removal is established. Th e corresponding cost of the obligation is included in the cost of the asset and
depreciated over the useful life of the asset.

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 result in future economic beneﬁ ts for the Group and the costs can
be measured reliably.

2.6 Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Th e cost of intangible assets acquired in a
business combination is measured at fair value at the date of acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortization and any accumulated impairment losses. Internally generated intangible
assets, excluding capitalized development costs, are not capitalized and expenditure is charged to the income statement in the
year in which expenditure is incurred.

Intangible assets with ﬁ nite 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. Th e amortization
period and the amortization method for intangible assets with ﬁ nite useful lives are reviewed at least at each ﬁ nancial year-
end. Changes in the expected useful life or the expected pattern of consumption of future economic beneﬁ ts embodied in the
assets are accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting
estimates. Th e amortization expense on intangible assets with ﬁ nite lives is recognized in the consolidated income statement
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 identiﬁ able assets less
liabilities and contingent liabilities of the acquired subsidiary, joint venture or associate at the date of the transaction. If the fair
value of identiﬁ able assets, liabilities or contingent liabilities or the cost of the acquisition can only be determined provisionally,
then Millicom initially accounts for goodwill using provisional values. Within twelve months of the acquisition date, Millicom
then recognizes any adjustments to the provisional values once the fair value of the identiﬁ able assets, liabilities and
contingent liabilities and the cost of the acquisition have been ﬁ nally 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 and
joint ventures is included in “intangible assets, net”. Goodwill on acquisition of associates is included in “investments in
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.

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying
value may be impaired. Impairment losses on goodwill are not reversed.

For the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date, allocated to each
of the Group’s cash generating units or groups of cash-generating units that are expected to beneﬁ t 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:

(cid:88) Represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and

(cid:88) Is not larger than an operating segment.

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Annual Report 2011 Millicom International Cellular S.A.

2. Summary of Consolidation and Accounting Policies (Continued)

Impairment is determined by assessing the recoverable amount of the cash-generating unit (or group of cash-generating
units), to which the goodwill relates. Where the recoverable amount of the cash-generating unit (or group of cash-generating
units) is less than the carrying amount, an impairment loss is recognized. 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 shown at either historical cost or, if acquired in a business combination, at fair value at the date of acquisition.
Licenses have a ﬁ nite 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.

Th e terms of licenses, which have been awarded for various periods, are subject to periodic review for, amongst 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 not usually
included.

Trademarks and customer bases
Trademarks and customer bases are recognized as intangible assets only when acquired or gained in a business combination.
Th eir cost represents fair value at the date of acquisition. Trademarks and customer bases have ﬁ nite useful lives and are
carried at cost less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost of
the trademarks and customer bases over their estimated useful lives. Th e estimated useful lives for trademarks and customer
bases are based on speciﬁ c characteristics of the market in which they exist. Trademarks and customer bases are included in
“Intangible assets, net”.

Estimated useful lives are:

Trademarks – 1 to 10 years
Customer bases – 4 to 9 years

2.7 Impairment of non-ﬁ nancial assets
At each reporting date the Group assesses whether there is an indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable
amount. Th e Group determines the recoverable amount 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 inﬂ ows 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 ﬂ ows discounted to their present value using a discount rate
that reﬂ ects current market conditions for the time value of money and risks speciﬁ c to the asset.

In addition to evaluation of possible impairment to the assets carrying value, the foregoing analysis also evaluates the
appropriateness of the expected useful lives of the assets. Impairment losses of continuing operations are recognized in
the consolidated income statement in those 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. Th e 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 proﬁ t 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.

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Annual Report 2011 Millicom International Cellular S.A.

2. Summary of Consolidation and Accounting Policies (Continued)

2.8 Loans and receivables
Loans and receivables are non-derivative ﬁ nancial assets with ﬁ xed or determinable payments that are not quoted in an active
market. Th ey are included in current assets, except for maturities greater than 12 months after the end of the reporting period.
Th ese are classiﬁ ed within non-current assets. Loans and receivables are carried at amortized cost using the eﬀ ective interest
method. Gains and losses are recognized in the income statement when the loans and receivables are derecognized or
impaired, as well as through the amortization process.

2.9 Financial instruments at fair value through proﬁ t or loss
Financial instruments at fair value through proﬁ t or loss are ﬁ nancial instruments held for trading. Th eir fair value is
determined by reference to quoted market prices on the statement of ﬁ nancial position date. Where there is no active market,
fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions,
reference to the current market value of a substantially similar instrument, discounted cash ﬂ ow analysis and option pricing
models. A ﬁ nancial instrument is classiﬁ ed in this category if acquired principally for the purpose of selling in the short-term.
Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are classiﬁ ed
as current assets.

2.10 Financial instruments that contain obligations to purchase own equity instruments
Contracts that contain obligations for the Company to purchase its own equity instruments for cash or other ﬁ nancial assets
are initially recorded as ﬁ nancial liabilities based on the present value of the redemption amounts with a corresponding reserve
in equity. Subsequently, the carrying value of the liability is remeasured at the present value of the redemption amount with
changes in carrying value recorded in other non-operating (expenses) income, net. If the contracts expire without delivery, the
carrying amounts of the ﬁ nancial liabilities are reclassiﬁ ed to equity.

2.11 Non-current assets (or disposal groups) held for sale and related liabilities
Non-current assets (or disposal groups) are classiﬁ ed 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 a sale transaction rather than
through continuing use). Liabilities of disposal groups are classiﬁ ed as “Liabilities directly associated with assets held for sale”.

2.12 Inventories
Inventories (which mainly consist of mobile telephone handsets and related accessories) are stated at the lower of cost and net
realizable value. Cost is determined using the ﬁ rst-in, ﬁ rst-out (FIFO) method. Net realizable value is the estimated selling price
in the ordinary course of business, less applicable variable selling expenses.

2.13 Trade receivables
Trade receivables are initially recognized at fair value and subsequently measured at amortized cost using the eﬀ ective interest
method, less provision for impairment. A provision for impairment is recorded when there is objective evidence that the
Group will not be able to collect amounts due according to the original terms of receivables. Signiﬁ cant ﬁ nancial diﬃ culties of
the debtor, probability that the debtor will enter bankruptcy or ﬁ nancial reorganization, and default or delinquency in
payments are indicators of impairment. Th e amount of the provision is the diﬀ erence between the asset’s carrying amount and
the present value of estimated future cash ﬂ ows, discounted at the eﬀ ective interest rate. Th e provision is recognized in the
consolidated income statement within “Cost of sales”.

2.14 Deposits
Time deposits
Cash deposits with banks with maturities of more than three months that generally earn interest at market rates are classiﬁ ed
as time deposits.

Pledged deposits
Pledged deposits represent contracted cash deposits with banks that are held as security for debts at corporate or operational
entity level. Millicom is unable to access these funds until either the relevant debt is repaid or alternative security is arranged
with the lender.

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Annual Report 2011 Millicom International Cellular S.A.

2. Summary of Consolidation and Accounting Policies (Continued)

2.15 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of three months or less.

2.16 Impairment of ﬁ nancial assets
Th e Group assesses at each statement of ﬁ nancial position date whether there is objective evidence that a ﬁ nancial asset or
group of ﬁ nancial assets is impaired. Impairment losses are recognized in the consolidated income statement.

2.17 Share capital
Common shares are classiﬁ ed as equity. Incremental costs directly attributable to the issue of new shares are shown in equity
as a deduction from the proceeds.

Where any Group company purchases the Company’s share capital, the consideration paid including any directly attributable
incremental costs is shown under “Treasury shares” and deducted from equity attributable to the Company’s equity holder
until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration
received, net of any directly attributable incremental costs and the related income tax eﬀ ects, is included in equity attributable
to the Company’s equity holders.

2.18 Borrowings
Borrowings are initially recognized at fair value, net of directly attributable transaction costs. After initial recognition
borrowings are subsequently measured at amortized cost using the eﬀ ective interest rate method. Amortized cost is calculated
by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the eﬀ ective
interest rate. Any diﬀ erence between the initial amount and the maturity amount is recognized in the consolidated income
statement over the period of the borrowing.

Borrowings are classiﬁ ed as current liabilities unless the Group has an unconditional right to defer settlement of the liability for
at least 12 months after the statement of ﬁ nancial position date.

2.19 Leases
Th e determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement and
requires an assessment of whether the fulﬁ llment of the arrangement is dependent on the use of a speciﬁ c asset or assets and
the arrangement conveys a right to use the asset.

Finance leases, which transfer to the Group substantially all the risks and beneﬁ ts incidental to ownership of the leased item,
are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the
minimum lease payments. Lease payments are apportioned between the ﬁ nance charges and reduction of the lease liability so
as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against
income. Where a ﬁ nance lease results from a sale and leaseback transaction, any excess of sales proceeds over the carrying
amount of the assets is deferred and amortized over the lease term.

Capitalized leased assets are depreciated over the shorter of the estimated useful lives of the assets, or the lease term if there is
no reasonable certainty that the Group will obtain ownership by the end of the lease term.

Operating lease payments are recognized as expenses in the consolidated income statement on a straight-line basis over the
lease term.

2.20 Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, if it is
probable that an outﬂ ow of resources embodying economic beneﬁ ts will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed,
for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the
reimbursement is virtually certain. Th e expense relating to any provision is presented in the income statement net of any
reimbursement. If the eﬀ ect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reﬂ ects, where appropriate, risks speciﬁ c to the liability. Where discounting is used, increases in the provision due to the
passage of time are recognized as interest expenses.

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Annual Report 2011 Millicom International Cellular S.A.

2. Summary of Consolidation and Accounting Policies (Continued)

2.21 Trade payables
Trade payables are initially recognized at fair value and subsequently measured at amortized cost using the eﬀ ective interest
method where the eﬀ ect of the passage of time is material.

2.22 Revenue recognition
Revenue comprises the fair value of consideration received or receivable for the sale of goods and services, net of value added
tax, rebates and discounts and after eliminating intra-group sales.

Revenue is recognized to the extent that it is probable that the economic beneﬁ ts will ﬂ ow to the Group and the revenue
can be reliably measured. Th e following speciﬁ c recognition criteria must also be met before revenue is recognized.

Th ese recurring revenues consist of monthly subscription fees, airtime usage fees, interconnection fees, roaming fees and
fees from other telecommunications services such as data services, short message services and other value added services.
Recurring revenues are recognized on an accrual basis, i.e. as the related services are rendered. Unbilled revenues for airtime
usage and subscription fees resulting from services provided from the billing cycle date to the end of each month are estimated
and recorded.

Subscription products and services are deferred and amortized over the estimated life of the customer relationship.
Related costs are also deferred, to the extent of the revenues deferred, and amortized over the estimated life of the customer
relationship. Th e estimated life of the customer relationship is calculated based on historical disconnection percentage for the
same type of customer.

Where customers purchase a speciﬁ ed amount of airtime in advance, revenue is recognized as credit is used. Unutilized airtime
is carried in the statement of ﬁ nancial position as deferred revenue within “other current liabilities”.

Revenues from value added content services such as video messaging, ringtones, games etc., are recognised net of payments to
the providers of these services if the providers are responsible for content and determining the price paid by the customer. For
such services the Group is considered to be acting in substance as an agent. Where the Group is responsible for the content
and determines the price paid by the customer then the revenue is recognised gross.

Revenues from the sale of handsets and accessories on a stand-alone basis (without multiple deliverables) are recognized when
the signiﬁ cant risks and rewards of ownership of handsets and accessories have been passed to the buyer.

Revenue arrangements with multiple deliverables (“Bundled Oﬀ ers” such as equipment and services sold together) are divided
into separate units of accounting if the deliverables in the arrangement meet certain criteria. Th e arrangement consideration is
then allocated among the separate units of accounting based on their relative fair values or on the residual method. Revenue is
then recognized separately for each unit of accounting.

2.23 Cost of sales
Th e primary cost of sales incurred by the Group in relation to the provision of telecommunication services relate to
interconnection costs, roaming costs, rental of leased lines, costs of handsets and other accessories sold, and royalties. Cost of
sales is recorded on an accrual basis.

Cost of sales also includes depreciation and any impairment of network equipment and trade receivables.

2.24 Customer acquisition costs
Speciﬁ c customer acquisition costs, including dealer commissions and handset subsidies, are charged to sales and marketing
when the customer is activated.

2.25 Employee beneﬁ ts
Pension obligations
Pension obligations can result from either a deﬁ ned contribution plan or a deﬁ ned beneﬁ t plan.

A deﬁ ned contribution plan is a pension plan under which the Group pays ﬁ xed contributions into a separate entity No
further payment obligations exist once the contributions have been paid. Th e contributions are recognized as employee
beneﬁ t expenses when they are due. Prepaid contributions are recognized as assets to the extent that a cash refund or a
reduction in future payments is available.

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2. Summary of Consolidation and Accounting Policies (Continued)

A deﬁ ned beneﬁ t plan is a pension plan that is not a deﬁ ned contribution plan. Typically, deﬁ ned beneﬁ t pension plans deﬁ ne
an amount of pension beneﬁ t that an employee will receive on retirement, usually dependent on one or more factors such as
age, years of service and compensation. Th e liability recognized in the statement of ﬁ nancial position in respect of the deﬁ ned
beneﬁ t pension plan is the present value of the deﬁ ned beneﬁ t obligation at the statement of ﬁ nancial position date less the
fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. Th e
deﬁ ned beneﬁ t obligation is calculated annually by independent actuaries. Th e present value of the deﬁ ned beneﬁ t obligation
is determined by discounting the estimated future cash outﬂ ows using an appropriate discount rate based on maturities of the
related pension liability. Th e Group does not have any deﬁ ned beneﬁ t pension plans.

Share-based compensation
Share awards are granted to management and key employees.

Th e cost of equity-settled transactions is recognized, together with a corresponding increase in equity, over the period in
which the performance and/or service conditions are fulﬁ lled, ending on the date on which the relevant employee becomes
fully entitled to the award (the vesting date). Th e cumulative expense recognized for equity-settled transactions at each
reporting date until the vesting date reﬂ ects the extent to which the vesting period has expired and the Group’s best estimate
of the number of equity instruments that will ultimately vest.

No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market
condition, which are treated as vested irrespective of whether or not the market conditions are satisﬁ ed, provided that all
other performance conditions are satisﬁ ed. Where the terms of an equity-settled award are modiﬁ ed, as a minimum an
expense is recognized as if the terms had not been modiﬁ ed. In addition, an expense is recognized for any modiﬁ cation that
increases the total fair value of the share-based payment arrangement, or is otherwise beneﬁ cial to the employee as measured
at the date of modiﬁ cation.

2.26 Taxation current tax
Current tax assets and liabilities for current and prior periods are measured at the amount expected to be recovered from or
paid to the taxation authorities. Th e tax rate and tax laws used to compute the amount are those enacted or substantively
enacted by the statement of ﬁ nancial position date.

Deferred tax
Deferred income tax is provided using the liability method and calculated from temporary diﬀ erences at the statement of
ﬁ nancial position date between the tax base of assets and liabilities and their carrying amount for ﬁ nancial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary diﬀ erences, except where the deferred tax liability arises from
the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, aﬀ ects neither accounting, nor taxable, proﬁ t or loss.

Deferred income tax assets are recognized for all deductible temporary diﬀ erences and carry-forward of unused tax credits
and unused tax losses, to the extent that it is probable that taxable proﬁ t will be available against which the deductible
temporary diﬀ erence and the carry-forward of unused tax credits and unused tax losses can be utilized, except where the
deferred tax assets relate to deductible temporary diﬀ erences from initial recognition of an asset or liability in a transaction
that is not a business combination, and, at the time of the transaction, aﬀ ects neither accounting, nor taxable, proﬁ t or loss.

Th e carrying amount of deferred income tax assets is reviewed at each statement of ﬁ nancial position date and reduced to
the extent that it is no longer probable that suﬃ cient taxable proﬁ t will be available to utilize the deferred income tax asset.
Unrecognized deferred income tax assets are reassessed at each statement of ﬁ nancial position date and are recognized to
the extent it is probable that future taxable proﬁ t will enable the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rate expected to apply in the year when the assets are
realized or liabilities settled, based on tax rates and tax laws that have been enacted or substantively enacted at the statement
of ﬁ nancial position date. Income tax relating to items recognized directly in equity is recognized in equity and not in the
consolidated income statement. Deferred tax assets and deferred tax liabilities are oﬀ set where legally enforceable set oﬀ
rights exist and the deferred taxes relate to the same taxable entity and the same taxation authority.

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2. Summary of Consolidation and Accounting Policies (Continued)

2.27 Discontinued operations
Revenues and expenses associated with discontinued operations are presented in a separate line in the consolidated income
statement. Comparative ﬁ gures in the consolidated income statement representing the discontinued operations are
reclassiﬁ ed to the separate line. Discontinued operations are those with identiﬁ able operations and cash ﬂ ows (for both
operating and management purposes) and represent a major line of business or geographic unit which has been disposed
of or is available for sale.

2.28 Derivative ﬁ nancial instruments and hedging activities
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently
re-measured at their fair value. Th e method of recognizing the resulting gain or loss depends on whether the derivative
is designated as a hedging instrument, and if so, the nature of the item being hedged.
Th e Group designates certain derivatives as either:
(a) hedges of the fair value of recognized assets or liabilities or a ﬁ rm commitment (fair value hedge);
(b) hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction

(cash ﬂ ow hedge); or

For transactions designated and qualifying for hedge accounting, at the inception of the transaction, the Group documents
the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for
undertaking various hedging transactions. Th e Group also documents its assessment, both at hedge inception and on an
ongoing basis, of whether the derivatives that are used in hedging transactions are highly eﬀ ective in oﬀ setting changes in
fair values or cash ﬂ ows of hedged items.

Th e fair values of derivative instruments used for hedging purposes are disclosed in note 35. Movements in the hedging reserve
are recognized as other comprehensive income. Th e full fair value of a hedging derivative is classiﬁ ed as a non-current asset or
liability when the period to maturity of the hedged item is more than 12 months and as a current asset or liability when the
remaining maturity of the hedged item is less than 12 months. Trading derivatives are classiﬁ ed as a current asset or liability
when the remaining period to maturity of the hedged item is less than 12 months.

Th e Group does not have either fair value or net investment hedges.

Th e eﬀ ective portion of changes in the fair value of derivatives that are designated and qualify as cash ﬂ ow hedges is
recognized in other comprehensive income. Th e gain or loss relating to any ineﬀ ective portion is recognized immediately
in the income statement within ‘other non operating (expenses) income, net’.

Amounts accumulated in equity are reclassiﬁ ed to the income statement in the periods when the hedged item aﬀ ects proﬁ t
or loss.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction
is ultimately recognized in the income statement.

When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity
is immediately transferred to the income statement within ‘other non operating (expenses) income, net’.

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2. Summary of Consolidation and Accounting Policies (Continued)

2.29 Changes in accounting policies
Th e consolidated ﬁ nancial statements as of December 31, 2011 are prepared in accordance with consolidation and accounting
policies consistent with those of the previous ﬁ nancial years.

Th ere are no IFRS or IFRIC interpretations that are eﬀ ective for the ﬁ rst time for the ﬁ nancial year beginning January 1, 2011
that have a material impact on the Group.

Th e following standards, amendments and interpretations issued are not eﬀ ective for the ﬁ nancial year beginning January 1,
2011 and have not been early adopted.

