Use these links to rapidly review the documentTABLE OF CONTENTS INDEX TO FINANCIAL STATEMENTS



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934ORý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934ORo

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


000-22828 Commission file number

MILLICOM INTERNATIONAL CELLULAR S.A.

(Exact name of Registrant as specified in its charter)

GRAND-DUCHY OF LUXEMBOURG

(Jurisdiction of incorporation or organization)

15 Rue Léon Laval, L-3372 Leudelange Grand Duchy of Luxembourg

(Address of principal executive offices)

Francois-Xavier Roger, T: +352 27759 114    E: francois.roger@millicom.com

(Name, Telephone, E-mail address of Company Contact Person)

Securities
registered or to be registered pursuant to Section 12 (b) of the Act:NoneSecurities registered or to be registered pursuant to Section 12 (g) of the Act:NoneSecurities for which there is a reporting obligation pursuant to Section 15(d) of the Act: Common Stock, par value $1.50 per share

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

108,648,325 shares of Common Stock as of December 31, 2009

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ý    No o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934. Yes o    No ý

NoteChecking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 from their obligations under those Sections.

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and
post such files). Yes o    No ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý

Accelerated filer o

Non-accelerated filer o


If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o    No ý

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.

o    U.S. GAAP    ý    International
Financial Reporting
Standards as issued by the International Accounting Standards Board    o    Other

If 'Other' has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
Item 17 o    Item 18 o



---





Table of Contents

TABLE OF CONTENTS



PageFORWARD-LOOKING STATEMENTS


2PRESENTATION OF FINANCIAL AND OTHER INFORMATION


3PART I


4ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS


4ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE


4ITEM 3.

KEY INFORMATION


4ITEM 4.

INFORMATION ON THE COMPANY


16ITEM 4A

UNRESOLVED STAFF COMMENTS


48ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS


48ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


77ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS


88ITEM 8.

FINANCIAL INFORMATION


89ITEM 9.

THE OFFER AND LISTING


90ITEM 10.

ADDITIONAL INFORMATION


91ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK


102ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES


104ITEM 12A.

DEBT SECURITIES


104ITEM 12B.

WARRANTS AND RIGHTS


104ITEM 12C.

OTHER SECURITIES


104ITEM 12D.

AMERICAN DEPOSITARY SHARES


104PART II


109ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES


109ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS


109ITEM 15.

CONTROLS AND PROCEDURES


109ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT


109ITEM 16B.

CODE OF ETHICS


110ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES


110ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES


110ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES


110ITEM 16F.

CHANGE IN CERTIFYING ACCOUNTANT


110ITEM 16G.

SIGNIFICANT DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES


110PART III


111ITEM 17.

FINANCIAL STATEMENTS


111ITEM 18.

FINANCIAL STATEMENTS


111ITEM 19.

EXHIBITS


111


---





Table of Contents

FORWARD-LOOKING STATEMENTS

Certain of the statements made in this document may be considered to be "forward-looking statements" as that term is defined in the
U.S. Private Securities Litigation Reform Act of 1995, such as statements that include the words "expect", "estimate", "believe", "project", "anticipate", "should", "intend", "probability", "risk",
"may", "target", "goal", "objective" and similar expressions or variations on such expressions. These statements appear in a number of places throughout the document including, but not exclusively,
"Information on the Company", and "Operating and Financial Review and Prospects". These statements concern, among other things, trends affecting the Company's financial condition or results of
operations, capital expenditure plans, the potential for growth and competition in areas of the Company's business, the potential for new agreements or extensions of existing agreements to be signed
with business partners or governmental entities or licenses to be granted by governmental authorities, and the supervision and regulation of the telecommunications' markets. Such forward-looking
statements are not guarantees of future performance and involve risks and uncertainties; actual results may differ materially as a result of various factors.

These
factors include, but are not limited to:



Readers
are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of filing hereof with the U.S. Securities and Exchange Commission.
Millicom International Cellular S.A. undertakes no obligation to release publicly the result of any revisions to these forward-looking statements which may be made to reflect events or
circumstances after the date hereof, including, without limitation, changes in Millicom International Cellular S.A.'s business or acquisition strategy or planned capital expenditures, or to
reflect the occurrence of unanticipated events.