(cid:88) IFRS 9, ‘Financial Instruments’, addresses the classiﬁ cation, measurement and recognition of ﬁ nancial assets and ﬁ nancial liabilities. IFRS 9 was
issued in November 2009 and October 2010. It replaces the parts of IAS 39 that relate to the classiﬁ cation and measurement of ﬁ nancial
instruments. IFRS 9 requires ﬁ nancial assets to be classiﬁ ed into two measurement categories: those measured at fair value, and those
measured at amortized cost. Th e determination is made at initial recognition. Th e classiﬁ cation depends on the entity’s business model for
managing its ﬁ nancial instruments and the contractual cash ﬂ ow characteristics of the instrument. For ﬁ nancial liabilities, the standard retains
most of the IAS 39 requirements. Th e main change is that, in cases where the fair value option is taken for ﬁ nancial liabilities, the part of a fair
value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this
creates an accounting mismatch. Th e Group is yet to assess IFRS 9’s full impact and intends to adopt IFRS 9 no later than the accounting
period beginning on or after January 1, 2015.

(cid:88) IFRS 10, ‘Consolidated Financial Statements’ build on existing principles by identifying the concept of control as the determining factor in

whether an entity should be included within the ﬁ nancial statements of the parent company. Th e standard provides additional guidance to
assist in the determination of control where this is diﬃ cult to assess. Th e Group is yet to assess IFRS 10’s full impact and intends to adopt IFRS
10 no later than the accounting period beginning on or after January 1, 2013.

(cid:88) IFRS 11, ‘Joint Arrangements’, sets out the core principle that a party to a joint arrangement determines the type of joint arrangement in

which it is involved by assessing its rights and obligations and accounts for those rights and obligations in accordance with that type of joint
arrangement. Th e standard removes the option of accounting for joint ventures using proportionate consolidation, and requires equity
accounting to be applied to joint ventures. Th e standard is eﬀ ective for annual periods beginning on or after January 1, 2013.

(cid:88) IFRS 12, ‘Disclosure of interests in other entities’ includes the disclosure requirements for all forms of interests in other entities, including joint
arrangements, associates, special purpose vehicles and other oﬀ balance sheet vehicles. Th e Group is yet to assess IFRS 12’s full impact and
intends to adopt IFRS 12 no later than the accounting period beginning on or after January 1, 2013.

(cid:88) IFRS 13. ‘Fair Value Measurement’ aims to improve consistency and reduce complexity by providing a precise deﬁ nition of fair value and a

single source of fair value measurement and disclosure requirements for use across IFRS’s. Th e requirements do not extend the use of fair value
accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS.
Th e Group is yet to assess IFRS 13’s full impact and intends to adopt IFRS 13 no later than the accounting period beginning on or after January
1, 2013.

(cid:88) IAS 1, Presentation of Financial Statements – amendment to revise the way other comprehensive income is presented, which retains the ‘one
or two statement’ approach at the option of the entity and only revises the way other comprehensive income is presented: requiring separate
subtotals for those elements which may be ‘recycled’ (e.g. cash-ﬂ ow hedging, foreign currency translation), and those elements that will not
(e.g. fair value through OCI items under IFRS 9). Th e amendment is eﬀ ective for annual periods beginning on or after January 1, 2012.

(cid:88) IAS 27, Consolidated and Separate Financial Statements, reissued as IAS 27 Separate Financial Statements, as a result of issuance of IFRS 10,

Consolidated Financial Statements. Th e standard is eﬀ ective for annual periods beginning on or after January 1, 2013.

(cid:88) IAS 28, Investments in Associates and Joint Ventures, reissued as IAS 28 Investments in Associates, as a result of issuance of IFRS 11, Joint

Arrangements. Th e standard is eﬀ ective for annual periods beginning on or after January 1, 2013.

Th ere are no other IFRS or IFRIC interpretations that are not yet eﬀ ective that would be expected to have a material impact
on the Group.

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3. Signiﬁ cant Accounting Judgments and Estimates
Contingent liabilities
Contingent liabilities are potential liabilities that arise from past events whose existence will be conﬁ rmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of Millicom. Provisions
for liabilities are recorded when a loss is considered probable and can be reasonably estimated. Th e determination of whether
or not a provision should be recorded for any potential liabilities is based on management’s judgment.

Estimates
Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. Because of inherent uncertainties in this evaluation
process, actual results may be diﬀ erent from originally estimated amounts. In addition, signiﬁ cant estimates are involved in the
determination of impairments, provisions related to taxes and litigation risks. Th ese estimates are subject to change as new
information becomes available and may signiﬁ cantly aﬀ ect future operating results.

Accounting for property, plant and equipment, and intangible assets involves the use of estimates for determining fair values
at acquisition dates, particularly in the case of such assets acquired in a business combination. Furthermore, the expected
useful lives of these assets must be estimated. Th e determination of fair values of assets and liabilities, as well as of useful lives
of the assets is based on management judgment.

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable proﬁ t will be available
against which the losses can be utilized. Signiﬁ cant management judgment is required to determine the amount of deferred
tax assets that can be recognized, based upon the likely timing and level of future taxable proﬁ ts together with future tax
planning strategies (see note 14).

For our critical accounting estimates reference is made to the relevant individual notes to these consolidated ﬁ nancial
statements, more speciﬁ cally note 5 – Acquisition of subsidiaries, joint ventures and non-controlling interests; note 7 –
Discontinued operations and assets held for sale; note 14 – Taxes; note 16 – Intangible assets, note 17 – Property, plant
and equipment, note 20 – Trade receivables, note 24 – Share-based compensation (relating to long-term incentive plans);
note 28 – Other noncurrent and current provisions and liabilities (relating to the put option); note 32 – Commitments
and contingencies; and note 35 – Financial instruments.

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4. Restatement of Previously Issued Financial Statements
As previously reported in the Company’s press release furnished on Form 6-K ﬁ led with the United States Securities and
Exchange Commission (“SEC”) on January 26, 2012, the board of directors of the Company, based on the recommendation
of the audit committee and in consultation with management, concluded that, because of a misstatement in the Company’s
previously issued ﬁ nancial statements for the year ended December 31, 2010, and for the quarters ending on September 30,
2010 to September 30, 2011, the Company should restate its December 31, 2010 ﬁ nancial statements in this Annual Report
on Form 20-F for the ﬁ scal year ended December 31, 2011. Accordingly, the Company has restated its ﬁ nancial statements for
these periods.

Th e restated ﬁ nancial statements as of and for the year ended December 31, 2010 correct the accounting treatment for the
Honduras transaction in July 2010 as follows:

Recognition of a liability and corresponding reserve for the put option provided to our partner who holds a non-controlling interest
in our Honduran operation.

Following reassessment of the accounting treatment of the put option provided to Millicom’s partner who holds a 33.3%
non-controlling interest in our Honduran operation, Millicom determined that, as the put option could be exercised under
certain change of control events which could be outside the control of Millicom, the option meets the criteria under IAS 32 for
recognition as a liability and corresponding equity reserve. Th erefore, Millicom has retroactively recorded a liability for the put
option at July 1, 2010 of $737 million. As a result of the change in carrying value of the put option between July 1, 2010 and
year end, the liability amounted to $769 million at December 31, 2010, representing the redemption value of the option.

Recognition of a loss on revaluation of the put option liability
Recognition for the period between July 1, 2010 to December 31, 2010 of a non operating expense of $32 million, reﬂ ecting the
change in value of the above mentioned put option liability.

Eﬀ ects of restatement
Th e following table sets forth the eﬀ ects of the restatement on aﬀ ected items within Millicom’s previously reported
Consolidated Statements of Financial Position and Consolidated Income Statements. Th e adjustments necessary to correct the
errors have no eﬀ ect on reported assets or cash ﬂ ows or guidance.

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4. Restatement of Previously Issued Financial Statements (Continued)

(in thousands of US dollars, except per share data)
Consolidated Income Statements Data:

Other non-operating income (expenses), net (including loss from associates)

Proﬁ t before taxes from continuing operations

Net proﬁ t for the period

Basic earnings per common share

Diluted earnings per common share

(in thousands of US dollars)
Consolidated Statements of Financial Position Data:

Accumulated proﬁ ts brought forward

Put option reserve

Total Equity

Total Current Liabilities

As of and for
the Year Ended
December 31, 2010
(31,519)
(31,956)
(63,475)
1,870,163
(31,956)
1,838,207
1,652,233
(31,956)
1,620,277
$15.27
($0.30)
$14.97
$15.24
($0.29)
$14.95

As of and for
the Year Ended
December 31, 2010
1,134,354
–
1,134,354
–
(769,378)
(769,378)
3,159,011
(769,378)
2,389,633
1,684,831
769,378
2,454,209

As previously reported
Adjustment
As adjusted
As previously reported
Adjustment
As adjusted
As previously reported
Adjustment
As adjusted
As previously reported
Adjustment
As adjusted
As previously reported
Adjustment
As adjusted

As previously reported
Adjustment
As adjusted
As previously reported
Adjustment
As adjusted
As previously reported
Adjustment
As adjusted
As previously reported
Adjustment
As adjusted

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5. Acquisitions of Subsidiaries, Joint Ventures and Non-Controlling Interests
Year ended December 31, 2011
In 2011 Millicom acquired minor investments in businesses for consideration of $9 million. As at December 31, 2011, an
agreement entered into on August 20, 2010 to increase Millicom’s ownership in Navega El Salvador from 55% to 100% remains
subject to regulatory approval.

Year ended December 31, 2010
In 2010, Millicom gained control over Telefonica Cellular S.A. DE CV, its mobile phone operation in Honduras, and acquired
control of Navega S.A. DE CV, its cable operation in Honduras.

Telefonica Cellular S.A. DE CV
On July 1, 2010 Millicom reached agreement with its local partner in Honduras whereby Millicom’s local partner granted
Millicom an unconditional call option for the next ﬁ ve years for his 33% stake in Telefonica Cellular S.A. DE CV (“Celtel”) and as
consideration, Millicom granted a put option for the same duration to the local partner (see notes 28 and 35). Th e put option
can only be exercised in case of a change of control of Millicom International Cellular S.A. or Millicom’s subsidiary that holds
the shares in Celtel (except if the change of control is in favor of Investment AB Kinnevik, the current largest shareholder of
Millicom, or management of Millicom).

Prior to entering into the agreement, Millicom was dependent on the consent of its local partner for strategic decisions related
to it Honduran operation, as the shareholders agreement required a vote of 75% of the shares to authorize and approve
signiﬁ cant ﬁ nancial and operating policies of Celtel. Th e call option allows Millicom, unconditionally at any time during the
ﬁ ve year period from July 1, 2010 to exercise its right to acquire the 33% stake (and voting rights) of our local partner at a price
which Millicom believes represents the strategic value of the asset. Th e call option therefore conferred to Millicom control over
Celtel through its ability to inﬂ uence and exercise the power to govern the ﬁ nancial and operating policies (develop the future
business in Honduras).

Accordingly, Celtel has been fully consolidated into the Millicom Group ﬁ nancial statements from July 1, 2010. Previously, the
Honduras operations were proportionately consolidated.

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5. Acquisitions of Subsidiaries, Joint Ventures and Non-Controlling Interests (Continued)

Millicom completed the allocation of the purchase price to the assets acquired, liabilities assumed and contingent liabilities
during the year ended December 31, 2010. Th e recognized amounts of identiﬁ ed assets acquired and liabilities during the year
ended December 31, 2010. Th e recognized amounts of identiﬁ ed assets acquired and liabilities assumed as of July 1, 2010 were
as follows:

Intangible assets, net (i)
Other investments
Property, plant and equipment, net
Trade receivables
Prepayments and accrued income
Other current assets
Cash and cash equivalents

Other non-current liabilities (ii)
Current debt and other ﬁ nancing
Trade payables
Accrued interests and other expenses
Current income tax liabilities
Other current liabilities

Non-controlling interests
Fair value of the net assets acquired and contingent liabilities
Goodwill arising on change of control
Previously held interests in Celtel

Revaluation of the previously held interests in Celtel

Previously held
interests (66.7%)
US$ ’000
22,602
13,769
226,055
9,251
4,454
22,990
16,436
315,557
100,492
49,962
4,078
8,504
11,643
35,871
210,550

Fair value (100%)
US$ ’000
435,174
20,653
339,082
13,876
6,681
34,485
24,654
874,605
264,590
74,943
6,117
12,756
17,465
51,890
427,761
147,121
299,723
854,572
(105,007)

1,049,288

(i)

(ii)

Intangible assets not previously recognized are trademarks for an amount of $40 million, with estimated useful life of 10 years, customers’
list for an amount of $335 million, with estimated useful life of 8-9 years, and telecommunications license for an amount of $21 million,
with estimated useful life of 11 years.
Deferred tax liabilities related to diﬀ erences between the tax base and the fair value of the identiﬁ able assets acquired amount to $114 million.

Th e goodwill, which is not expected to be tax deductible, is attributable to the proﬁ tability potential of Celtel and the
synergies expected to arise. Th e fair value of the customers’ list was ascertained using the discounted excess earnings method,
the fair value of the trademark was ascertained using the relief from royalty approach, and the fair value of the
telecommunications license against comparable transactions.

Th e change of control contributed revenues of $100 million and net proﬁ t of $1,049 million (including the gain on revaluation
of the previously held interest) for the period from acquisition to December 31, 2010. If the change of control had occurred on
January 1, 2010, unaudited pro forma Group revenues from continuing operations for the year ended December 31, 2010
would have been $4,018 million, and the unaudited pro forma net proﬁ t from continuing operations for the same period,
as restated, would have been $1,633 million. Th ese amounts have been calculated using the Group accounting policies.

Millicom revalued at fair value its previously held 66.7% interest in Celtel recognizing a gain of $1,049 million, recorded under
the caption “Revaluation of previously held interests”. Th e fair value of the previously held interests was determined based on
discounted cash ﬂ ows. Th e cash ﬂ ow projections used (adjusted operating proﬁ t margins, income tax, working capital and
capital expenditure) were estimated by management covering six years. Cash ﬂ ows beyond this period were extrapolated
using a perpetual growth rate of 2%. Th e valuation was determined using a discount rate of 14.3%.

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5. Acquisitions of Subsidiaries, Joint Ventures and Non-Controlling Interests (Continued)

Navega S.A. DE CV
As part of a regional shareholding alignment agreement with its local partner in Honduras, on August 20, 2010 Millicom
reached agreement with its local partner in Honduras whereby Millicom acquired a further 6% of Navega S.A. DE CV (“Navega
Honduras”) (formerly Metrored S.A.). As a result of this agreement Millicom has the right to control Navega Honduras, which
has been fully consolidated into the Millicom Group ﬁ nancial statements from August 20, 2010. Previously, the results of
Navega Honduras were proportionately consolidated. Th e agreement is expected to facilitate further integration of the
cable business and to create synergies.

Millicom completed the allocation of the purchase price to the assets acquired, liabilities assumed and contingent liabilities
during the year ended December 31, 2010 and recognized the following amounts:

Intangible assets, net
Property, plant and equipment, net
Other non-current assets
Trade receivables
Prepayments and accrued income
Other current assets
Cash and cash equivalents

Other non-current liabilities
Current debt and other ﬁ nancing
Trade payables
Accrued interests and other expenses
Current income tax liabilities
Other current liabilities

Non controlling interests
Fair value of the net assets acquired and contingent liabilities
Goodwill arising on change of control
Previously held interests in Navega Honduras

Revaluation of the previously held interests in Navega Honduras

Cost of change of control

Previously held
interests (66.7%)
US$ ’000
11,879
13,890
109
1,207
25
293
1,852
29,255
1,930
699
217
689
628
1,343
5,506

Fair value (100%)
US$ ’000
19,563
22,875
180
1,988
40
482
3,050
48,178
3,178
1,152
357
1,135
1,035
2,211
9,068
13,037
26,073
13,866
(23,748)

10,726

5,465

Th e goodwill, which is not expected to be tax deductible, is attributable to the proﬁ tability potential of Navega Honduras
and the synergies expected to arise. Th e fair value of the customers’ list was ascertained using the discounted excess earnings
method, and the fair value of the trademark was ascertained using the relief from royalty approach.

Navega Honduras contributed revenues of $1 million and net proﬁ t of $20 million (including gain on revaluation) for the
period from acquisition to December 31, 2010. If the acquisition had occurred on January 1, 2010, unaudited pro forma
Group revenues from continuing operations for the year ended December 31, 2010 would have been $3,924 million, and the
unaudited pro forma net proﬁ t from continuing operations for the same period, as restated, would have been $1,612 million.
Th ese amounts have been calculated using the Group accounting policies.

Millicom revalued at fair value its previously held 60% interest in Navega Honduras recognizing a gain of $11 million,
recorded under the caption “Revaluation of previously held interests”.

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5. Acquisitions of Subsidiaries, Joint Ventures and Non-Controlling Interests (Continued)

Year ended December 31, 2009
In 2009, Millicom’s joint venture in Guatemala acquired the remaining non-controlling interest in Navega.com S.A. and Millicom
acquired the remaining non-controlling interest in its operation in Chad.

Navega.com S.A.
On March 13, 2009, Millicom’s joint venture in Guatemala completed the acquisition of the remaining 55% interest in Navega.
com S.A. (“Navega Guatemala”). Millicom’s share of the acquisition cost of the remaining 55% interest in Navega Guatemala
amounted to $49 million and Millicom’s share of the cash acquired amounted to $10 million; net cash used for this acquisition
therefore amounted to $39 million.

Millicom completed the allocation of the purchase price to the assets acquired, liabilities assumed and contingent liabilities
during the year ended December 31, 2009. Millicom’s share of the fair value of the identiﬁ able assets and liabilities acquired
was as follows:

Intangible assets, net (i)
Property, plant and equipment, net
Other non-current assets
Trade receivables
Prepayments and accrued income
Current income tax assets
Other current assets (ii)
Cash and cash equivalents

Other non-current liabilities (iii)
Current debt and other ﬁ nancing
Trade payables
Accrued interests and other expenses
Current income tax liabilities
Other current liabilities (ii)

Fair value of the net assets acquired and contingent liabilities
Goodwill arising on acquisition
Previously held interests in Navega Guatemala and Metrored
Revaluation of the previously held interests in Navega Guatemala and Metrored
Acquisition cost

Previously held
interests (66.7%)
US$ ’000
8,988
18,995
87
1,739
8
7
353
5,070
35,247
–
5,546
4,611
286
1,899
5,961
18,303

Fair value (100%)
US$ ’000
51,442
34,205
122
3,196
13
16
2,400
10,656
102,050
3,437
10,953
7,241
557
2,872
16,589
41,649
60,401
38,203
(16,944)
(32,319)
49,341

(i)

(ii)

Intangible assets not previously recognized are trademarks for an amount of $2 million (Millicom’s share: $1 million), with estimated useful
life of eight years, and customers’ list for an amount of $62 million (Millicom’s share: $35 million), with estimated useful life of nine years.
Contingent liabilities relating to tax and other contingencies on acquisition of $6 million (Millicom’s share: $3 million) were booked
within “Other current liabilities”. Th e former shareholders placed $3 million in escrow to partly cover these contingencies. Th erefore
a corresponding ﬁ nancial asset of $3 million (Millicom’s share: $2 million) has been recorded within “Other current assets”.

(iii) Deferred tax liabilities, related to the diﬀ erences between the tax base and the fair value of the identiﬁ able assets acquired amount

to $6 million (Millicom’s share: $3 million).

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5. Acquisitions of Subsidiaries, Joint Ventures and Non-Controlling Interests (Continued)

Th e goodwill, which is not expected to be tax deductible, is attributable to the proﬁ tability potential of the acquired business and
the synergies expected to arise from the Group’s acquisition of Navega. Th e fair value of the customer bases was ascertained using
the discounted excess earnings method and the fair value of the trademark was ascertained using the relief from royalty approach.

Th e acquired business contributed revenues of $21 million and net proﬁ t of $12 million for the period from acquisition to
December 31, 2009. If the acquisition had occurred on January 1, 2009, unaudited pro forma Group revenues from continuing
operations for the year ended December 31, 2009 would have been $3,378 million, and the unaudited pro forma net proﬁ t
from continuing operations for the same period would have been $507 million. Th ese amounts have been calculated using
the Group accounting policies.

In 2009 Millicom early adopted IFRS 3R and applied it to this acquisition (see note 2). As a result, Millicom revalued at fair
value its previously held 45% interest in Navega (held by Millicom’s joint venture in Guatemala) and its previously held 49%
interest in Metrored S.A. (“Metrored”), a subsidiary of Navega (held by Millicom’s joint venture in Honduras), recognizing a
gain of $32 million, recorded under the caption “Revaluation of previously held interests”.

Millicom Tchad S.A.
On March 4, 2009, Millicom completed the acquisition of the remaining 12.5% non-controlling interests in its operation in Chad.
Th e initial consideration amounted to $8 million and was paid in cash. As certain conditions were met, two additional payments
of $1 million each were made.

In 2009 Millicom early adopted IAS 27R and applied it to this acquisition. As a result, the purchase of the non-controlling interest
in Chad was treated as an equity transaction. Th e diﬀ erence between the acquisition cost and the carrying value of the existing
non-controlling interest at the date of the transaction resulted in a decrease in Millicom shareholders’ equity of $10 million.

Other minor investments
In 2009, Millicom acquired other minor investments for a cash consideration of $6 million.

6. Disposals of Subsidiaries and Joint Ventures
Year ended December 31, 2011
Millicom Lao Co Ltd
On September 16, 2009 Millicom announced that it signed an agreement for the sale of its 74.1% holding in Millicom Lao Co. Ltd.,
its Laos operation, to VimpelCom for approximately $65 million in total cash proceeds, payable on completion. Th e transaction
valued the entire Laos operation at an enterprise value of approximately $102 million.

On March 9, 2011 Millicom completed the transaction and received proceeds (net of transaction costs and taxes) from the
sale of $53 million, realizing a gain on sale of $37 million. From that date the Laos operation is no longer included in the
consolidated ﬁ nancial statements of the Group.

Amnet Honduras
As part of a regional shareholding alignment agreement with its local partner in Honduras, on March 21, 2011, Millicom
reduced its shareholding in Amnet Honduras from 100% to 66.7%, realizing a gain on sale of $2.2 million, which is recorded in
equity as gain on sale to non-controlling interests. Th e proceeds from the sale amount to $16.5 million, of which $1 million was
received in March 2011, while $4 million will be received each year for the next three years (in March 2012, March 2013 and
March 2014) and the remaining $3.5 million will be received in March 2015.

Year ended December 31, 2010
As part of the regional shareholding alignment agreement with its local partner in Guatemala, on August 20, 2010, Millicom
disposed of 45% of its interest in Newcom Guatemala (“Amnet Guatemala”). From that date Amnet Guatemala has been accounted
for as a joint venture and proportionately consolidated into the Millicom Group ﬁ nancial statements. Previously, the results of
the Amnet Guatemala were fully consolidated. Th ere was no signiﬁ cant impact on proﬁ t and loss from the disposal.

Year ended December 31, 2009
On October 16, November 25 and November 26, 2009 respectively, Millicom completed the sale of its operations in Sri Lanka,
Sierra Leone and Cambodia, for total proceeds of respectively $155 million, $1 million and $353 million realizing a total net
gain of $289 million. Total transaction costs amounted to $11 million. Total cash disposed amounted to $30 million.

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7. Discontinued Operations and Assets held for Sale
Discontinued operations
Th e results of discontinued operations for the years ended December 31, 2011, 2010 and 2009 are presented below:

Revenues
Operating expenses(i)
Operating proﬁ t
Non-operating income (expenses), net
Proﬁ t before tax
Tax charge
Gain from disposal, net
Net proﬁ t for the year

2011
US$ ’000
6,134
(3,378)
2,756
509
3,265
(305)
36,505
39,465

2010
US$ ’000
29,625
(17,086)
12,539
271
12,810
(953)
–
11,857

2009
US$ ’000
218,874
(193,038)
25,836
(10,500)
15,336
(3,854)
288,860
300,342

(i)

In 2009, an impairment of $11 million was booked to align the carrying value of Millicom’s operation in Sierra Leone to its
estimated fair value less cost to sell.

Th e cash (used) provided by discontinued operations for the years ended December 31, 2011, 2010 and 2009
is presented below:

Net cash provided by operating activities
Net cash used by investing activities
Net cash (used) provided by ﬁ nancing activities
Exchange (loss) gain on cash and cash equivalents
Transfer of cash to assets held for sale
Proceeds from the sale of discontinued operations
Cash provided (used) by discontinued operations

2011
US$ ’000
–
–
–
–
–
53,102
53,102

2010
US$ ’000
11,105
(16,089)
5,597
234
(847)
–
–

2009
US$ ’000
29,906
(62,795)
(8,270)
(158)
(19,099)
477,171
416,755

Th e following table gives details of non cash investing and ﬁ nancing activities of discontinued operations for the years ended
December 31, 2011, 2010 and 2009:

Investing activities
Acquisition of property, plant and equipment
Financing activities
Vendor ﬁ nancing and ﬁ nance leases

2011
US$ ’000

2010
US$ ’000

2009
US$ ’000

–

(873)

873

Asian businesses
In May 2009, Millicom decided to dispose of its businesses in Cambodia, Laos and Sri Lanka and, as a result, in accordance with
IFRS 5, these operations were classiﬁ ed as discontinued operations. Millicom’s operations in Sri Lanka and Cambodia were sold
respectively on October 16 and November 26, 2009 and its operation in Laos sold on March 9, 2011. Millicom’s businesses in
Cambodia, Laos and Sri Lanka previously represented the entire operating segment “Asia”.

Assets held for sale
At December 31, 2011 Millicom had assets held for sale amounting to $66 million representing towers sold but yet to be
transferred to associates in Ghana, Tanzania, the Democratic Republic of Congo and Colombia. Th e assets and directly
associated liabilities (asset retirement obligations) of $10 million that are part of these sales but are not leased back by
Millicom have been reclassiﬁ ed respectively as assets held for sale and liabilities directly associated with assets held for
sale, as completion of their sale is highly probable. Th e part of the towers which are leased back are capitalized and classiﬁ ed
under the caption “Property, plant & equipment, net” in the statement of ﬁ nancial position as at December 31, 2011.

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7. Discontinued Operations and Assets Held for Sale (Continued)

Th e major classes of assets and liabilities classiﬁ ed as held for sale as at December 31, 2011, and 2010 are as follows:

Assets
Property, plant and equipment, net
Trade receivables, net
Inventories
Other assets
Cash and cash equivalents
Assets held for sale
Liabilities
Non-current debt and other ﬁ nancing
Other non-current liabilities
Current debt and other ﬁ nancing
Trade payables
Other current liabilities
Liabilities directly associated with assets held for sale
Net assets directly associated with the disposal group

2011
US$ ’000

66,252
–
–
–
–
66,252

–
9,658
–
–
–
9,658
56,594

2010
US$ ’000

171,473
6,044
477
4,402
2,314
184,710

13,322
13,992
5,662
4,278
23,513
60,767
123,943

Ghana
In January 2010, Millicom’s operation in Ghana signed a sale and lease-back agreement with Helios Towers Ghana, a direct
subsidiary of Helios Towers Africa, for most of its tower assets. Under the agreement, Millicom Ghana sold the tower assets
to Helios Towers Ghana for a total consideration of $30 million cash and a 40% stake in Helios Towers Ghana, and leased back
a dedicated portion of each tower on which to locate its network equipment.

By December 31, 2011 approximately 97% of the towers had been transferred. Th e remaining towers are expected to be
transferred in 2012. Th e carrying value of the portion of the remaining towers that will not be leased back has been classiﬁ ed
as assets held for sale as at December 31, 2011 and amounted to $1 million (December 31, 2010: $6 million).

Th e gain on sale represents the diﬀ erence between the proceeds received and the net book value of the towers sold, as
adjusted to eliminate Millicom’s equity stake in Helios Towers Ghana. A portion of the gain, representing the portion of towers
leased back is deferred and recognised over the term of the lease. Th e net gain realized for the year ended December 31, 2011
was $5 million (2010: $5 million).

Th e fair value of the towers was derived by using the estimated replacement cost of the towers adjusted by an amount for
wear and tear taking into consideration the average age of the towers. Th e fair value of the assets sold was $70 million and
the acquired 40% interest in Helios Towers Ghana is accounted for as an investment in associate (see note 18).

Millicom is leasing back a portion representing 40% of the towers sold for a period of 12 years (with options to renew for four
further periods of ﬁ ve years each). Th e 40% portion of towers being leased back represents the dedicated part of each tower
on which Millicom’s equipment is located and is derived from the average current technical capacity of the towers. Th is part
of each of the towers is being accounted for as a ﬁ nance lease. Rights to use the land on which the towers are located are
accounted for as operating leases, and costs of services for the towers are treated as operating expenses.

Annual payments under the ﬁ nance lease agreement depend on the timing of transfer of towers to Helios Towers Ghana,
but amount to approximately $11 million per annum once all towers are transferred.

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7. Discontinued Operations and Assets Held for Sale (Continued)

Tanzania
In December 2010, Millicom’s operation in Tanzania signed a sale and lease-back agreement with Helios Towers Tanzania, a
direct subsidiary of Helios Towers Africa, for most of its tower assets. Under the agreement, Millicom Tanzania has agreed to
sell the tower assets to Helios Towers Tanzania for a total consideration of $81 million cash and a 40% stake in Helios Towers
Tanzania, and will lease back a dedicated portion of each tower on which to locate its network equipment.

By December 31, 2011, approximately 70% of the towers had been transferred. Th e remaining towers are expected to be
transferred in 2012. Th e carrying value of the portion of the remaining towers that will not be leased back has been classiﬁ ed as
assets held for sale as at December 31, 2011 and amounted to $22 million (December 31, 2010: $52 million). At December 31,
2011, liabilities directly related to these assets held for sale amounted to $3 million. (December 31, 2010: $6 million).

Th e gain on sale represents the diﬀ erence between the proceeds received and the net book value of the towers sold, as
adjusted to eliminate Millicom’s equity stake in Helios Towers Tanzania. A portion of the gain, representing the portion of
towers leased back is deferred and recognised over the term of the lease. Th e net gain realized for the year ended December 31,
2011 was $13 million (2010: nil).

Th e fair value of the assets was derived by using the estimated replacement cost of the towers adjusted by an amount for wear
and tear taking into consideration the average age of the towers. Th e fair value of the assets sold was $131 million and the
acquired 40% interest in Helios Towers Tanzania is accounted for as an investment in associate (see note 18).

Millicom will lease back 40% of the towers sold for a period of 12 years (with options to renew for four further periods of ﬁ ve
years each). Th e 40% portion of towers to be leased back represents the dedicated part of each tower on which Millicom’s
equipment is located and is derived from the average current technical capacity of the towers. Th is part of each of the towers is
accounted for as a ﬁ nance lease. Rights to use the land on which the towers are located will be accounted for as operating
leases, and costs of services for the towers are treated as operating expenses.

Annual payments under the ﬁ nance lease agreement depend on the timing of transfer of towers to Helios Towers Tanzania,
but amount to approximately $10 million per annum once all towers are transferred.

Th e Democratic Republic of Congo (“DRC”)
In December 2010, Millicom’s operation in DRC signed a sale and lease-back agreement with Helios Towers DRC, a direct
subsidiary of Helios Towers Africa, for most of its tower assets. Under the agreement, Millicom DRC has agreed to sell the
towers to Helios Towers DRC for a total consideration of $41.5 million cash and a 40% stake in Helios Towers DRC, and will
lease back a dedicated portion of most of the towers on which to locate its network equipment.

By December 31, 2011, approximately 50% of the towers had been transferred. Th e remaining towers are expected to be
transferred in 2012. Th e carrying value of the portion of the remaining towers that will not be leased back has been classiﬁ ed as
assets held for sale as at December 31, 2011 and amounted to $29 million (December 31, 2010: $55 million). At December 31,
2011, liabilities directly related to these assets held for sale amounted to $2 million. (December 31, 2010: $5 million).

Th e gain on sale represents the diﬀ erence between the proceeds received and the net book value of the towers sold, as
adjusted to eliminate Millicom’s equity stake in Helios Towers DRC. A portion of the gain, representing the portion of towers
leased back is deferred and recognised over the term of the lease. Th e net gain realized for the year ended December 31, 2011
was $3 million (2010: nil).

Millicom will lease back a portion representing 40% of most of the towers sold for a period of 12 years (with options to renew
for four further periods of ﬁ ve years each). Th e 40% portion of towers to be leased back represents the dedicated part of each
tower on which Millicom’s equipment is located and is derived from the average current technical capacity of the towers.
Th is part of each of the towers is accounted for as a ﬁ nance lease. Rights to use the land on which the towers are located
are accounted for as operating leases, and costs of services for the towers are treated as operating expenses.

Annual payments under the ﬁ nance lease agreement depend on the timing of transfer of towers to Helios Towers DRC,
but amount to approximately $13 million per annum once all towers are transferred.

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7. Discontinued Operations and Assets Held for Sale (Continued)

Colombia
In July 2011, Millicom’s operation in Colombia signed a sale and lease-back agreement with American Towers International Inc,
for most of its tower assets.

Under the agreement, Colombia Móvil has agreed to sell those tower assets to a fully owned subsidiary of American Towers in
Colombia (ATC Infraco S.A.S) for total consideration of $182 million cash and an option for Millicom to acquire in cash a 40%
stake in the holding company that owns that subsidiary (ATC Colombia BV), and will lease back a dedicated portion of each
tower on which to locate its network equipment.

By December, 2011, approximately 63% of the towers had been transferred. Th e remaining towers are expected to be
transferred in 2012. Th e carrying value of the portion of the remaining towers that will not be leased back has been classiﬁ ed
as assets held for sale as at December 31, 2011 and amounted to $14 million. At December 31, 2011, liabilities directly related
to these assets held for sale amounted to $4 million.

Th e gain on sale represents the diﬀ erence between the proceeds and the net book value of the towers sold, as adjusted
to eliminate Millicom’s equity stake in ATC Colombia BV. A portion of the gain, representing the portion of towers leased
back is deferred and recognised over the term of the lease. Th e net gain realized for the year ended December 31, 2011 was
$12 million.

Millicom will lease back 50% of the towers sold for a period of 12 years (with options to renew for four further periods of ﬁ ve
years each). Th e 50% portion of towers to be leased back represents the dedicated part of each tower on which Millicom’s
equipment is located and is derived from the average current technical capacity of the towers. Th is part of each of the towers
is accounted for as a ﬁ nance lease. Rights to use the land on which the towers are located are accounted for as operating leases,
and costs of services for the towers are treated as operating expenses.

Annual payments under the ﬁ nance lease agreement depend on the timing of transfer of towers to ATC Infraco S.A.S., but
amount to approximately $19 million per annum once all towers are transferred.

Th e option to acquire a 40% interest in ATC Infraco (“ATC Infraco Option”) was exercised by Millicom in December 2011 for
cash consideration of $7 million. Th e option price is set at a value that has been derived from the value of the tower assets that
are transferred to ATC Infraco.

Millicom has provided Colombia Móvil’s other shareholders with an unconditional option to acquire an interest in ATC Infraco
up to half of the interest held or to be held by Millicom. Th e option expires on July 18, 2013. At December 31, 2011 the fair
value of the option granted by Millicom is not signiﬁ cant.

Th rough a Millicom subsidiary, Millicom also has an unconditional option to acquire a minority equity interest of up to 40%
in ATC Sitios de Colombia S.A.S., an already established tower subsidiary of American Towers International Inc. Th e option
to acquire an interest of up to 40% in ATC Sitios (“ATC Sitios Option”) may be exercised until December 21, 2012. Th e option
price is the equivalent of the amount invested by American Tower in ATC Sitios as adjusted for any return on capital invested
by American Tower. At December 31, 2011 the fair value of the option granted to Millicom is not signiﬁ cant.

Millicom has provided Colombia Móvil’s other shareholders with an unconditional option to acquire an interest in ATC Sitios
up to half of the interest held or to be held by Millicom. Th e option expires on July 18, 2013. At December 31, 2011 the fair
value of the option granted by Millicom is not signiﬁ cant.

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8. Subsidiaries
Th e Group has the following signiﬁ cant subsidiaries, which are consolidated:

Name of the company
Central America
Telemovil El Salvador S.A.
Cable El Salvador S.A. de C.V.
Telefonica Celular S.A.
Navega S.A. DE CV (formerly Metrored S.A) (see note 5).
Cable Costa Rica S.A.
South America
Telefonica Celular de Bolivia S.A.
Telefonica Celular del Paraguay S.A.
Colombia Movil S.A. E.S.P.
Africa
Millicom Ghana Company Limited
Sentel GSM S.A.
MIC Tanzania Limited

Oasis S.P.R.L.

Millicom Tchad S.A. (see note 5)
Millicom Mauritius Limited
Millicom Rwanda Limited
Unallocated
Millicom International Operations S.A.
Millicom International Operations B.V.
MIC Latin America B.V.
Millicom Africa B.V.
Millicom Holding B.V.
Millicom Ireland Limited

Holding
December 31,
2011
% of ownership
interest

Holding
December 31,
2010
% of ownership
interest

100.0
100.0
66.7
66.7
100.0

100.0
100.0
50.0 + 1 share

100.0
100.0
100.0

100.0

100.0
100.0
87.5

100.0
100.0
100.0
100.0
100.0
100.0

100.0
100.0
100.0

100.0

100.0
100.0
87.5

100.0
100.0
100.0
100.0
100.0
100.0

Country

El Salvador
El Salvador
Honduras
Honduras
Costa Rica

Bolivia
Paraguay
Colombia

Ghana
Senegal
Tanzania
Democratic
Republic of Congo
Chad
Mauritius
Rwanda

Luxembourg
Netherlands
Netherlands
Netherlands
Netherlands
Ireland

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9. Interests in Joint Ventures
Th e Group has the following signiﬁ cant joint venture companies, which are proportionally consolidated:

Name of the company

Central America

Comunicaciones Celulares S.A.
Navega.com S.A. (see note 5)
Africa
Emtel Limited

Holding
December 31,
2011
% of ownership
interest

Holding
December 31,
2010
% of ownership
interest

55.0
55.0

50.0

55.0
55.0

50.0

Country

Guatemala
Guatemala

Mauritius

Th e share of assets and liabilities of the jointly controlled entities at December 31, 2011 and 2010, which are included in the
consolidated ﬁ nancial statements, are as follows:

Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities

2011
US$ ’000
235,092
419,371
654,463
205,848
174,823
380,671

2010
US$ ’000
199,147
386,703
585,850
159,616
145,664
305,280

Th e share of revenues and operating expenses of the jointly controlled entities for the years ended December 31, 2011, 2010,
and 2009, which are included in the consolidated income statements from continuing operations, are as follows:

Revenues

Total operating expenses

Operating proﬁ t

2011
US$ ’000
650,300

(364,992)

285,308

2010
US$ ’000
799,305

(413,461)

385,844

2009
US$ ’000
947,600

(503,298)

444,302

10. Segment Information
Management has determined the operating and reportable segments based on the reports that are used by the Chief Operating
Decision Maker (“CODM”) to make strategic and operational decisions.

Management considers the Group from both a business and a geographic perspective. Th e Group operates in the business of
communication, information, entertainment, mobile ﬁ nancial services and solutions, and provides these services through mobile
telephony and cable (including broadband, television and ﬁ xed telephony). Th e Group’s risks and rates of return for its operations
are aﬀ ected predominantly by the fact that it operates in diﬀ erent geographical regions. Th e businesses are organized and managed
according to the selected geographical regions, which represent the basis for evaluation of past performance and for making
decisions about the future allocation of resources.