2

---



Table of Contents

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Unless the context otherwise requires, the term the "Company" refers only to Millicom International Cellular S.A., a stock
corporation organized under the laws of the Grand Duchy of Luxembourg, and the term the "Group", "Millicom", "we", "us" or "our" refers to Millicom International Cellular S.A. and its
subsidiaries, joint ventures and affiliates. Unless the context otherwise requires, when used herein with respect to a licensed area, "persons", "population" and "pops" are interchangeable and refer
to the aggregate number of persons located in such licensed area and "equity pops" refers to the number of such persons in a licensed area multiplied by the Group's ownership interest in the licenses
for such licensed area. The term "Attributable Customers" refers to 100% of customers in the Group's subsidiaries and the Group's percentage ownership of customers in each joint venture. Persons,
population and pops data for 2008, 2007 and 2006 have been extracted from the "CIAThe World Factbook" for 2009 for countries where the license area covers the entire country. In addition,
information on the countries in which Millicom operates has been extracted from the "CIAThe World Factbook" for 2009 with updates, where appropriate, from the U.S. Department of State's
website. Unless otherwise indicated, all financial data and discussions thereon in this annual report are based upon financial statements prepared in accordance with International Financial Reporting
Standards as adopted by the European Union and as issued by the International Accounting Standarb Board ("IFRS") and customer figures represent the total number of mobile customers of systems in which
the Group has an ownership interest. In this report, references to "dollars" or "$" are to U.S. dollars, references to "SEK" are to Swedish krona and references to "Euro" or "€" are to
the Euro.

As
a foreign private issuer, the Company is exempt from the proxy rules of Section 14 under the Securities Act of 1934, as amended (the "Exchange Act"), and the reporting
requirements of Section 16 under the Exchange Act.

3

---





Table of Contents

PART I

ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable for Annual Reporting filing.

ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable for Annual Reporting filing.

ITEM 3.    KEY INFORMATION

Selected Financial Information

The Group reports under International Financial Reporting Standards, as adopted by the European Union ("IFRS"), with no difference for
the Group to IFRS as issued by the International Accounting Standards Board.

The
following table sets forth summary financial data of the Group as of and for the years ended December 31, 2009, 2008, 2007, 2006 and 2005. The data are based upon the Group's
audited consolidated balance sheets as of December 31, 2009, 2008, 2007, 2006 and 2005 and audited consolidated income statements for the years then ended. The following information is
qualified in its entirety by, and should be read in conjunction with, such statements.

Unless
otherwise indicated all financial data and discussions in this document are based upon financial statements prepared in accordance with IFRS.

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

Year Ended December 31,2009

2008

2007

2006

2005(in thousands of U.S. dollars, except per share data)Income Statements Data:Revenues(1)

3,372,727

3,150,559

2,429,082

1,423,240

788,310Operating profit(1)

851,023

818,222

630,662

411,888

242,058Profit for the period from continuing operations(1)

503,590

402,195

436,477

222,352

82,627Net profit attributable to equity holders for the period

850,788

517,516

697,142

168,947

10,277Basic earnings from continuing operations per common share

$5.09

$4.79

$4.18

$2.13

$0.90Basic earnings per common share

$7.84

$4.80

$6.90

$1.68

$0.10Weighted average number of shares in basic computation (in thousands)(2)

108,527

107,869

101,088

100,361

98,803Diluted earnings from continuing operations per common share

$5.08

$4.76

$4.07

$2.13

$0.89Diluted earnings per common share

$7.82

$4.77

$6.61

$1.67

$0.10Weighted average number of shares in diluted computation (in thousands)(2)

108,750

108,646

108,047

101,371

99,921Dividends per share

$1.24

$2.40








4

---



Table of Contents



As of December 31,2009

2008

2007

2006

2005(in thousands of U.S. dollars)Balance Sheets Data:Property, plant and equipment, net

2,710,641

2,787,224

2,066,122

1,267,159

671,774Intangible assets, net

1,044,837

990,350

467,502

482,775

373,487Financial assets at fair value through profit or loss









327,803Investments in associates(3)

872

21,087

11,234

6,838

5,367Total assets

5,991,018

5,220,808

4,413,826

3,320,994

2,559,656Current liabilities

1,569,772

1,749,080

2,002,269

901,851

909,008Non-current liabilities

2,067,534

1,812,553

1,043,221

1,442,716

1,070,140Non-controlling interest

(73,673
)
(25,841
)
80,429

77,514

34,179Shareholders' equity

2,383,803

1,677,918

1,287,907

504,874

299,605




As of and for Year ended December 31,2009

2008

2007

2006

2005(in thousands of U.S. dollars)Operating Data (unaudited)(4):Total Customers:Prepaid

32,073,052

26,316,527

19,308,632

12,016,649

5,590,923Postpaid

1,847,052

1,374,147

977,166

861,116

460,970Monthly churn (%)(5):Prepaid

5.2
%
5.5
%
4.1
%
4.1
%
4.3
%Postpaid

1.7
%
1.1
%
1.3
%
1.2
%
1.7
%


(1)Excludes discontinued operations. A more complete description of discontinued operations is contained in Note 6 of the "Notes to the Consolidated
Financial Statements".(2)The average number of shares, which is calculated on a weighted average basis. There were no treasury shares as of December 31, 2009.(3)Investments in associates under IFRS from 2005 to 2008 mainly represented Navega.com S.A. and its subsidiaries. See "Operating and Financial Review
and ProspectsResults of Operations".(4)Operating data excludes discontinued operations.(5)We calculate churn rates by dividing the number of customers whose service is disconnected during a period, whether voluntarily or involuntarily (such as
when a customer fails to pay a bill) by the average number of customers during the period. We believe that we apply conservative policies in calculating customer totals and the related churn rates.
For example, Millicom counts a customer as a "customer" only when the customer has made a revenue generating call within a 60-day period. Other operators with whom we compete generally use
less restrictive definitions, such as labeling a "customer" a customer who has made a revenue generating call within a 90- or 120-day period. Our conservative definitions may
result in different churn rates and market share figures than if we used criteria employed by some other operators in calculating customer churn and market share.


5

---





Table of Contents

RISK FACTORS

In addition to the other information contained in this Annual Report, investors should carefully consider the risks described below.
Our financial condition or results of operations could be significantly affected by any of these risks.

The
following discussion contains a number of forward-looking statements. Please refer to the "Forward-Looking Statements" discussion at the front of this Annual Report for cautionary
information.

An economic downturn, a substantial slowdown in economic growth or deterioration in consumer spending could adversely affect our operating results and financial condition.

In 2009, our business continues to be impacted by the general worldwide economic crisis and its effects will continue to impact on our
results in 2010. Some recent events
affected negatively the economies of the countries where we operate and could possibly impact our businesses: the decline of remittances from the United States (affecting Central America), raw
material price decreases (affecting Chad, Paraguay, the Democratic Republic of Congo (DRC), Ghana) and less international tourism (affecting Senegal, Mauritius, and Tanzania).

In
addition, further deterioration in the economic environment could have an adverse effect on the level of demand by our individual customers for our products and services. This could
also impact our growth, such as the one relating to mobile telecommunications, or the one relating to broadband products and services.

Risks Relating to our Business

Emerging Markets Risks

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

We offer mobile telephony and cable services in 14 emerging markets in Central and South America, Africa and Asia. Many of the
countries in which we operate are considered to be emerging economies and, therefore, can be subject to greater political and economic risk than developed countries. The governments of these 14
countries differ widely with respect to type of government, constitution, and stability. Many of these 14 countries lack mature legal and regulatory systems. Some of the countries in which we operate,
particularly Chad and DRC, suffer from political instability, civil unrest, or war-like actions by anti-government insurgent groups. These problems may continue or worsen,
potentially resulting in civil war in these countries. In addition to the above, Honduras was largely cut off from foreign aid as a result of the political events of June 2009 and there is still some
risks that the recent elections in Honduras will not restore its standing in the international community.

As
a result of the above, we face several risks, ranging from the risk that our networks may be disrupted to the risk that we may have to evacuate some or all of our key staff from
certain countries, in which case there is no guarantee that we would be able to continue to conduct our local business as previously. Any of these events would adversely affect our revenues or results
of operations.