Th e Group has businesses in three regions: Central America, South America and Africa.

Product and service oﬀ erings have converged to business categories to be more customer-centric, and less focused on the medium
in which the product and service oﬀ erings are provided (i.e. through mobile devices vs. cables). Accordingly, management and
operation of the Central America cable business has been integrated with our mobile operations. As a result of these changes,
execution of global strategies and reporting to the Chief Operating Decision-Maker are no longer separated between mobile
operations and cable operations. Comparative segment information for Central America has been restated to include the
Cable business, which was previously reported as a separate segment.

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10. Segment Information (Continued)

Th e following tables present revenues, operating proﬁ t (loss) and other segment information for the years ended December 31, 2011, 2010 and 2009:

December 31, 2011
Revenues
Operating proﬁ t (loss)
Add back:
Depreciation and amortization
Loss (gain) of disposal and impairment
Share-based compensation
Corporate costs
Adjusted operating proﬁ t (loss)(i)
Additions to:
Property, plant and equipment
Intangible assets
Capital expenditure
Taxes paid
Changes in working capital
Other movements
Operating free cash ﬂ ow (ii)

Total Assets(iii)
Total Liabilities

Central America
US$ ’000
1,842,166
649,159

South America
US$ ’000
1,706,139
504,822

Africa
US$ ’000
981,292
216,865

Unallocated items
US$ ’000
–
(113,825)

Total continuing
operations
US$ ’000
4,529,597
1,257,021

Discontinue
operations
(note 7)
US$ ’000
6,134
2,756

Inter company
elimination
US$ ’000
–
–

303,272
5,453
–
–
957,884

(220,455)
(1,576)
(222,031)
(146,245)
(66,743)
18,239
541,104

230,936
(9,913)
–
–
725,845

(294,628)
(29,304)
(323,932)
(77,355)
14,613
85,747
424,918

4,073,905
1,673,356

2,008,584
1,388,516

203,948
(17,325)
–
–
403,488

(287,736)
(8,952)
(296,688)
(13,528)
92,061
77,857
263,190

1,629,896
1,704,743

824
–
17,264
95,737
–

(434)
(5,412)
(5,846)
(30,943)
(25,392)
36,721
(25,460)

830,071
926,596

738,980
(21,785)
17,264
95,737
2,087,217

(803,253)
(45,244)
(848,497)
(268,071)
14,539
218,564
1,203,752

8,542,456
5,693,211

1,539
–
–
–
4,295

(20)
–
(20)

–
–
–
–
–

–
–
–

–
–

(1,260,510)
(856,819)

7,281,946
4,836,392

Total
US$ ’000
4,535,731
1,259,777

740,519
(21,785)
17,264
95,737
2,091,512

(803,273)
(45,244)
(848,517)

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10. Segment Information (Continued)

December 31, 2010 (As restated)(iv)
Revenues
Operating proﬁ t (loss)
Add back:
Depreciation and amortization

Loss (gain) of disposal and impairment
Share-based compensation

Corporate costs
Adjusted operating proﬁ t (loss)(i)
Additions to:
Property, plant and equipment
Intangible assets
Capital expenditure
Taxes paid

Changes in working capital

Other movements
Operating free cash ﬂ ow (ii)

Total Assets(iii)
Total Liabilities

Central
America(v)
US$ ’000
1,641,441
638,598

South America
US$ ’000
1,373,877
361,969

Africa
US$ ’000
904,931
147,737

Unallocated items
US$ ’000
–
(106,574)

Total continuing
operations
US$ ’000
3,920,249
1,041,730

Discontinued
operations
(note 7)
US$ ’000
29,625
12,539

Inter company
elimination US$
’000
–
–

250,144
4,099
–
–
892,841

(187,157)
(20,948)
(208,105)
(139,139)
34,024
6,978
586,599

223,186
4,590
–
–
589,745

(216,408)
(28,091)
(244,499)
(62,240)
(31,333)
60,061
311,734

202,733

7,568
–
–
358,038

(273,689)
(3,924)
(277,613)
(9,291)

(27,776)

101,603
144,961

923

–
30,718
74,933
–

(17)
(473)
(490)
(28,053)

25,970

(24,456)
(27,029)

676,986

16,257
30,718
74,933
1,840,624

(677,271)
(53,436)
(730,707)
(238,723)

885

144,186
1,016,265

–

–
–
–
12,539

(16,223)
–
(16,223)

–

–
–

–
–
–

Total
US$ ’000
3,949,874
1,054,269

676,986

16,257
30,718

74,933

1,853,163

(693,494)
(53,436)

(746,930)

3,617,802
2,319,733

1,503,621
1,257,708

1,600,307
1,630,201

650,677
803,332

7,372,407
6,010,974

71,878
47,518

(449,168)
(1,453,008)

6,995,117
4,605,484

(i) Adjusted operating proﬁ t is used by the management to monitor the segmental performance and for capital management (see note 34).
(ii) Operating free cash ﬂ ow by segment includes vendor ﬁ nancing of capital equipment as a cash transaction.
(iii) Segment assets include goodwill and other intangibles.
(iv) Restatement – see note 4.
(v) Includes cable which in 2010 was reported as a separate segment which has now been integrated with mobile operations

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10. Segment Information (Continued)

Review of operations

Corporate Governance

Financial statements

December 31, 2009
Revenues
Operating proﬁ t (loss)
Add back:
Depreciation and amortization
Loss (gain) of disposal and impairment
Share-based compensation
Corporate costs
Adjusted operating proﬁ t (loss)(i)
Additions to:
Property, plant and equipment
Intangible assets
Capital expenditure
Taxes paid
Changes in working capital
Other movements
Operating free cash ﬂ ow (ii)

Total Assets(iii)
Total Liabilities

Central America
US$ ’000
1,514,663
615,636

South America
US$ ’000
1,075,914
227,904

Africa
US$ ’000
782,150
84,582

Unallocated items
US$ ’000
–
(77,099)

Total continuing
operations
US$ ’000
3,372,727
851,023

Discontinued
operations
(note 7)
US$ ’000
218,874
314,696

Inter company
elimination
US$ ’000
–
–

205,052
1,361
–
–
822,049

(152,222)
(23,085)
(175,307)
(115,414)
(53,407)
1,763
479,684

208,469
2,222
–
–
438,595

(143,556)
(19,489)
(163,045)
(54,423)
39,978
1,927
263,032

196,832
3,401
–
–
284,815

(395,352)
(2,892)
(398,244)
(6,654)
55,631
18
(64,434)

1,082
262
10,175
65,580
–

(246)
(646)
(892)
(19,359)
239
–
(20,012)

611,435
7,246
10,175
65,580
1,545,459

(691,376)
(46,112)
(737,488)
(195,850)
42,441
3,708
658,270

34,842
(277,665)
–
–
71,873

(79,072)
–
(79,072)

–
–
–
–
–

–
–
–

Total
US$ ’000
3,591,601
1,165,719

646,277
(270,419)
10,175
65,580
1,617,332

(770,448)
(46,112)
(816,560)

2,132,331
1,257,957

1,370,202
1,141,956

1,586,488
1,594,662

732,667
470,781

5,821,688
4,465,356

411,939
242,625

(242,609)
(1,027,093)

5,991,018
3,680,888

(i) Adjusted operating proﬁ t is the measure used by the management to monitor the segmental performance and for capital management (see note 34).
(ii) Operating free cash ﬂ ow by segment includes vendor ﬁ nancing of capital equipment as a cash transaction.
(iii) Segment assets include goodwill and other intangibles.

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10. Segment Information (Continued)

Revenues from continuing operations for the years ended December 31, 2011, 2010 and 2009 analyzed by country are as follows:

Colombia
Honduras
Guatemala
Paraguay
El Salvador
Other
Total

2011
US$ ’000
756,211
673,022
646,679
593,382
413,712
1,446,591
4,529,597

2010
US$ ’000
612,111
532,068
570,827
462,537
453,503
1,289,203
3,920,249

2009
US$ ’000
444,899
436,435
517,555
387,964
493,298
1,092,576
3,372,727

Non-current assets (intangible assets and property, plant and equipment) as at December 31, 2011 and 2010 analyzed by
country are as follows:

Colombia
Honduras
Guatemala
Paraguay
El Salvador
Other
Total

2011
US$ ’000
596,498
1,669,030
392,349
255,577
437,879
1,684,137
5,035,470

2010
US$ ’000
604,723
1,762,865
348,682
223,840
482,623
1,627,779
5,050,512

11. Analysis of Operating Proﬁ t
Th e Group’s operating income and expenses from continuing operations analyzed by nature of expense is as follows:

Revenues
Cost of rendering telecommunication services
Depreciation and amortization (notes 10, 16 and 17)
Dealer commissions
Employee related costs (note 12)
Sites and network maintenance
Advertising and promotion
Phone subsidies
External services
Operating lease expense (note 32)
Billing and payments
Gain (loss) on disposal and impairment of assets, net (note 10 and 17)
Other income
Other expenses
Operating proﬁ t

2011
US$ ’000
4,529,597
(1,006,951)
(738,980)
(398,467)
(299,151)
(208,340)
(126,522)
(138,578)
(154,621)
(96,376)
(33,373)
21,785
43,700
(136,702)
1,257,021

2010
US$ ’000
3,920,249
(809,669)
(676,986)
(354,608)
(294,045)
(175,971)
(119,675)
(124,448)
(110,344)
(82,929)
(27,831)
(16,257)
3,192
(88,948)
1,041,730

2009
US$ ’000
3,372,727
(716,269)
(611,435)
(300,487)
(249,757)
(151,816)
(122,986)
(108,714)
(81,537)
(72,749)
(21,005)
(7,246)
–
(77,703)
851,023

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11. Analysis of Operating Proﬁ t (Continued)

Th e following table summarizes the aggregate amounts paid to Millicom’s auditors for the years ended December 31, 2011,
2010 and 2009.

Audit Fees
Audit Related Fees
Tax Fees
All Other Fees
Total

2011
US$ ’000
3,623
152
97
58
3,930

2010
US$ ’000
4,237
604
–
55
4,896

2009
US$ ’000
4,179
115
61
71
4,426

Audit related services consist principally of consultations related to ﬁ nancial accounting and reporting standards, including
making recommendations to management regarding internal controls and the issuance of certiﬁ cations of loan covenant
compliance required by Millicom’s debt agreements. Tax services consist principally of tax planning services and tax compliance
services. All other fees are for services not included in the other categories. One hundred percent of the audit related, tax and
other fees for 2011 and 2010 were approved by the audit committee.

12. Employee Related Costs
Employee related costs are comprised of the following:

Wages and salaries

Social security

Share-based compensation
(see note 24)
Other employee related costs(i)
Total

2011
US$ ’000

(209,180)

(23,613)

(17,264)

(49,094)
(299,151)

2010
US$ ’000

(196,318)

(21,094)

(30,718)

(45,915)
(294,045)

2009
US$ ’000

(183,220)

(20,105)

(10,175)

(36,257)
(249,757)

(i)

Includes pension costs and other beneﬁ ts. Th ere are no deﬁ ned beneﬁ t pension plans.

Th e average number of permanent employees during the years ended December 31, 2011, 2010 and 2009 was as follows:

Continuing operations
Discontinued operation
Total average number of permanent employees

2011
6,526
128
6,654

2010
6,109
237
6,346

2009
5,937
1,852
7,789

13. Other Non-Operating (Expenses) Income, Net
Th e Group’s other non-operating (expenses) income, net is comprised of the following:

Change in carrying value of put option(i)
Change in fair value of derivatives
Other exchange (losses), net
Other non operating (expenses) income, net

(i) Restatement – see note 4

2011
US$ ’000
24,233
(2,472)
(26,051)
(4,290)

2010
(As restated)(i)
US$ ’000
(31,956)
(14,597)
(15,105)
(61,658)

2009
US$ ’000
–
–
(32,181)
(32,181)

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14. Taxes
Group taxes mainly comprise income taxes of subsidiaries and joint ventures. As a Luxembourg commercial company, the
Company is subject to all taxes applicable to a Luxembourg Société Anonyme. Due to losses incurred and brought forward,
no taxes based on Luxembourg-only income have been computed for 2011, 2010 and 2009.

Th e eﬀ ective tax rate on continuing operations is (2%) (2010: 12%, 2009: 27%). Currently Millicom operations are in
jurisdictions with income tax rates of 10% to 40% (2010 and 2009: 10% to 40%).

Th e reconciliation between the weighted average statutory tax rate and the eﬀ ective average tax rate is as follows:

Weighted average statutory tax rate(i)
Recognition of previously unrecorded tax losses
Unrecognized current year tax losses(ii)
Non taxable income and non deductible expenses, net
Taxes based on revenue
Income taxes at other than statutory tax rates
Withholding taxes on transfers between operating and non operating entities
Non-taxable gain arising from revaluation of previously held interests
Eﬀ ective tax rate

2011
%
24
(29)
1
1
(6)
4
3
–
(2)

2010
%
23
–
7
–
(7)
2
3
(16)
12

2009
%
23
–
9
(1)
(8)
3
3
(2)
27

(i)

(ii)

Th e weighted average statutory tax rate has been determined by dividing the aggregate statutory tax charge of each subsidiary and joint
venture, which was obtained by applying the statutory tax rate to the proﬁ t or loss before tax, by the aggregate proﬁ t before tax excluding
the impact of the revaluation of Honduras in 2010 (see note 5).
Unrecognized current year tax losses mainly consist of tax losses at the Company level and tax losses recorded in the Group’s operations in
the Democratic Republic of Congo and Rwanda (2010: DRC, Rwanda and Colombia; 2009: DRC and Colombia).

Th e credit (charge) for income taxes from continuing operations is shown in the following table and recognizes that revenue
and expense items may aﬀ ect the ﬁ nancial statements and tax returns in diﬀ erent periods (temporary diﬀ erences):

Current income tax credit (charge)
Net deferred income tax beneﬁ t (expense)
Credit / (charge) for taxes

2011
US$ ’000
(278,502)
296,849
18,347

2010
US$ ’000
(223,077)
(4,019)
(227,096)

2009
US$ ’000
(201,230)
13,232
(187,998)

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14. Taxes (Continued)

Th e tax eﬀ ects of signiﬁ cant items comprising the Group’s net deferred income tax asset and liability as of December 31, 2011
and 2010 are as follows:

Loss carry-forwards
Provision for doubtful debtors
Temporary diﬀ erences between book and tax
basis of intangible assets and property, plant
and equipment
Deferred tax liabilities recognized as part
of the acquisition of Celtel (see note 5)
Deferred tax liabilities recognized as part
of the acquisition of Amnet (see note 5)
Deferred tax liabilities recognized as part
of the acquisition of Navega (see note 5)
Other temporary and translation diﬀ erences
Deferred tax beneﬁ t (expense)
Deferred tax assets (liabilities), net
Deferred tax assets
Deferred tax liabilities

Consolidated balance sheets

2011
US$ ’000
182,562
9,124

2010
US$ ’000
–
4,206

Consolidated income statements
2011
US$ ’000
182,562
4,918

2010
US$ ’000
(5,877)
602

2009
US$ ’000
(1,945)
408

4,993

(45,456)

50,449

(2,398)

(2,411)

(94,390)

(105,392)

(19,413)

(25,805)

(2,358)

37,382

117,900
316,966
(199,066)

(3,126)

3,613

(171,960)
23,959
(195,919)

11,002

6,392

768

40,758
296,849

8,460

6,237

936

(11,979)
(4,019)

–

9,485

540

7,155
13,232

Deferred income tax assets and liabilities reﬂ ect temporary diﬀ erences between the carrying amounts of assets and liabilities
for ﬁ nancial reporting purposes and the amounts used for income tax purposes.

No deferred tax liability was recognized in respect of $3,352 million (2010: $3,659 million) of unremitted earnings of
subsidiaries and joint ventures, because the Group was in a position to control the timing of the reversal of the temporary
diﬀ erences and it was unlikely that such diﬀ erences would reverse in a foreseeable future. Furthermore, it was not practicable
to estimate the amount of unrecognized deferred tax liabilities in respect of these unremitted earnings.

During 2011, a tax credit of $308 million was recognized in our Colombian operation relating to expected utilization of tax loss
carry-forwards and other temporary diﬀ erences related mainly to property, plant and equipment and intangible assets. Th e
expected utilisation of tax loss carryforwards was based on an assessment by management that suﬃ cient taxable proﬁ t will be
available to allow the beneﬁ t of the deferred tax asset to be utilised.

Unrecognized net operating losses and other tax loss carry-forwards relating to continuing operations amounted to $169
million as at December 31, 2011 (2010: $775 million, 2009: $885 million) with expiry periods of between 1 and 5 years. In
addition the Company has unrecognized net operating losses of $1,742 million (2010: $1,833 million) which do not expire.

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15. Earnings Per Share
Basic earnings per share are calculated by dividing net proﬁ t for the year attributable to equity holders of the Company by the
weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share are calculated by dividing the net proﬁ t for the year attributable to equity holders of the Company
by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of dilutive
potential shares.

Th e following reﬂ ects the net proﬁ t and share data used in the basic and diluted earnings per share computations:

Basic
Net proﬁ t attributable to equity holders from continuing operations
Net proﬁ t attributable to equity holders from discontinued operations
Net proﬁ t attributable to equity holders to determine the basic earnings per share
Diluted
Net proﬁ t attributable to equity holders from continuing operations
Net proﬁ t attributable to equity holders from continuing operations used to
determine the diluted earnings per share
Net proﬁ t attributable to equity holders from discontinued operations
Net proﬁ t attributable to equity holders to determine the diluted earnings per share

Weighted average number of ordinary shares (excluding treasury shares)
for basic earnings per share
Eﬀ ect of dilution:
Potential incremental shares as a result of share options
Weighted average number of ordinary shares (excluding treasury shares)
adjusted for the eﬀ ect of dilution

(i) Restatement – see note 4

2011
US$ ’000

2010
(As restated)(i)
US$ ’000

885,815
38,700
924,515

885,815

38,700
924,515

2011
’000

1,611,491
8,786
1,620,277

1,611,491

8,786
1,620,277

2010
’000

2009
US$ ’000

551,390
298,858
850,788

551,390

298,858
850,788

2009
’000

104,196

108,219

108,527

105

177

104,301

108,396

223

108,750

To calculate earnings per share amounts for the discontinued operations, the weighted average number of shares for both
basic and diluted amounts is as per the table above.

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16. Intangible Assets
Th e movements in intangible assets in 2011 were as follows:

Opening balance, net
Change in the composition of the Group (see note 5)
Additions (see note 10)
Amortization charge(i)
Transfers
Other movements
Exchange rate movements
Closing balance, net
As at December 31, 2011
Cost or valuation
Accumulated amortization
Net

Goodwill
US$ ’000
1,427,825
–
–
–
–
–
(12,966)
1,414,859

1,414,859
–
1,414,859

Licenses
US$ ’000
238,196
–
12,609
(34,634)
3,342
(614)
(5,719)
213,180

408,872
(195,692)
213,180

Other(ii)
US$ ’000
616,824
4,603
32,635
(105,882)
(3,342)
(498)
(2,026)
542,314

865,465
(323,151)
542,314

Total
US$ ’000
2,282,845
4,603
45,244
(140,516)
–
(1,112)
(20,711)
2,170,353

2,689,196
(518,843)
2,170,353

(i) Th e amortization charge for Licenses and Other is recorded under the caption “General and administrative expenses”.
(ii) Th e caption “Other” includes mainly those intangible assets identiﬁ ed in business combination (i.e. customers’ lists and trademarks).

Th e movements in intangible assets in 2010 were as follows:

Goodwill
US$ ’000
547,986
869,559
–
–
–
–
10,280
1,427,825

1,427,825
–
1,427,825

Licenses
US$ ’000
218,510
30,519
26,190
(39,353)
1,751
(80)
659
238,196

401,306
(163,110)
238,196

Other(ii)
US$ ’000
278,341
383,837
27,246
(78,801)
(1,751)
(2,167)
10,119
616,824

839,112
(222,288)
616,824

Total
US$ ’000
1,044,837
1,283,915
53,436
(118,154)
–
(2,247)
21,058
2,282,845

2,668,243
(385,398)
2,282,845

Th e following table provides details of cash used for additions to intangible assets:

Additions
Subtotal
Change in suppliers advances
Change in capex accruals and payables
Cash used from continuing operations for additions from intangible assets

(i) Restatement – see note 4

2011
US$ ’000
45,244
45,244
(165)
11,394
56,473

2010
US$ ’000
53,436
53,436
160
(27,358)
26,238

2009
US$ ’000
46,112
46,112
–
(108)
46,004

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16. Intangible Assets (Continued)

Impairment test of goodwill
As at December 31, 2011, management tested all goodwill for impairment. Th e Group determines whether goodwill is
impaired at least on an annual basis. Th is requires an estimation of the recoverable amount of the cash-generating unit (or
group of cash-generating units) to which the goodwill is allocated.

Th e recoverable amount of a cash-generating unit (“CGU”) or group of CGUs is determined based on discounted cash ﬂ ows.
Th e cash ﬂ ow projections used (adjusted operating proﬁ t margins, income tax, working capital, capital expenditure and license
renewal cost) are extracted from ﬁ nancial budgets approved by management and the Board covering a period of three years
apart from our new business in Rwanda where six years has been used (2010: eight years). Th e planning horizon reﬂ ects
industry practice in the countries where the Group operates. Cash ﬂ ows beyond this period are extrapolated using a perpetual
growth rate of 2% (2010: 2%). No impairment losses were recorded on goodwill for the years ended December 31, 2011, 2010
and 2009.

As part of the impairment tests, sensitivity analysis was performed on the key assumptions from which it was determined that
suﬃ cient margin exists from realistic changes to the assumptions that would have resulted in impairment.

Th e recoverable amounts have been determined for the cash generating units based on the following discount rates for the
years ended December 31, 2011 and 2010:

Central America
South America
Africa

Discount rate after tax

2011
8.2%–12.7%
8.0%–11.2%
8.9%–14.6%

2010
9.9%–14.3%
9.5%–15.9%
8.8%–14.6%

Th e allocation of goodwill to cash generating units, net of exchange rate movements, is shown below:

Millicom’s operations in:
Honduras (see note 5)
El Salvador
Costa Rica
Colombia
Guatemala
Senegal
Other
Total Goodwill

2011
US$ ’000
925,834
184,956
137,945
52,283
35,574
34,008
44,259
1,414,859

2010
US$ ’000
936,895
184,956
137,638
52,283
34,339
35,209
46,505
1,427,825

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17. Property, Plant and Equipment
Movements in tangible assets in 2011 were as follows:

Opening balance, net
Change in the composition of the Group (note 5)(iii)
Additions (including sale and leaseback)
Impairments and net disposals
Depreciation charge(ii)
Asset retirement obligations
Transfers
Transfer to assets held for sale (see note 7)
Exchange rate movements
Closing balance at December 31, 2011
Cost or valuation
Accumulated depreciation
Net

Network
equipment (iv)
US$ ’000
2,395,597
2,175
127,279
(99,038)
(549,938)
4,776
629,985
(56,142)
(26,917)
2,427,777
4,557,220
(2,129,443)
2,427,777

Land and
Buildings
US$ ’000
53,725
–
8,845
(369)
(3,317)
100
11,749
–
(1,310)
69,423
84,879
(15,456)
69,423

Construction
in Progress
US$ ’000
206,808
3,102
720,659
(6,661)
–
–
(685,219)
–
1,694
240,383
240,383
–
240,383

Other(i)
US$ ’000
111,537
209
21,841
(2,525)
(45,209)
–
43,485
–
(1,804)
127,534
344,537
(217,003)
127,534

Total
US$ ’000
2,767,667
5,486
878,624
(108,593)
(598,464)
4,876
–
(56,142)
(28,337)
2,865,117
5,227,019
(2,361,902)
2,865,117

(i) Th e caption “Other” mainly includes oﬃ ce equipment and motor vehicles.
(ii)

Th e depreciation charge for network equipment is recorded under the caption “Cost of sales” and the depreciation charge for Land and
Buildings and Other is recorded under the caption “General and administrative expenses”.

(iii) Th e change in the composition of the Group corresponded to other minor investments.
(iv) Th e net carrying amount of network equipment under ﬁ nance leases at December 31, 2011, mainly comprising towers, was $133 million.

Movements in tangible assets in 2010 were as follows:

Opening balance, net
Change in the composition of the Group (note 5)(iii)
Additions
Impairments and net disposals
Depreciation charge(ii)
Asset retirement obligations
Transfers
Transfer to assets held for sale (see note 7)
Exchange rate movements
Closing balance at December 31, 2011
Cost or valuation
Accumulated depreciation
Net

Network
equipment (iv)
US$ ’000
2,352,954
118,923
54,906
(48,038)
(508,339)
(17,176)
560,413
(106,174)
(11,872)
2,395,597
4,165,165
(1,769,568)
2,395,597

Land and
Buildings
US$ ’000
81,215
2,165
417
(263)
(3,062)
493
(26,870)
–
(370)
53,725
65,868
(12,143)
53,725

Construction
in Progress
US$ ’000
152,234
3,431
600,625
(2,034)
–
–
(545,093)
–
(2,355)
206,808
206,808
–
206,808

Other(i)
US$ ’000
124,238
5,330
21,323
(2,560)
(47,431)
–
11,550
–
(913)
111,537
303,781
(192,244)
111,537

Total
US$ ’000
2,710,641
129,849
677,271
(52,895)
(558,832)
(16,683)
–
(106,174)
(15,510)
2,767,667
4,741,622
(1,973,955)
2,767,667

(i) Th e caption “Other” mainly includes oﬃ ce equipment and motor vehicles.
(ii)

(iii) Th e change in the composition of the Group corresponded to the acquisition of Honduras, Navega and other minor investments.
(iv) Th e net carrying amount of network equipment under ﬁ nance leases at December 31, 2010, mainly comprising towers, was $41 million.
(v) From January 1, 2010 the estimated useful life of network towers and civil works was changed from 10 to 15 years.

Borrowing costs capitalized for the year ended December 31, 2011 were not signiﬁ cant (2010: not signifcant).

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17. Property, Plant and Equipment (Continued)

Th e following table provides details of cash used for the purchase of property, plant and equipment:

Additions
Additions from discontinued operations
Subtotal
Change in suppliers advances
Change in capex accruals and payables
Vendor ﬁ nancing and ﬁ nance leases (see note 31)
Capitalized interests
Cash used from continuing operations for purchase of
property, plant and equipment

2011
US$ ’000
803,273
(20)
803,253
(2,639)
(63,004)
(37,929)
–

699,681

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US$ ’000
693,494
(16,223)
677,271
(12,072)
22,480
(90,779)
–

596,900

2009
US$ ’000
770,448
(79,072)
691,376
(77,539)
162,421
(45,399)
(4,294)

726,565

18. Investments in Associates
As at December 31, 2011 Millicom’s investment in associates amounted to $63 million representing 40% interests in Helios
Towers Tanzania, Helios Towers DRC and ATC Colombia B.V. acquired during the year, and Helios Towers Ghana (see note 7)
(2010: including $17 million representing a 40% interest in Helios Towers Ghana).

19. Non-Current Pledged Deposits
As at December 31, 2011, non-current pledged deposits amounted to $49 million (2010: $50 million) and mainly related to
security over ﬁ nancing of Millicom’s operation in Chad (see note 27).

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20. Trade Receivables, Net

Gross trade receivables
Less: provisions for impairment of receivables
Trade receivables, net

2011
US$ ’000
348,870
(71,926)
276,944

2010
US$ ’000
304,999
(51,741)
253,258

Th e nominal value less impairment of trade receivables is assumed to approximate their fair values (see note 35).

As at December 31, 2011 and 2010, the ageing analysis of trade receivables is as follows:

2011
Telecom operators
Own customers
Others
Total

2010
Telecom operators
Own customers
Others
Total

Past due (net of impairments)

Neither past
due nor impaired
US$ ’000

<30 days
US$ ’000

30–90 days
US$ ’000

>90 days
US$ ’000

73,381
70,568
34,126
178,075

30,670
14,558
9,337
54,565

20,914
13,298
6,071
40,283

792
2,996
233
4,021

Past due (net of impairments)

Neither past
due nor impaired
US$ ’000

<30 days
US$ ’000

30–90 days
US$ ’000

>90 days
US$ ’000

68,929
50,339
33,508
152,776

30,244
16,088
4,997
51,329

38,340
6,510
3,938
48,788

28
337
–
365

21. Other Current Assets
Other current assets are comprised as follows:

Value added tax receivables
Pledged deposits
Escrow accounts (see note 28)
Related party receivables
Other
Total other current assets

2011
US$ ’000
11,402
297
3,972
76,677
54,267
146,615

Total
US$ ’000

125,757
101,420
49,767
276,944

Total
US$ ’000

137,541
73,274
42,443
253,258

2010
US$ ’000
9,319
7,261
11,730
–
47,001
75,311

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Annual Report 2011 Millicom International Cellular S.A.

22. Cash and Cash Equivalents
Cash and cash equivalents are comprised as follows:

Cash and cash equivalents in U.S. dollars
Cash and cash equivalents in other currencies
Restricted cash
Total cash and cash equivalents

2011
US$ ’000
509,882
351,744
19,653
881,279

2010
US$ ’000
571,158
452,329
–
1,023,487

Cash balances are diversiﬁ ed among leading international banks and in domestic banks within the countries where we operate.

23. Share Capital
Share capital and share premium
Th e authorized share capital of the Company totals 133,333,200 registered shares (2010: 133,333,200). As at December 31, 2011,
the total subscribed and fully paid-in share capital and premium was $663 million (2010: $682 million) consisting of 104,939,217
(2010: 109,053,120) registered common shares at a par value of $1.50 (2010: $1.50) each.

Th e following table summarizes movements in issued share capital for the years ended December 31, 2011 and 2010:

Issued share capital as of January 1
Exercise of share options(i)
Shares to employees and directors(i)
Total issuance of shares during the year
Cancellation of shares during the year
Issued share capital as of December 31

2011
number
of shares
109,053,120
39,622
46,475
86,097
(4,200,000)
104,939,217

2010
number
of shares
108,648,325
145,305
259,490
404,795
–
109,053,120

(i)

In addition, 6,179 of share options and 186,681 of restricted shares were issued from treasury shares during 2011.

Th e Company repurchased 4,646,241 shares for $498 million under a share buy-back program in 2011 (2010: 3,253,507 shares
for $300 million).

Th e Company reduced its issued share capital by $6 million in 2011, by way of cancellation of 4.2 million shares having a par
value of $1.50 each, previously held as treasury shares.

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24. Share Based Compensation
Share options
Until May 30, 2006, share options were granted to directors, senior executives, oﬃ cers and selected employees. Th e exercise
price of the granted options was equal to or higher than the market price of the shares on the date of grant. Th e options were
conditional on the employee or director completing one to ﬁ ve years service (the vesting period). Th e options were exercisable
starting from one year to ﬁ ve years from the grant date. Th e options have a contractual option term of six years from the grant
date for employees and of twenty years for directors (amended in 2005). Share options grants for directors prior to 2005 had
an indeﬁ nite life. Shares issued when share options are exercised have the same rights as common shares.

Th e following table summarizes information about share options outstanding and exercisable at December 31, 2011.
Th e market price of the Company’s shares as at December 31, 2011 was the SEK equivalent of $100.20 (2010: $95.60).

Range of exercise price $
20.56
25.05–29.75
31.88–35.91
20.56–35.91

Options outstanding

Options exercisable

Weighted
average
exercise price
20.56
26.93
35.16
29.34

Number
outstanding at
December 31,
2011
35,000
33,332
66,664
134,996

Weighted
average
exercise price
20.56
26.93
35.16
29.34

Number
outstanding at
December 31,
2011
35,000
33,332
66,664
134,996

Share options outstanding at the end of the year have the following expiry dates, exercise prices and terms:

Date issued

Number of options
outstanding as at
December 31, 2011

Exercise
price $

May 1996, May 1997, May 1998, May 2000 and May 2004

99,996

25.05–35.91

May 2005

35,000

20.56

Terms
Exercisable
immediately.
Options have an
indeﬁ nite life.
Exercisable
immediately.
Options have a
twenty year life.

Th e following table summarizes the Company’s share options as of December 31, 2011, 2010 and 2009, and changes during the
years then ended:

2011

Average
exercise price
in $ per share

29.06

20.56
28.80
29.34
29.34

2010

Average
exercise price
in $ per share

26.21

25.05
22.58
29.06
29.06

Number of
options

183,797

(3,000)
(45,801)
134,996
134,996

2009

Average
exercise price
in $ per share

24.23

18.73
20.53
26.21
28.20

Number of
options

329,788

(686)
(145,305)
183,797
183,797

Number of
options

494,120

(25,108)
(139,224)
329,788
243,946

Outstanding at
beginning of year
Expired/forfeited
Exercised
Outstanding at end of year
Exercisable at end of year

In May 2006 at the Annual General Meeting, it was agreed to accelerate the vesting period for share options held by the
directors from three years to one year to correspond to the directors’ one-year term in oﬃ ce. It was also agreed to change the
term of the share options so that they no longer expire when a director is no longer a member of the Board. In addition, the
directors entered into an agreement with Millicom, whereby if Millicom is subject to a change of control the directors’ share
options will vest immediately and the restricted shares will become unrestricted upon the change of control.

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24. Share Based Compensation (Continued)

Restricted share grants
Starting on May 30, 2006, the grant of options was replaced by the grant of restricted shares whereby these shares cannot be
sold or transferred for 12 months. No grants of restricted shares were made in 2011.

Grants to directors in 2010 were as follows:

Directors

Number
of shares
5,277

Share price at
date of grant
$81.91

2010 Expense
(US$ ’000)
432

Compensation expense for the total number of shares awarded in 2010 to Directors was measured on the grant dates using
Millicom’s closing share price as quoted on the NASDAQ National Market on those dates.

Long-term incentive plans
2008
Long term incentive awards for 2008 (“2008 LTIPs”) were approved by Millicom’s Board of Directors on December 4, 2007. Th e
awards consisted of a performance shares plan and a matching share award plan. Shares granted under the performance share
plan vested at the end of a three year period, on meeting a performance condition related to Millicom’s “earnings per share”
(“EPS”). Th e achievement of a certain level of this condition, measured at the end of the three year period, resulted in the
vesting of a speciﬁ c percentage of shares to each employee in the plan.

Th e matching share award plan requires employees to invest in shares of the Company in order to be eligible for matching
shares. Shares awarded under this plan vested at the end of a three year period, on meeting market conditions that are based
on the “total shareholder return” (“TSR”) of Millicom’s shares compared to the TSR of a peer group of companies during the
three-year period of the plan. A fair value per share was determined and applied to the total potential number of matching
shares and was expensed over the vesting period.

In 2011, 148,585 shares were issued under the 2008 performance shares plan and 28,795 shares issued under the matching
share award plan. Th ere are no more shares to be issued under the 2008 LTIPs.

Th e total charge for the 2008 LTIPs of $25 million was recorded over the service period including $20 million in 2010 when
conditions connected to the plans previously not expected to be met, were fulﬁ lled (2008 to 2010).

2009
Long term incentive awards for 2009 (“2009 LTIPs”) were approved by Millicom’s Board of Directors on June 16, 2009. Th e 2009
LTIPs consist of a deferred share awards plan and a performance shares plan.

Shares granted under the deferred plan are based on past performance and vested 16.5% on each of January 1, 2010 and
January 1, 2011 and 67% on January 1, 2012.

Shares granted under the performance plan vest at the end of a three year period, 50% subject to a market condition that is
based on the TSR of Millicom compared to the TSR a peer group of companies during the three-year period of the plan, and
50% subject to a performance condition, based on EPS. A fair value per share subject to the market condition was determined
and applied to the total potential number of performance shares, to be expensed over the vesting period.

In 2011, 3,804 shares were issued under the 2009 performance shares plan and 26,023 shares issued under the deferred share plan.

Th e total charge for the 2009 LTIPs of $11 million was recorded over the service period (2009 to 2011).

2010
Long term incentive awards for 2010 (“2010 LTIPs”) were approved by Millicom’s Board of Directors on November 27, 2009.
Th e 2010 LTIPs consist of a deferred share awards plan and a performance shares plan, the mechanisms of which are the same
as the 2009 LTIPs.

In 2011, 706 shares were issued under the 2010 performance shares plan and 25,243 shares issued under the deferred
share plan.

Th e total charge for the 2010 LTIPs was estimated as of December 31, 2011 at $15 million, and is being recorded over the
service period (2010 to 2012).

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24. Share Based Compensation (Continued)

2011
Long term incentive awards for 2011 (“2011 LTIPs”) were approved by Millicom’s Board of Directors on February 1, 2011. Th e 2011
LTIPs consist of a deferred share awards plan and a performance shares plan, the mechanisms of which are the same as the 2009 LTIPs.

Shares granted under the deferred share awards plan are based on past performance and vest 16.5% on each of January 1, 2012
and January 1, 2013 and 67% on January 1, 2014.

Shares granted under the performance plan vest at the end of the three year period, subject to performance conditions, 50%
based on Return on Capital Investment (ROIC) and 50% based on EPS. Prior to September 2011, the vesting conditions were
50% based on EPS and 50% on a market condition that was based on the ranking of the TSR of Millicom compared to the FTSE
Global Telecoms Index adjusted to add three peer companies (“Adjusted Global Telecoms Index”). As this index was discontinued
during 2011, the Compensation Committee approved the replacement of this condition with the ROIC condition. As a result
the total estimated charge of the 2011 LTIPs increased from $19 million to $ 20 million.

In 2011, no shares were issued under either the deferred share awards plan or the performance shares plan.

Th e total charge for the 2011 LTIPs was estimated as of December 31, 2011 at $20 million, and is being recorded over the
service period (2011 to 2013).

Th e number of share awards expected to vest under the long term incentive plans is as follows:

Plan share awards
Share awards granted(i)
Revision for actual and
expected forfeitures
Revision for expectations in
respect of performance
conditions
Shares issued
Share awards
expected to vest

Performance
shares 2011
105,643
2,935

Deferred share
awards 2011
145,687
3,800

Performance
shares 2010
81,862
6,771

Deferred share
awards 2010
153,960
12,043

Performance
shares 2009
124,254
9,875

Deferred share
awards 2009
172,352
10,677

(12,947)

(19,130)

(17,425)

(26,612)

(21,127)

(36,501)

–

95,631

130,357

–

(706)

70,502

(25,243)

114,148

(4,416)

108,586

(53,337)

93,191

(i) Additional shares granted including consideration for the impact of the special dividends paid in 2011 and 2010 (see note 29)

Total share based compensation expense
Total share-based compensation for years ended December 31, 2011, 2010 and 2009 was as follows:

Share options
Restricted share grants
2006 LTIPs
2007 LTIPs
2008 LTIPs
2009 LTIPs
2010 LTIPs
2011 LTIPs
Total share based compensation expense

2011
US$ ’000
–
–
–
–
–
3,330
5,289
8,645
17,264

2010
US$ ’000
7
432
–
97
20,467
3,461
6,254
–
30,718

2009
US$ ’000
(46)
368
(530)
5,142
167
5,074
–
–
10,175

25. Put Option Reserve
On July 1, 2010, in exchange for an unconditional 5 year call option, the Company granted to its non-controlling interest in
our operation in Honduras a 5 year conditional put option over his 33.3% shareholding. A put option reserve in the amount
of $737 million was recognised representing the present value of the redemption price of the put option at that date.