Most of the countries in which we operate have weak legal and telecommunications regulatory regimes compared to those in developed countries and this creates risks for our
operations.

In order for our operations to provide mobile services, they must receive a license from the government of the country in which they
operate. Our ability to operate is therefore dependent on the licenses granted by the government of each country. These licenses generally allow our companies to operate for a number of years, after
which they are subject to renewal. To the extent that our

6

---



Table of Contents

operations
depend on governmental approval and regulatory decisions, our local business may be adversely affected by changes in the political structure or by actions or decisions of specific
government representatives in the relevant market. It is possible that a government could decide arbitrarily to revoke a license or impose new conditions that we do not agree with and may not get
consulted about in advance. For example, we are currently in litigation with the government of Senegal, which purported to challenge the validity of our license when we refused to pay additional
amounts for a license that we validly hold and that does not expire until 2018. We may not always have access to efficient avenues for appeal and may have to accept arbitrary conditions imposed upon
us. This could adversely affect our business and our revenues. Our only avenue of recourse may often be to the judicial system of the relevant country; however, the legal and court systems of many
countries in which we operate tend to be poorly developed and can be subject to political influence and other inherent uncertainties. It can therefore be difficult to obtain a rapid, fair and unbiased
resolution of disagreements with governmental authorities.

Even
where we have other options, such as claiming compensation in arbitration proceedings for violations of a bilateral investment treaty, the process can be lengthy and costly. For
example, the arbitration we filed against the government of Senegal before the International Center for the Settlement of Investment Disputes in November 2008 has not resulted in a decision on the
merits and is not expected to be finally resolved in the immediate future. Even when the outcome is successful, the enforcement of any award favorable to us could be challenging.

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

This risk potentially exists in any of the countries in which we operate, but might be highest in Bolivia at the moment under the
current Government. The Government of President Evo Morales in Bolivia has nationalized telecommunications company Entel, which had been privatized under previous presidential regimes in Bolivia.
Other such actions might take place in our sector in connection with the government's decision to regain more control over the Bolivian economy, as shown by certain measures implemented in the
oil & gas sector in 2005 and 2006. We believe that nationalization of the telecommunications sector will probably not occur but that the Bolivian Government will more likely attempt to impose
measures to lower tariffs offered to customers and improve the offer and availability of mobile telephony and other telecommunications services in isolated rural areas, or increased taxes on private
foreign owned businesses such as Telecel, our Bolivian operation, to increase government revenues. Measures like these may have the effect of increasing our network rollout costs and reducing the
profitability of our Bolivian operation.

Most of the countries in which we operate have underdeveloped economies with low gross domestic product ("GDP") per capita and therefore the increased inflationary pressures
and downturns could significantly impact our revenues.

Our operations are dependent on the health of the economies of the markets in which we operate. We offer our services in emerging
market countries with economies at various stages of development or structural reform. Most of the economies of the countries in which we operate have large sectors where a percentage of the local
population earns a living on a day-to-day basis and primarily spends its income on basic items such as food, housing and clothing, and has less income to spend on mobile
telephony services. Therefore, downturns in the economies of any particular country or region in which we operate may adversely affect demand for our services, which would result in reduced revenues.

Some
of these countries have historically experienced high inflation rates, although in the recent years inflation rates in all countries where we operate have been relatively low, if we
exclude Ghana,

7

---



Table of Contents

following
the significant devaluation of the local currency. Periods of significant inflation in any of our markets could adversely affect our costs and financial condition.

Most of the countries where we operate lack infrastructure or have infrastructure in very poor condition and, particularly in Africa, have an insufficient electricity
supply.

With the exception of Mauritius, the countries in which we operate often lack basic infrastructure or have infrastructure in poor or
very poor condition, including in particular roads and power networks. The lack of suitable infrastructure is particularly acute in countries recovering from civil wars, such as the Democratic
Republic of Congo, and in countries suffering from civil war-like events, such as Chad. In general, the rural areas in each of our operations often lack even the most basic infrastructure,
as any development tends to be concentrated in urban areas. Millicom must often build its cell sites without the benefit of roads and other infrastructures, which increases our network development
costs.