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26. Other Reserves

As at January 1, 2009
Transfer from retained proﬁ ts
Shares issued via the exercise of share options
Share-based compensation
Issuance of shares–2006, 2007 and 2009 LTIPs
Currency translation movement
As at December 31, 2009
Transfer from retained proﬁ ts
Shares issued via the exercise of share options
Share-based compensation
Issuance of shares–2007, 2008, 2009 and 2010
LTIPs
Cash ﬂ ow hedge reserve movement
Currency translation movement
As at December 31, 2010
Transfer from retained proﬁ ts
Shares issued via the exercise of share options
Share-based compensation
Issuance of shares–2008, 2009, 2010 and 2011
LTIPs
Cash ﬂ ow hedge reserve movement
Currency translation movement
As at December 31, 2011

Legal
reserve
US$ ’000
15,365
880
–
–
–
–
16,245
53
–
–

–

–
–
16,298
61
–
–

–

–
–
16,359

Equity-settled
transaction
reserve
US$ ’000
30,726
–
(888)
9,807
(13,891)
–
25,754
–
(816)
30,286

(16,488)

–
–
38,736
–
(81)
17,264

(23,230)

–
–
32,689

Hedge
reserve
US$ ’000
–
–
–
–
–
–
–
–
–
–

–

(1,700)
–
(1,700)
–
–
–

–

(3,015)
–
(4,715)

Currency
translation
reserve
US$ ’000
(93,265)
–
–
–
–
(13,664)
(106,929)
–
–
–

–

–
(1,090)
(108,019)
–
–
–

–

–
(39,806)
(147,825)

Total
US$ ’000
(47,174)
880
(888)
9,807
(13,891)
(13,664)
(64,930)
53
(816)
30,286

(16,488)

(1,700)
(1,090)
(54,685)
61
(81)
17,264

(23,230)

(3,015)
(39,806)
(103,492)

Legal reserve
On an annual basis, if the Company reports a net proﬁ t for the year on a non-consolidated basis, Luxembourg law requires
appropriation of an amount equal to at least 5% of the annual net proﬁ t to a legal reserve until such reserve equals 10% of the
issued share capital. Th is reserve is not available for dividend distribution.

At the Company’s Annual General Meeting in May 2011, the shareholders voted to transfer $61 thousand from retained proﬁ ts
to the legal reserve (May 2010: $53 thousand).

Equity-settled transaction reserve
Th e cost of share options and LTIPs is recognized as an increase in the equity-settled transaction reserve over the period in
which the performance and/or service conditions are rendered. When the options are subsequently exercised their cost is
transferred from the equity-settled transaction reserve to the share premium. Th e reserve will be transferred to the share
capital and share premium when the shares under the diﬀ erent LTIPs vest and are issued.

Currency translation reserve
For the purposes of consolidating joint ventures, associates and subsidiaries with functional currencies other than US dollars,
their statements of ﬁ nancial position are translated to US dollars using the closing exchange rate. Income statements accounts
are translated to US dollars at the average exchange rates during the year. Th e currency translation reserve includes foreign
exchange gains and losses arising from the translation of ﬁ nancial statements.

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27. Borrowings
Borrowings due after more than one year:

Debt and ﬁ nancing:
8% Senior Notes
Bank ﬁ nancing
Non-controlling shareholders
Vendor ﬁ nancing
Finance leases
Total non-current other debt and ﬁ nancing
Less: portion payable within one year
Total other debt and ﬁ nancing due after more than one year

Borrowings due within one year:

Debt and ﬁ nancing:
Bank ﬁ nancing
Vendor ﬁ nancing
Finance leases
Total current other debt and ﬁ nancing
Portion of non-current debt payable within one year
Total other debt and ﬁ nancing due within one year

2011
US$ ’000

2010
US$ ’000

436,679
1,411,340
264,427
42,911
137,764
2,293,121
(476,269)
1,816,852

435,279
1,477,680
308,162
49,211
41,235
2,311,567
(514,995)
1,796,572

2011
US$ ’000

2010
US$ ’000

121,134
6,462
17,561
145,157
476,269
621,426

36,876
3,593
–
40,469
514,995
555,464

Th e following table provides details of net debt change for the years 2011, 2010 and 2009:

Net debt at the beginning of the year
Cash items
Proceeds from issuance of debt and other ﬁ nancing
Repayment of debt and other ﬁ nancing
Net (increase) decrease in cash and cash equivalents
(Purchase) disposal of time deposits
(Purchase) disposal of pledged deposits
Non-cash items
Vendor ﬁ nancing and ﬁ nance leases (see note 31)
Interest accretion
Debt acquired in acquisition of subsidiaries
Other
Exchange movement on debt and other ﬁ nancing
Net debt at the end of the year

2011
US$ ’000
1,268,219

703,073
(791,940)
142,208
2,837
8,683

37,929
47,507
–
108,483
(19,937)
1,507,062

2010
US$ ’000
722,935

2009
US$ ’000
1,483,831

1,147,585
(1,396,997)
487,675
46,953
2,462

90,779
31,825
–
77,249
57,753
1,268,219

627,872
(506,588)
(836,967)
(50,061)
(45,652)

45,399
20,908
25,962
(95,637)
53,868
722,935

Net debt includes interest bearing loans and borrowings, less cash and cash equivalents and pledged and time deposits related
to bank borrowings.

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27. Borrowings (Continued)

10% Senior notes
On September 9, 2010, Millicom announced early and fully redemption of its 10% Senior Notes. Th e 10% Senior Notes were
repurchased on November 30, 2010 for $490 million representing $459 million of principal, $23 million of interest to December
1, 2010 and $8 million early redemption penalty.

Th ese notes were initially issued in aggregate principal amount of $550 million on November 24, 2003, due on December 1,
2013, of which $90 million were repurchased in 2007. Th e 10% Senior Notes were bearing interest at 10% per annum, payable
semi-annually in arrears on June 1 and December 1.

Other debt and ﬁ nancing
Millicom’s share of total other debt and ﬁ nancing analyzed by operation is as follows:

Colombia(i)
El Salvador(ii)
Honduras(iii)
Tanzania(iv)
Guatemala(v)
Ghana(vi)
Cable Central America(vii)
Chad(viii)
Paraguay(ix)
Bolivia(x)
DRC(xi)
Other
Total other debt and ﬁ nancing
Of which:
Due after more than 1 year
Due within 1 year

2011
US$ ’000
543,412
436,679
258,383
197,270
221,364
118,426
131,834
107,767
98,222
70,831
96,343
157,747
2,438,278

1,816,852
621,426

2010
US$ ’000
522,994
435,279
207,277
207,086
163,631
158,183
133,816
107,227
105,700
99,085
94,151
117,607
2,352,036

1,796,572
555,464

Signiﬁ cant individual ﬁ nancing facilities are described below:

(i) Colombia
In March 2008, Colombia Móvil S.A. E.S.P (“Colombia Móvil”), Millicom’s operation in Colombia, entered into a COP391 billion,
5 year facility with a club of Colombian banks. Th is facility bears interest at Deposits to Fixed Terms (“DTF”) plus 4.5% and is
50% guaranteed by the Company. As at December 31, 2011, $93 million (2010: $176 million) was outstanding on this facility.

Colombia Móvil S.A. E.S.P. also had local currency loans from its non-controlling shareholders outstanding as at December 31,
2011 of $264 million (2010: $308 million). Th ese loans bear interest at DTF plus 4.15% and mature between 2014 and 2015.

In addition, as at December 31, 2011 Colombia Móvil S.A. E.S.P. had $116 million (2010: $39 million) of other debt and
ﬁ nancing, in US$ and local currency as well as ﬁ nance lease payables of $52 million relating to lease of tower space from ATC
Sitios Infraco S.A.S.

(ii) El Salvador
On September 23, 2010, Telemóvil Finance Co. Ltd., a fully owned subsidiary of Millicom in the Cayman Islands issued $450
million aggregate principal amount of 8% Senior Unsecured Guaranteed Notes (the “8% Senior Notes”) due on October 1,
2017. Th e 8% Senior Notes were issued for $444 million representing 98.68% of the aggregate principal amount. Distribution
and other transaction fees of $9 million reduced the total proceeds from issuance to $435 million. Th e 8% Senior Notes have
an 8% per annum coupon with an 8.25% yield and are payable semi-annually in arrears on April 1 and October 1. Th e eﬀ ective
interest rate is 8.76%.

Th e 8% Senior Notes are general unsecured obligations of Telemóvil Finance Co. Ltd and rank equal in right of payment with all
future unsecured and unsubordinated obligations of Millicom. Th e 8% Senior Notes are guaranteed by Telemóvil El Salvador,
S.A., a Millicom subsidiary.

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27. Borrowings (Continued)

Telemóvil Finance Co. Ltd has options to partially or fully redeem the 8% Senior Notes as follows:

(i)

Full or partial redemption at any time prior to October 1, 2014 for 100% of the principal to be redeemed, or the present
value of the remaining scheduled payments of principal to be redeemed and interest, whichever is higher.

(ii) Full or partial redemption at any time on or after October 1, 2014 for the following percentage of principal to be

redeemed, plus accrued and unpaid interest and all other amounts dues, if any:

October 1, 2014 104%
October 1, 2015 102%
October 1, 2016 100%

(iii) Redemption of up to 35% of the original principal of the 8% Senior Notes if, prior to October 1, 2013, Telemóvil El Salvador
receives proceeds from issuance of shares, at a repurchase price of 108% of the principal amount to be redeemed plus
accrued and unpaid interest and all other amounts due, if any, on the redeemed notes.

If either Millicom, Telemóvil Finance Co. Ltd or Telemóvil El Salvador, S.A. experience a Change of Control Triggering Event,
deﬁ ned as a rating decline resulting from a change in control, each holder will have the right to require repurchase of its notes
at 101% of their principal amount plus accrued and unpaid interest and all other amounts due, if any.

In September 2006, Telemóvil El Salvador S.A., Millicom’s operation in El Salvador, entered into a $200 million 5 year loan.
Th e loan was syndicated amongst a group of local and international banks and was arranged by ABN AMRO, Citigroup and
Standard Bank. Th e loan bears interest at $ LIBOR plus 1.75%. Th is loan was fully repaid in 2010.

In December 2008, Telemóvil El Salvador S.A., entered into a $12 million 2 year loan with Banco Agrícola Comercial S.A.
Th e loan bears interest at $ LIBOR plus 6%. Th is loan was fully repaid in 2010.

In December 2009, El Salvador entered into a 2 year loan with Scotiabank, bearing interest at $ LIBOR plus 5.0%. Th is loan
was fully repaid in 2010.

(iii) Honduras
Telefonica Celular S.A., Millicom’s operation in Honduras, has facilities with several local and international banks maturing
between 2012 and 2016. Th ese facilities are in dollars and in Lempiras and are unsecured. Interest rates are either ﬁ xed or
variable, ranging as of December 31, 2011 between 4% and 11% (2010: between 6.25% and 16.5%). As at December 31, 2011,
the amount of outstanding debt under these facilities was $258 million.

(iv) Tanzania
In December 2008, Millicom Tanzania Limited, Millicom’s operation in Tanzania entered into facilities totaling $228 million
comprising of a 5 year local currency syndicated tranche for TZS95 billion at the 180 days treasury Bill rate plus 3%, a seven
year $116 million EKN guaranteed ﬁ nancing with 45% of the facility ﬁ xed at 4.1% and 55% of the facility at $ LIBOR plus 0.665%
and a seven year $40 million tranche with Proparco at $ LIBOR plus 2.5%. All tranches are 100% guaranteed by the Company.
As at December 31, 2011, the amount outstanding under these facilities was $155 million (2010: $200 million).

In March 2007, Millicom Tanzania Limited entered into a 5 year Citi-Opic facility, bearing interest at a rate of $ LIBOR plus
2.5%, composed of a $17.4 million $ Tranche and a Tranche in local currency up to the equivalent of $5 million. Th e
outstanding US$ amount under these facilities as at December 31, 2011 amounted to $2 million (2010: $7 million).

In December 2010, the operation signed a sale and lease-back agreement with Helios Towers Tanzania, a direct subsidiary of
Helios Towers Africa, for most of its cell sites, to be transferred to Helios Towers in 2011 and 2012. As at December 31, 2011,
$40 million was outstanding on the ﬁ nance lease as part of the lease back agreement.

(v) Guatemala
In 2011 Comcel and its sister companies Asesoria en Telecomunicaciones S.A. (Asertel), Distribuidora Central de
Comunicaciones, S.A. (COCENSA), Distribuidora Internacional de Comunicaciones, S.A. (INTERNACOM) and Distribuidora de
Comunicaciones de Occidente, S.A. (COOCSA) entered into a $215 million syndicated loan with Citibank, Scotiabank, Banco
General, RBC and HSBC which was fully disbursed in 2011, Millicom’s share of the facility at December 31, 2011 amounted to
$118 million.

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27. Borrowings (Continued)

As at December 31, 2011, Comcel had ﬁ nancing of $27 million (Millicom’s share of outstanding debt) with Citibank bearing a
ﬁ xed rate of 4.40% (2010: $28 million), and $70 million with Bancolombia and Blue Tower maturing between 2012 and 2017
bearing a ﬂ oating interest rate between 5.00% and 5.06% (2010: $71 million) and other ﬁ nancing with local banks of the
equivalent of $6 million (2010: nil).

Comcel also had another 5 year facility with IFC for $100 million, bearing interest at $ LIBOR plus 4.50%. Th is loan was fully
repaid during 2011 (2010: $64 million).

(vi) Ghana
In December 2007 Millicom (Ghana) Limited, Millicom’s operation in Ghana, entered into a $60 million local 5 year Facility.
Th e loan bears interest at $ LIBOR plus 2%. In parallel a $80 million oﬀ shore 7 year DFI (Development Finance Institution)
ﬁ nancing which bears interest at $ LIBOR plus 2.25% was arranged. As at December 31, 2011, $72 million (2010: $102 million)
was outstanding under these facilities.

In December 2009 the operation entered into a 3.5 year $22 million Ericsson arranged ﬁ nancing with EKN and Nordea priced
at $ LIBOR + 0.85% fully guaranteed by the Company. As at December 31, 2011, $19 million was outstanding under this facility
(2010: $15 million).

In January 2010, the operation signed a sale and lease-back agreement with Helios Towers Ghana, a direct subsidiary of Helios
Towers Africa, for most of its cell sites, to be transferred to Helios Towers in 2010 and 2011. As at December 31, 2011, $27
million was outstanding on the ﬁ nance lease as part of the lease back agreement (2010: $41 million).

(vii) Cable Central America
In September 2009, Millicom Cable N.V., a subsidiary of the Company, reﬁ nanced with a 2 year, $250 million senior term loan
facility fully guaranteed by the Company with Standard Bank, RBS, Nordea, DnB Nor, and Morgan Stanley. Th is loan agreement
is allocated to the three main Amnet operating entities in Costa Rica, El Salvador, and Honduras. Th e loan bore interest for the
ﬁ rst six months at $ LIBOR plus 4.5%, for months seven to twelve at $ LIBOR plus 4.75% and thereafter the margin increases by
an incremental 25 basis points per quarter.

During the course of 2010 Millicom’s cable businesses in Honduras and Costa Rica obtained ﬁ nancing under a $105 million
7 year club deal ﬁ xed rate facility with HSBC, Bancocolombia and Citibank bearing interest at 6.7% in Costa Rica and a $30
million 7 year bilateral ﬁ xed rate ﬁ nancing from Banco Industrial bearing interest at 7% in Honduras. As at December 31, 2011,
$99 million was outstanding under the facility in Costa Rica (2010: $104 million) and $33 million for the facility in Honduras
(2010: $29 million).

(viii) Chad
In May and August 2007, Millicom’s operation in Chad signed respectively a $31 million 5 year Facility with China Development
Bank bearing interest at $ LIBOR +2% and a Euro15 million 5 year Facility with Proparco bearing interest at Euribor +2%. As at
December 31, 2011 $3 and $4 million respectively (2010: $13 and $8 million respectively) were outstanding under these
facilities, both guaranteed by the Company.

In May 2009, Millicom Chad entered into a XAF6 billion 5 year Facility co-arranged by Societe Generale Cameroun and Financial
Bank priced at a ﬁ xed interest rate of 7%, fully guaranteed by the Company. At the same date, Millicom Chad signed a XAF21
billion 5 year Subordinated Facility with Societe Generale Tchad with interest at TIAO +1.85% and guaranteed by Nordea.
Th is guarantee is secured by a pledged deposit of $44 million by the Company (see note 19). As at December 31, 2011 $12
and $41 million respectively were outstanding under these facilities (2010: $12 million and $43 million respectively).

In December 2009 the operation signed a XAF9.25 billion 5 year ﬁ xed rate ﬁ nancing with the IFC bearing interest at 8%.
Th is facility is guaranteed by Millicom. As at December 31, 2011 the amount outstanding under this facility was $17 million
(2010: $18 million).

In January 2010 the operation entered into a 3 year deferred payment agreement with Huawei for $50 million, guaranteed by
Millicom and bearing interest at LIBOR +3.75%. As at December 31, 2011 the amount outstanding under this agreement was
$15 million (2010: $13 million).

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27. Borrowings (Continued)

In July 2010, Millicom Chad signed a XAF 8 billion 5 year Facility co-arranged by Proparco and BICEC (Banque Internationale
du Cameron pour l’Epargne et Le Credit) at a ﬁ xed interest rate of 8%, guaranteed by Millicom. As at December 31, 2011 the
amount outstanding under this facility was $15 million (2010: nil).

(ix) Paraguay
In July 2008, Telefonica Cellular Del Paraguay S.A. (Telecel), Millicom’s operation in Paraguay entered into a $107 million, 8 year
loan with the European Investment Bank (“EIB”). Th e loan bears interest at rates between $ LIBOR plus 0.234% and $ LIBOR
plus 0.667%. Th e outstanding amount as at December 31, 2011 was $95 million (2010: $100 million). Th e EIB loan is guaranteed
for commercial risks by a group of banks. Th e commission guarantee fee is 1.25% per annum.

In addition as at December 31, 2011, Telecel had $3 million (2010: $6 million) of other debt and ﬁ nancing outstanding.

(x) Bolivia
In December 2007, Telefonica Celular de Bolivia SA (“Telecel Bolivia”), Millicom’s operation in Bolivia, signed a ﬁ nancing
agreement for $40 million with the Nederlandse Financieringsmaatschappij Voor Ontwikkelingslanden, N.V. (FMO), also
known as the Netherlands Development Finance Company. Th e A tranche of $20 million was provided directly by the FMO, is
repayable over 7 years and bears interest at $ LIBOR plus 2.25%. Th e B tranche of $20 million is provided equally by Nordea and
Standard Bank, is repayable over 5 years and bears interest at $ LIBOR plus 2%. Both tranches are guaranteed by the Company.
As of December 31, 2011, $16 million of this ﬁ nancing agreement was outstanding (2010: $25 million).

In March 2008, Telecel Bolivia signed a 4 year and 9 months ﬁ nancing agreement for $30 million with International Finance
Corporation. Th e loan bears interest at $ LIBOR plus 2% and is fully guaranteed by the Company. As of December 31, 2011, $8
million of this ﬁ nancing agreement was outstanding (2010: $17 million).

In addition to the above, Telecel Bolivia had $46 million of other debt and ﬁ nancing outstanding as at December 31, 2011
(2010: $44 million). Th is additional debt comprises seven bilateral loans in local currency bearing a ﬁ xed rate ranging from
4.5% to 6.5% and maturing between December 2012 and December 2016.

During 2011 supplier ﬁ nancing from Huawei (at interest rates of $ LIBOR plus 2%) and FPLT amounting to $13 million
was repaid.

(xi) Democratic Republic of Congo
In September 2006, Oasis S.P.R.L. (“Oasis”), Millicom’s operation in the Democratic Republic of Congo, entered into a $106
million, 7 year loan from the China Development Bank to ﬁ nance equipment purchases from Huawei. Th e loan bears interest
at $ LIBOR plus 2% and is repayable over 17 equal quarterly installments commencing in 2009. Th is ﬁ nancing is 100%
guaranteed by the Company. As of December 31, 2011, $35 million was outstanding under this facility (2010: $55 million).

In September 2009, Oasis entered into a 7 year $80 million ﬁ nancing with the IFC guaranteed by Millicom and bearing interest
at LIBOR +5%. As at December 31, 2011 the outstanding amount under this facility was $28 million (2010: $17 million).

In addition at December 31, 2011, Oasis had other debt and ﬁ nancing of $33 million (2010: $22 million), mainly consisting of
$17 million of ﬁ nance leases related to towers and $16 million of vendor ﬁ nancing from Huawei, bearing interest at Libor + 3%
and guaranteed by Millicom.

Fair value of ﬁ nancial liabilities
Borrowings are recorded at amortized cost. Th e fair value of borrowings as at December 31, 2011 and 2010 is as follows:

Other debt and ﬁ nancing
Fair value of total debt

2011
2,262,974
2,262,974

2010
2,246,644
2,246,644

When the quoted price of the borrowings in an active market is not available, the fair value of the borrowings is calculated by
discounting the expected future cash ﬂ ows at market interest rates.

Th e nominal value of the other ﬁ nancial liabilities is assumed to approximate their fair values (see note 35).

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27. Borrowings (Continued)

Guarantees
In the normal course of business, Millicom has issued guarantees to secure some of the obligations of some of its operations
under bank and supplier ﬁ nancing agreements. Th e tables below describe the outstanding amount under the guarantees and
the remaining terms of the guarantees as of December 31, 2011 and 2010. Amounts covered by bank guarantees are recorded
in the consolidated statements of ﬁ nancial position under the caption “Other debt and ﬁ nancing” and amounts covered by
supplier guarantees are recorded under the caption “Trade payables” or “Other debt and ﬁ nancing” depending on the
underlying terms and conditions.

As of December 31, 2011

Terms
0–1 year
1–3 years
3–5 years
More than 5 years
Total

As of December 31, 2010

Terms
0–1 year
1–3 years
3–5 years
More than 5 years
Total(ii)

Bank and other
ﬁ nancing guarantees(i)

Outstanding
exposure
29,522
230,855
271,995
186,065
718,437

Maximum
exposure
105,088
383,124
354,565
225,210
1,067,987

Bank and other
ﬁ nancing guarantees(i)

Outstanding
exposure
–
360,084
220,079
182,165
762,328

Maximum
exposure
6,200
472,231
293,424
265,710
1,037,565

(i) Th e guarantee ensures payment by the guarantor of outstanding amounts of the underlying loans in the case of non-payment by the obligor.
(ii)

Including discontinued operations.

Pledged assets
Th e Group’s share of total debt and ﬁ nancing secured by either pledged assets, pledged deposits issued to cover letters of credit
or guarantees issued by the Company as at December 31, 2011 is $1,384 million (2010: $1,380 million). Th e assets pledged by
the Group for these debts and ﬁ nancings at the same date amount to $383 million (2010: $411 million) of which $335 million
(2010: $360 million) were pledged over property, plant and equipment.

28. Other Non-Current and Current Provisions and Liabilities
Provisions and other non-current liabilities are comprised as follows:

Non-current legal provisions (note 32)
Long-term portion of asset retirement obligations
Long-term portion of deferred income on tower deals
Other
Total

2011
US$ ’000
5,658
51,223
50,914
5,818
113,613

2010
US$ ’000
6,416
61,473
7,864
4,014
79,767

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27. Borrowings (Continued)

Provisions and other current liabilities are comprised as follows:

Put option(i)
Deferred revenues
Customer deposits
Current legal provisions (note 32)
Other tax payables
Current provisions(ii)
Derivative ﬁ nancial instruments
Customer and distributor cash balances (Tigo cash)
Other
Total

2011
US$ ’000
745,145
133,326
22,171
1,738
69,799
15,147
14,884
19,152
27,118
1,048,480

2010
(As Restated)
US$ ’000
769,378
111,169
12,242
2,314
87,541
21,067
–
2,044
6,080
1,011,835

(i) Restatement – see note 4
(ii)

Includes tax and other contingencies for $4 million (2010: $12 million) that were assumed as part of the Amnet and Navega acquisitions.
Th e former shareholders of Amnet and Navega placed in escrow $35 million and $3 million respectively to cover these contingencies.
Th erefore a corresponding ﬁ nancial asset of $4 million (2010: $12 million) has been recorded within “Other current assets”.

Put option
On July 1 2010, Millicom reached an agreement with its local partner in Honduras whereby Millicom’s local partner granted
Millicom an unconditional call option for a duration of ﬁ ve years for his 33% stake in Celtel, the Honduran operation (see
notes 5 and 35). At the same time, and as consideration for the call option, Millicom granted a put option for the same
duration to its local partner. Th e put option can only be exercised in cases of a change of control of Millicom International
Cellular S.A. or Millicom’s subsidiary that holds the shares in Celtel (except if the change of control is in favor of Investment
AB Kinnevik, the current largest shareholder of Millicom, or management of Millicom).

A change of control event may occur at Millicom level which is beyond the control of Millicom. Such an event would trigger
the ability of our local partner to exercise his put option at his discretion. Th erefore, the put option is a ﬁ nancial liability as
deﬁ ned in IAS 32 and Millicom has recorded a current liability for the present value of the redemption price of the put
option of $745 million at December 31, 2011 (2010: $769 million).

Th e redemption price of the put option is based on a multiple of the EBITDA of Celtel. Th e multiple is based on a change of
control transaction multiple of Millicom. Management estimated the change of control transaction multiple of Millicom from
a trading multiple of Millicom and adding a control premium (based upon comparable transactions from the industry).

29. Dividends
On December 2, 2011 an extraordinary dividend of $3.00 per share from Millicom’s retained proﬁ ts as at December 31, 2010
was approved at an Extraordinary General Meeting and distributed in December 2011.

On May 31, 2011 a dividend distribution of $1.80 per share from Millicom’s retained proﬁ ts as at December 31, 2010 was
approved by the shareholders at the Annual General Meeting and distributed in June 2011.

On May 25, 2010 an ordinary dividend of $1.40 per share and a special dividend of $4.60 per share from Millicom’s retained
proﬁ ts as at December 31, 2009 were approved by the shareholders and distributed in June 2010.

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30. Directors’ and oﬃ cers’ remuneration
Directors
Th e remuneration of the members of the Board of Directors of the Company comprises an annual fee. Between May 2006 and
May 2010 the Directors remuneration also included share based compensation (restricted shares) and until May 2006
Directors were issued share options. Director remuneration is proposed by the Nominations Committee and approved by the
shareholders at the Annual General Meeting of Shareholders (the “AGM”).

Th e remuneration charge for the Board for the years ended December 31, 2011, 2010 and 2009 was as follows:

2011
Fees
Total
2010
Fees
Share-based compensation:(i)
Restricted shares(ii)
Total
2009
Fees
Share-based compensation:(i)
Restricted shares(ii)
Total

Chairman

No. of shares

US$ ’000

Other members of the Board
No. of shares

US$ ’000

Total
US$ ’000

203
203

82
159

106

81
187

697
697

444

350
794

584

287
871

900
900

521

432
953

690

368
1,058

4,270

5,111

1,007

1,441

(i) See note 24.
(ii) Restricted shares cannot be sold for one year from date of issue

Th e number of shares and share options beneﬁ cially owned by the Directors as at December 31, 2011 and 2010 was as follows:

2011
Shares
Share options
2010
Shares
Share options

Chairman

Other members
of the Board

2,318
–

19,560
10,000

73,158
35,000

Total

21,878
10,000

75,476
35,000

Oﬃ cers
Th e remuneration of the Oﬃ cers of the Company (“Oﬃ cers”) comprises an annual base salary, an annual bonus, share based
compensation, social security contributions, pension contributions and other beneﬁ ts. Th e bonus and share based compensation
plans are based on actual performance (including individual and Group performance). Up until May 2006, the Oﬃ cers were
issued share options. Subsequent to May 2006, the Oﬃ cers were issued restricted shares. Share-based compensation is granted
once a year by the Compensation Committee of the Board. Since 2006, the annual base salary and other beneﬁ ts of the Chief
Executive Oﬃ cer (“CEO”) are proposed by the Compensation Committee and approved by the Board and the annual base
salary and other beneﬁ ts of the Chief Financial Oﬃ cer (“CFO”) and Chief Operating Oﬃ cers (“COOs”) are set by the CEO
and approved by the Board.

On March 2, 2009, Millicom announced that the Board appointed Mikael Grahne, who has been the COO of Millicom since
February 2002, to succeed Marc Beuls as President and CEO.

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30. Directors’ and Oﬃ cers’ Remuneration (Continued)

Th e remuneration charge for the Oﬃ cers for the years ended December 31, 2011, 2010 and 2009 was as follows:

2011
Base salary
Bonus
Pension
Other beneﬁ ts
Total
Share-based compensation:(i)
Shares issued/charge under long term incentive plans(ii)
2010
Base salary
Bonus
Pension
Other beneﬁ ts
Total
2009
Base salary
Bonus
Other beneﬁ ts
Total
Share-based compensation:(i)
Shares issued/charge under long term incentive plans (ii)
Charge for share options

Current
Chief Executive
Oﬃ cer
US$ ’000

Former
Chief Executive
Oﬃ cer
US$ ’000

Current
Chief Financial
Oﬃ cer
US$ ’000

1,323
1,915
406
158
3,802

2,862

1,261
1,823
385
178
3,647

1,380
1,988
142
3,510

1,598
16

–
–
–

–

–
–
–

–

2,349
1,388
–
3,737

(2,829)(iii)
10

676
798
105
71
1,650

1,267

614
624
112
74
1,424

625
503
–
1,128

129
–

(i) See note 24.
(ii)

Share awards of 34,937 and 14,814 were granted in 2011 under the 2011 LTIPs to the CEO and CFO. Share awards of 41,628 and 19,891 were
granted in 2010 under the 2010 LTIPs to the CEO and CFO. Share awards of 35,011 and 13,323 were granted under the 2009 LTIPs to the
CEO and CFO.

(iii) Reversal for non-vested shares of the former CEO, Marc Beuls.

Th e number of shares and unvested share awards beneﬁ cially owned by senior management as at December 31, 2011 and 2010
was as follows:

2011
Shares
Share awards not vested
2010
Shares
Share awards not vested

Chief
Executive
Oﬃ cer

666,193
105,063

648,647
99,431

Chief
Financial
Oﬃ cer

7,800
45,228

905
37,720

Total

673,993
150,291

649,552
137,151

Severance payments
If employment of the executives is terminated by Millicom, severance payment of up to 12 months’ salary is payable.

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30. Directors’ and Oﬃ cers’ Remuneration (Continued)

31. Non-Cash Investing and Financing Activities
Th e following table gives details of non-cash investing and ﬁ nancing activities for continuing operations for the years ended
December 31, 2011, 2010 and 2009.

Investing activities
Acquisition of property, plant and equipment (see note 17)
Asset retirement obligations (see note 17)
Financing activities
Vendor ﬁ nancing and ﬁ nance leases (see note 17)
Share-based compensation (see note 24)

2011
US$ ’000

2010
US$ ’000

2009
US$ ’000

(37,929)
(4,876)

37,929
17,264

(90,779)
16,683

90,779
30,718

(45,399)
(24,209)

45,399
10,175

32. Commitments and Contingencies
Operational environment
Millicom has operations in emerging markets, namely Latin America and Africa, where the regulatory, political, technological
and economic environments are evolving. As a result, there are uncertainties that may aﬀ ect future operations, the ability to
conduct business, foreign exchange transactions and debt repayments and which may impact upon agreements with other
parties. In the normal course of business, Millicom faces uncertainties regarding taxation, interconnect, license renewal and
tariﬀ arrangements, which can have a signiﬁ cant impact on the long-term economic viability of its operations.

Litigation
Th e Company and its operations are contingently liable with respect to lawsuits and other matters that arise in the normal
course of business. As of December 31, 2011, the total amount of claims against Millicom’s operations was $127 million
(December 31, 2010: $143 million) of which $1 million (December 31, 2010: $6 million) relate to joint ventures. As at
December 31, 2011, $7 million (December 31, 2010: $9 million) has been provided for these claims in the consolidated
statement of ﬁ nancial position. Management is of the opinion that while it is impossible to ascertain the ultimate legal and
ﬁ nancial liability with respect to these claims, the ultimate outcome of these contingencies is not anticipated to have a
material eﬀ ect on the Group’s ﬁ nancial position and operations.

Sentel GSM S.A. (“Sentel”) license
Th e Sentel license to provide mobile telephony services in the Republic of Senegal has been challenged by the Senegalese
authorities. As of today, Sentel continues to provide telephony services to its customers and eﬀ ectively remains in control of
the business. However, the government of the Republic of Senegal published on November 12, 2008 a decree dated as of 2001
that purports to revoke Sentel’s license.

Sentel’s twenty year license was granted in 1998 by a prior administration, before the enactment in 2002 of the Senegal
Telecommunications Act. Although the current Senegalese government has, since 2002, acknowledged the validity of the
Sentel license, it has also requested that Sentel renegotiate the terms of the license. Sentel has indicated its willingness to
negotiate only certain enhancements to the license and data services and the extension of the duration of the license.

On November 11, 2008 Millicom International Operations B.V. (MIO B.V.), a wholly owned Millicom subsidiary and Sentel
instigated arbitration proceedings with the International Center for the Settlement of Investment Disputes (ICSID) against the
Republic of Senegal under provisions of the Sentel license and international law. MIO B.V. and Sentel seek compensation for
the purported expropriation of the Senegal license and monetary damages for breach of the license.

On the same day, the Republic of Senegal instigated court proceedings in the Republic of Senegal against Millicom and Sentel
and sought court approval for the revocation of Sentel’s license and sought damages against Sentel and Millicom.

In July 2010, the ICSID panel ruled that it has jurisdiction over the claims brought by Sentel and MIO B.V., overruling the
objections to ICSID’s jurisdiction made by the Republic of Senegal. On November 10, 2010, the Republic of Senegal withdrew
its action against Sentel and Millicom in the court proceedings in Senegal. A hearing on the merits of the case was held in
December 2011, and a ﬁ nal decision on the case is expected in 2012.

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30. Directors’ and Oﬃ cers’ Remuneration (Continued)

Due to the nature of the dispute, the status of the process for arbitration proceedings, a lack of qualitative information from
which to assess possible outcomes, and a lack of ﬁ nancial information, signiﬁ cant uncertainties exist as to the ﬁ nancial impact
(if any) of the dispute. Th e uncertainties are such that, at the date of ﬁ ling of these consolidated ﬁ nancial statements, it is not
practicable to include a reasonable and accurate assessment of the possible ﬁ nancial eﬀ ect of this dispute.

Lease commitments
Operating Leases:
Th e Group has the following annual operating lease commitments as of December 31, 2011 and 2010.

Operating lease commitments
Within: one year
Between: one to ﬁ ve years
After: ﬁ ve years
Total

2011
US$ ’000

62,480
157,843
18,587
238,910

2010
US$ ’000

63,375
235,195
143,390
441,960

Operating leases comprise mainly of lease agreements relating to land and buildings. Th e operating lease terms and conditions
reﬂ ect normal market conditions. Total operating lease expense from continuing operations was $96 million in 2011 (2010: $83
million, 2009: $73 million–see note 11).

Finance leases:
Th e Group’s future minimum payments on ﬁ nance leases were $453 million at December 31, 2011 (2010: $120 million) and
mainly comprised leased towers in Ghana, Tanzania, DRC and Colombia under 12 year leases (see note 17). Other ﬁ nancial
leases are not material and mainly consist of lease agreements relating to vehicles used by the Group.

Th e Group has the following ﬁ nance lease commitments as of December 31, 2011 and 2010.

Finance lease commitments
Within: one year
Between: one to ﬁ ve years
After: ﬁ ve years
Total

2011
US$ ’000

36,507
153,212
263,303
453,022

2010
US$ ’000

6,874
33,438
79,430
119,742

Capital commitments
As of December 31, 2011 the Company and its subsidiaries and joint ventures have ﬁ xed commitments to purchase network
equipment, land and buildings and other ﬁ xed assets for a value of $370 million (2010: $207 million), of which $46 million
(2010: $19 million) relate to joint ventures, from a number of suppliers.

In addition, Millicom is committed to supporting Colombia Móvil S.A., its operation in Colombia, through loans and warranties.
Th e maximum commitment is $264 million and remains until the time the total support from Millicom equals the support
from the founding shareholders of Colombia Móvil S.A.

Contingent assets
Due to late delivery by suppliers of network equipment in various operations, Millicom is entitled to compensation. Th is
compensation is in the form of discount vouchers on future purchases of network equipment. Th e amount of vouchers
received but not recognized as they had not yet been used as at December 31, 2011 was $0.2 million (2010: $1 million).

Dividends
Th e ability of the Company to make dividend payments is subject to, among other things, the terms of indebtedness, legal
restrictions and the ability to repatriate funds from Millicom’s various operations. As at December 31, 2011, $94 million
(December 31, 2010: $60 million) of Millicom’s retained proﬁ ts represent statutory reserves and are undistributable to
owners of the Company.

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102

32. Commitments and Contingencies (Continued)

Foreign currency forward contracts
As of December 31, 2011, the Group held foreign currency forward contracts to sell Colombian Pesos in exchange for United
States Dollars for a nominal amount of $84 million (2010: $84 million). Net exchange losses on these forward contracts for the
year were $2 million (2010: $15 million).

Ownership agreements with non-controlling shareholders
As of December 31, 2010 the agreement with the non-controlling shareholder to increase Millicom’s ownership of its cable
businesses in El Salvador from 55% to 100% was pending regulatory approval.

33. Related Party Transactions
Th e Company conducts transactions with its principal shareholder, Investment AB Kinnevik (“Kinnevik”) and subsidiaries, and
with tower companies in which it holds a direct or indirect equity interest in Ghana, DRC, Tanzania and Colombia.
Transactions with related parties are conducted on normal commercial terms and conditions.

Kinnevik
Th e Company’s principal shareholder is Kinnevik. Kinnevik is a Swedish holding company with interests in the telecommunications,
media, publishing, paper industries and ﬁ nancial services. As of December 31, 2011 and 2010, Kinnevik owned approximately
36% of Millicom. During 2011 and 2010, Kinnevik did not purchase any Millicom shares. Th ere are no loans made by Millicom
to or for the beneﬁ t of these related parties.

During 2011 and 2010 the Company purchased services from Kinnevik subsidiaries including fraud detection, procurement
and professional services.

Helios Towers and American Towers
Th e Group acquired a 40% equity investment in the associate company Helios Towers Ghana in 2010 and in the associate
companies Helios Towers DRC, Helios Towers Tanzania and ATC Colombia B.V. in 2011 (“Tower companies”). Millicom sold
and leased back a portion of its tower assets in each of these countries and received related tower operation and management
services (see note 7). Th e Group has future lease commitments in respect of the Tower companies (see note 32).

Th e following transactions were conducted with related parties:

Purchases of goods and services (Kinnevik)
Lease of towers and related services (Associates)
Gain on sale of towers (Associates)
Total

As at December 31, the Company had the following balances with related parties:

Payables
Finance lease payables
Other accounts payable
Total
Receivables from sale of towers

2011
US$ ’000
5,958
21,864
54,419
82,241

2010
US$ ’000
4,000
8,738
7,521
20,259

2011
US$ ’000

126,823
10,077
136,900
76,677

2009
US$ ’000
1,000
–
–
1,000

2010
US$ ’000

41,253
637
41,890
–

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103

34. Financial Risk Management

Terms, conditions and risk management policies
Exposure to interest rate, foreign currency, non-repatriation, liquidity and credit risks arise in the normal course of Millicom’s
business. Th e Group analyses each of these risks individually as well as on an interconnected basis and deﬁ nes and implements
strategies to manage the economic impact on the Group’s performance in line with its ﬁ nancial risk management policy.
Millicom’s risk management strategies may include the use of derivatives. Millicom’s policy prohibits the use of such derivatives
in the context of speculative trading.

Interest rate risk
Interest rate risk generally arises on borrowings. Borrowings issued at ﬂ oating rates expose the Group to cash ﬂ ow interest rate
risk. Borrowings issued at ﬁ xed rates expose the Group to fair value interest rate risk. Th e Group’s exposure to risk of changes in
market interest rates relates to both of the above. To manage the risk, the Group’s policy is to maintain a combination of ﬁ xed
and ﬂ oating rate debt with target for the debt to be equally distributed between ﬁ xed and variable rates. Th e Group actively
monitors borrowings against target and applies a dynamic interest rate hedging approach. Th e target mix between ﬁ xed and
ﬂ oating rate debt is reviewed periodically. Th e purpose of Millicom’s policy is to achieve an optimal balance between cost of
funding and volatility of ﬁ nancial results, while taking into account market conditions as well as our overall business strategy.
At December 31, 2011, approximately 51% of the Group’s borrowings are at a ﬁ xed rate of interest or for which variable rates
have been swapped for ﬁ xed rates under interest rate swaps (2010: 36%).

To comply with internal policies, in January 2010 Millicom entered into an interest rate swap to hedge the interest rate risk of
the ﬂ oating rate debt in three diﬀ erent countries (Tanzania, DRC and Ghana). Th e interest rate swap was issued in January
2010 for a nominal amount of $100 million, with maturity January 2013.

In 2010 Millicom entered into interest rate swaps to hedge the interest rate risks on ﬂ oating rate debts in Honduras and Costa
Rica. Th e interest rate swap in Honduras was issued for a nominal amount of $30 million, with maturity in 2015, and in Costa
Rica for a nominal amount of $105 million with maturity in 2017.

Th e table below summarizes, as at December 31, 2011, our ﬁ xed rate debt and ﬂ oating rate debt:

Amounts due within

Fixed rate
Weighted average nominal
interest rate
Floating rate
Weighted average nominal
interest rate
Total
Weighted average nominal
interest rate

1 year

1–2 years

261,840

118,930

2–3 years

4–5 years
(in thousands of US Dollars, except percentages)
45,742

3–4 years

134,273

97,007

4.37%

6.02%

6.13%

5.66%

6.02%

359,586

194,066

191,260

193,967

198,659

5.31%

5.50%

4.75%

6.27%

5.98%

>5 years

Total

584,489

1,242,281

8.85%

58,459

2.17%

6.98%

1,195,997

5.37%

621,426

312,996

325,533

290,974

244,401

642,948

2,438,278

4.91%

5.70%

5.32%

6.06%

5.99%

5.19%

6.97%

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104

34. Financial Risk Management (Continued)

Th e table below summarizes, as at December 31, 2010, our ﬁ xed rate debt and ﬂ oating rate debt:

Amounts due within

Fixed rate
Weighted average
nominal interest rate
Floating rate
Weighted average
nominal interest rate
Total
Weighted average
nominal interest rate

1 year

1–2 years

69,761

5.69%

36,361

6.19%

2–3 years

4–5 years
(in thousands of US Dollars, except percentages)
70,409

3–4 years

64,885

60,987

6.35%

5.89%

6.66%

485,703

334,637

193,167

246,496

155,378

7.25%

6.25%

6.39%

6.29%

6.70%

>5 years

Total

549,062

851,465

8.81%

85,190

4.55%

7.87%

1,500,571

6.55%

555,464

370,998

254,154

311,381

225,787

634,252

2,352,036

7.05%

6.25%

6.38%

6.20%

6.69%

8.25%

7.03%

A one hundred basis point fall or rise in market interest rates for all currencies in which the Group had borrowings at
December 31, 2011, would increase or reduce proﬁ t before tax from continuing operations for the year by approximately
$12 million (2010: $15 million).

Foreign currency risk
Th e Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures where
the Group operates. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and
net investments in foreign operations.

Millicom seeks to reduce its foreign currency exposure through a policy of matching, as far as possible, assets and liabilities
denominated in foreign currencies. In some cases, Millicom may borrow in US dollars where it is either commercially more
advantageous for joint ventures and subsidiaries to incur debt obligations in US dollars or where US dollar denominated
borrowing is the only funding source available to a joint venture or subsidiary. In these circumstances, Millicom accepts the
remaining currency risk associated with ﬁ nancing its joint ventures and subsidiaries, principally because of the relatively
high cost of forward cover, when available, in the currencies in which the Group operates.

Th e following table summarizes debt denominated in US$ and other currencies at December 31, 2011 and 2010.

Total US$
Colombia
Chad
Tanzania
Bolivia
Ghana
Guatemala
Other
Total non-US$ currencies
Total

2011
US$ ’000
1,605,850
504,337
86,411
34,584
46,305
18,670
11,249
130,872
832,428
2,438,278

2010
US$ ’000
1,571,757
522,994
72,754
56,659
43,878
40,565
20,552
22,877
780,279
2,352,036

At December 31, 2011, if the US$ had weakened/strengthened by 10% against the other functional currencies of our
operations and all other variables held constant, then proﬁ t before tax from continuing operations would have increased/
decreased by $112 million and $137 million respectively (2010: $105 million and $129 million respectively). Th is increase/
decrease in proﬁ t before tax would have mainly been as a result of the conversion of the results of our operations with
functional currencies other than the US dollar.

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105

34. Financial Risk Management (Continued)

Non-repatriation risk
Most of the operations in which we have interests receive substantially all of their revenues in the currency of the countries in
which they operate. We derive substantially all of our revenues through funds generated by our local operations and, therefore,
we rely on their ability to transfer funds to the Company.

Although there are foreign exchange controls in some of the countries in which our mobile telephone companies operate,
none of these countries currently signiﬁ cantly restrict the ability of these operations to pay interest, dividends, technical
service fees, royalties or repay loans by exporting cash, instruments of credit or securities in foreign currencies. However,
existing foreign exchange controls may be strengthened in countries where we operate, or foreign exchange controls may be
introduced in countries where we operate that do not currently impose such restrictions, in which case, the Company’s ability
to receive funds from the operations will subsequently be restricted, which would impact our ability to pay dividends to our
shareholders.

In addition, in some countries, it may be diﬃ cult to convert large amounts of local currency into foreign currency because of
limited foreign exchange markets. Th e practical eﬀ ects of this are time delays in accumulating signiﬁ cant amounts of foreign
currency and exchange risk, which could have an adverse eﬀ ect on the Group’s results of operations.

Credit and counterparty risk
Financial instruments that potentially subject the Group to credit risk are primarily cash and cash equivalents, pledged
deposits, letters of credit, trade receivables, amounts due from joint venture partners, supplier advances and other current
assets and derivatives. Counterparties to agreements relating to the Group’s cash and cash equivalents, pledged deposits and
letters of credit are signiﬁ cant ﬁ nancial institutions with investment grade ratings. Management does not believe there are
signiﬁ cant risks of non-performance by these counterparties. Management has taken steps to diversify its banking partners.
We are also managing the allocation of deposits across banks so that the Group’s counterparty risk with a given bank stays
within limits which have been set based on each banks credit rating. Th is way we are avoiding any signiﬁ cant exposure to a
speciﬁ c party.

A large portion of turnover comprises prepaid airtime. For customers for whom telecom services are not prepaid, the Group
follows risk control procedures to assess the credit quality of the customer, taking into account its ﬁ nancial position, past
experience and other factors.

Accounts receivable are mainly derived from balances due from other telecom operators. Credit risk of other telecom
operators is limited due to the regulatory nature of the telecom industry, in which licenses are normally only issued to credit
worthy companies. Th e Group maintains a provision for impairment of trade receivables based upon expected collectability
of all trade receivables.

As the Group has a large number of internationally dispersed customers, there is no signiﬁ cant concentration of credit risk
with respect to trade receivables.

Liquidity risk
Liquidity risk is deﬁ ned as the risk that an entity will encounter diﬃ culty in meeting obligations associated with ﬁ nancial
liabilities. Th e Group has incurred signiﬁ cant indebtedness but also has signiﬁ cant cash balances. Millicom evaluates its ability
to meet its obligations on an ongoing basis using a recurring liquidity planning tool. Th is tool considers the operating net cash
ﬂ ows generated from its operations and the future cash needs for borrowing and interest payments and capital and operating
expenditures required in maintaining and developing local business.

Th e Group manages its liquidity risk through use of bank overdrafts, bank loans, vendor ﬁ nancing, Export Credit Agencies and
Development Finance Institutions (“DFI”) loans, bonds and ﬁ nance leases. Millicom believes that there is suﬃ cient liquidity
available in our markets to meet ongoing liquidity needs. Additionally, Millicom is able to arrange oﬀ shore funding through
the use of Export Credit Agency guarantees and DFIs (IFC, PROPARCO, DEG and FMO), who have been established speciﬁ cally
to ﬁ nance development in our markets. Millicom is diversifying its ﬁ nancing with commercial banks representing about 51% of
its gross ﬁ nancing, Bonds 18%, Development Finance Institutions 12%, partners 11%, ﬁ nancial leases 6% and suppliers 2%. Th e
Group is therefore not dependent on a few sources of ﬁ nancing but is relying on various ﬁ nancing opportunities.

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106

34. Financial Risk Management (Continued)

Th e tables below summarize the maturity proﬁ le of the Group’s net ﬁ nancial liabilities at December 31, 2011 and 2010.

Year ended 31 December 2011
Total borrowings (see note 27)
Cash and cash equivalent
Time deposit
Pledged deposit (relating to bank borrowings)
Net cash (debt)
Future interest commitments(ii)
Trade payables (excluding accruals)
Derivative ﬁ nancial instruments
Put option
Other ﬁ nancial liabilities (including accruals)
Trade receivables
Other ﬁ nancial assets
Net ﬁ nancial asset (liability)

Year ended 31 December 2010 (As restated)(i)
Total borrowings (see note 27)
Cash and cash equivalent
Time deposit
Pledged deposit (relating to bank borrowings)
Net cash (debt)
Future interest commitments(ii)
Trade payables (excluding accruals)
Derivative ﬁ nancial instruments
Put option
Other ﬁ nancial liabilities (including accruals)
Trade receivables
Other ﬁ nancial assets
Net ﬁ nancial asset (liability)

Less than 1 year
US$ ’000
(621,426)
881,279
269
297
260,419
(135,667)
(340,684)
(14,884)
(745,145)
(861,831)
276,944
334,181
(1,226,667)

Less than 1 year
US$ ’000
(555,464)
1,023,487
3,106
7,261
478,390
(145,664)
(315,058)
–
(769,378)
(734,448)
253,258
200,630
(1,032,270)

1 to 5 years
US$ ’000
(1,173,904)
–
–
49,371
(1,124,533)
(342,098)
–
(8,016)
–
–
–
37,359
(1,437,288)

1 to 5 years
US$ ’000
(1,162,320)
–
–
49,963
(1,112,357)
(346,193)
–
(18,250)
–
–
–
17,754
(1,459,046)

>5 years
US$ ’000
(642,948)
–
–
–
(642,948)
(26,484)
–
–
–
–
–
–
(669,432)

>5 years
US$ ’000
(634,252)
–
–
0
(634,252)
(26,109)
–
–
–
–
–
–
(660,361)

Total
US$ ’000
(2,438,278)
881,279
269
49,668
(1,507,062)
(504,249)
(340,684)
(22,900)
(745,145)
(861,831)
276,944
371,540
(3,333,387)

Total
US$ ’000
(2,352,036)
1,023,487
3,106
57,224
(1,268,219)
(517,966)
(315,058)
(18,250)
(769,378)
(734,448)
253,258
218,384
(3,151,677)

(i) Restatement – see note 4
(ii)

Includes unamortized diﬀ erence between carrying amount and nominal amount of debts.

Capital management
Th e primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy
capital ratios in order to support its business and maximize shareholder value.

Th e Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain
or adjust the capital structure, the Group may make dividend payments to shareholders, return capital to shareholders or issue
new shares. Millicom is rated by one independent rating agency, namely Moody’s, which upgraded Millicom’s rating by one
notch to Ba1, which is just one notch below investment grade. Th e Group monitors capital using primarily a net debt to
adjusted operating proﬁ t ratio, as well as a set of other indicators.

Net debt
Adjusted operating proﬁ t (see note 10)

Net debt to adjusted operating proﬁ t ratio

2011
US$ ’000
1,507,062
2,087,217
ratio
0.7

2010
US$ ’000
1,268,219
1,840,624
ratio
0.7

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Annual Report 2011 Millicom International Cellular S.A.

107

34. Financial Risk Management (Continued)

Th e Group reviews it gearing ratio (net debt divided by total capital plus net debt) periodically. Net debt includes interest
bearing loans and borrowings, less cash and cash equivalents and pledged deposits related to bank borrowings. Capital
represents equity attributable to the equity holders of the parent.

Net debt
Equity
Net debt and equity
Gearing ratio

(i) Restatement – see note 4

2011
US$ ’000
1,507,062
2,445,554
3,952,616
38%

2010
(As Restated)(i)
US$ ’000
1,268,219
2,389,633
3,657,852
35%

35. Financial Instruments
Th e fair value of Millicom’s ﬁ nancial instruments is included at the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale. Th e fair value of all ﬁ nancial assets and all ﬁ nancial
liabilities except debt and ﬁ nancing approximate their carrying value largely due to the short-term maturities of these instruments. Th e
fair values of all debt and ﬁ nancing have been estimated by the Group based on discounted future cash ﬂ ows at market interest rates.

Th e following table shows the carrying and fair values of ﬁ nancial instruments as at December 31, 2011 and 2010:

FINANCIAL ASSETS
Loans and receivables
Pledged deposits
Other non-current assets
Trade receivables, net
Amounts due from non-controlling interests and JV partners
Prepayments and accrued income
Other current assets
Cash and cash equivalents
Total
Current
Non-current
FINANCIAL LIABILITIES
Debt and ﬁ nancing (see note 27)
Trade payables
Payables and accruals for capital expenditure
Derivative ﬁ nancial instruments
Put option
Amounts due to non-controlling interests and JV partners
Accrued interest and other expenses
Other liabilities
Total
Current
Non-current

(i) Restatement – see note 4

Carrying value

2011
US$ ’000

2010
(As Restated)(i)
US$ ’000

Fair value

2011
US$ ’000

2010
(As Restated)(i)
US$ ’000

49,371
37,359
276,944
158,782
119,362
146,615
881,279
1,669,712
1,582,982
86,730

2,438,278
224,089
333,551
22,900
745,145
92,677
263,747
74,259
4,194,646
2,363,960
1,830,686

49,963
17,754
253,258
99,497
89,477
75,311
1,023,487
1,608,747
1,541,030
67,717

2,352,036
202,707
278,063
18,250
769,378
97,919
228,360
24,380
3,971,093
2,152,257
1,818,836

49,371
37,359
276,944
158,782
119,362
146,615
881,279
1,669,712
1,582,982
86,730

2,262,974
224,089
333,551
22,900
–
92,677
263,747
74,259
3,274,197
1,618,816
1,655,381

49,963
17,754
253,258
99,497
89,477
75,311
1,023,487
1,608,747
1,541,030
67,717

2,246,644
202,707
278,063
18,250
–
97,919
228,360
24,380
3,096,323
1,382,879
1,713,444

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Annual Report 2011 Millicom International Cellular S.A.

108

35. Financial Instruments (Continued)

Call option and put option related to Telefonica Cellular S.A. DE CV (Celtel)
As described in note 5, on July 1, 2010 Millicom reached agreement with its local partner in Honduras whereby Millicom’s
local partner granted Millicom an unconditional call option for the next ﬁ ve years for his 33% stake in Telefonica Celtel and
as consideration, Millicom granted a conditional put option for the same duration to the local partner.

Th e put option can only be exercised in cases of a change of control of Millicom International Cellular S.A. or Millicom’s
subsidiary that holds the shares in Celtel (except if the change of control is in favour of Investment AB Kinnevik, the current
largest shareholder of Millicom, or management of Millicom). Millicom believe that a change of control transaction that
triggers the local partner’s right to exercise his put is currently highly unlikely to happen during the term of the put option
and have therefore determined the fair value of the put option to be immaterial at both December 31, 2010 and 2011.

Th e call option price is a ﬁ xed multiple of the EBITDA of Celtel in the year the option is exercised. As the ﬁ xed multiple
exceeded the fair value multiples (based on comparable transactions and including a control premium) at December 31, 2011
and 2010, and as there were no expectations that the Honduran market characteristics would signiﬁ cantly change over the
term of the call option, Millicom determined the fair value of the call option to be immaterial at both December 31, 2011
and 2010.

Fair value measurement hierarchy
Eﬀ ective January 1, 2009, Millicom adopted the amendment to IFRS 7 for ﬁ nancial instruments that are measured in the
Statement of Financial Position at fair value, which requires disclosure of fair value measurements by level of the following
fair value measurement hierarchy:

(cid:88) Level 1–Quoted prices (unadjusted) in active markets for identical assets or liabilities.

(cid:88) Level 2–Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices)

or indirectly (that is, derived from prices).

(cid:88) Level 3–Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

Derivative ﬁ nancial instruments are measured with reference to Level 2, except for the call options in Colombia (see note 7)
and the call and put options in Honduras (see note 5 and note 28) which are measured with reference to level 3. Th e Honduras
put option liability is carried at the present value of the redemption amount and is therefore excluded from the fair value
hierarchy. No other ﬁ nancial instruments are measured at fair value.

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Annual Report 2011 Millicom International Cellular S.A.

109

36. Subsequent Events
Dividend
On February 8, 2012 Millicom announced that the Board will propose to the Annual General Meeting of the Shareholders a
dividend distribution of $2.40 per share to be paid out of Millicom’s proﬁ ts for the year ended December 31, 2011 subject to
the Board’s approval of the 2011 Consolidated Financial Statements of the Group.

On February 8, 2012 Millicom announced that the Board has approved a share buyback program of up to $300 million for the
2012 year.

Shareholder information
Corporate and registered oﬃ ce
Millicom International Cellular SA
15 Rue Léon Laval
L-3372 Leudelange
Grand Duchy of Luxembourg
Tel: +352 27 759 101
Fax: +352 27 759 359
RCB 40630 Luxembourg

Investor relations
Justine Dimovic Tel: +352 691 750479
Emily Hunt Tel: +44 7779 018539

Visit MIC’s homepage at
http://www.millicom.com

Financial calendar
April 18, 2012
First quarter results

July 18, 2012
Second quarter results

October 17, 2012
Th ird quarter results

February 2013
Full year results 2012

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