The
electricity supply is insufficient in certain countries in which we operate (predominantly in Africa, with the exception of Mauritius) due to the growth experienced in such
countries. We therefore have to rely on diesel powered generators that we source, install, maintain and refuel. In Chad, at December 31, 2009 and 2008, almost 100% of our radio sites were
powered by diesel powered generators, and in the Democratic Republic of Congo it was the case for about half of our sites. This increases our costs and impacts the profitability of our African
operations.

We have been subject to increasing foreign taxes or reducing tariffs in the countries in which we operate, which reduces amounts we receive from our operations and may
increase our tax costs.

Many of the foreign countries in which we operate have implemented new taxes or increased the rates of existing taxes applicable to
corporations or reduced tariffs (interconnect rates) in order to raise government revenue. Furthermore, competitive pricing pressure or the provisions of new tax laws may prevent us from passing these
taxes onto our local customers. Consequently, any increase in taxes applicable to our local operating subsidiaries could reduce the amount of earnings they generate.

We could be subject to the impact of a deteriorating economic environment within the developed countries.

Many of the countries in which we operate receive significant inflows of funds from relatives and friends in developed countries that
work abroad. A significant deterioration in the developed country economies could impact the ability of those abroad to continue remitting funds because of job losses or reduced wages. Lower
remittances would reduce the disposable income which would impact our revenues. The deterioration in developed economies could also put pressure on the
amount of foreign aid the developed countries provide to developing countries in which we operate and could increase the local governments' need to generate revenue through taxation.

Currency fluctuations or devaluations may reduce the amount of profit and the value of assets that we are able to report.

Exchange rates for currencies of the countries in which our companies operate fluctuate in relation to the US$ and such fluctuations
may have a material adverse effect on our earnings, assets or cash flows when translating local currency into US$. For each venture that reports its results in a currency other than the US$, a
decrease in the value of that currency against the US$ reduces our profits while also reducing our assets, our liabilities and our future dividends. To the extent that our operations retain earnings
or distribute dividends in local currencies, the amount of US$ we receive is affected by fluctuations of exchange rates for such currencies against the US$, which could affect our results of
operations. In addition, exchange rates are impacting Millicom's earnings, assets and cash flows as our operating subsidiaries have US$ debt, because of lack of available financing in local
currencies.

8

---



Table of Contents

We
generally are not able to hedge our foreign currency exposures, because of lack of available instruments in the countries where we operate. Millicom had a net exchange loss of
$32 million for the year ended December 31, 2009, compared to a loss of $52 million for the year ended December 31, 2008.

Most of our operations receive revenue denominated in the local currency of the country of operation. In the future, any of the countries in which these operations are
located may impose foreign exchange controls which will restrict our ability to receive funds from the operations.

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 significantly 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 will
negatively impact the Company's revenues.

In
addition, in some countries, it may be difficult to convert large amounts of local currency into foreign currency because of limited foreign exchange markets. The practical effects of
this are time delays in accumulating significant amounts of foreign currency and exchange risk, which could have an adverse effect on the Group's results of operations.

Our ability to reduce our foreign currency exposure may be limited by restrictions on hedging instruments.

At the operations level, we seek to reduce our foreign exchange exposure through a policy of matching, as far as possible, cash inflows
and outflows. Where possible and where it is financially viable, we borrow in local currency to help hedge against local currency net inflows. Our ability to reduce our foreign currency exchange
exposure may be limited by the lack of long term financing in local currency. As such, there is a risk that we may not be able to fund our local operation's capital expenditure needs or reduce our
foreign exchange exposure by borrowing in local currency.

We own our operations through holding companies in jurisdictions which may effect changes to their respective laws that may unfavorably affect our financial status or tax
treatment.

We hold the interests in our mobile telephone companies through our subsidiaries in various jurisdictions in and outside Luxembourg,
mainly but not exclusively through holding companies incorporated in the Netherlands and the Netherlands Antilles. The laws or administrative practices relating to taxation (including the current
position as to withholding taxes on dividends paid by our local operations and tax concessions we have obtained in certain of our countries of operation), foreign exchange controls, or other matters,
are periodically subject to change. Any such change could have a material adverse effect on our financial affairs and on our ability to receive, or the tax treatment of, funds from our local
operations.

9

---



Table of Contents

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

We are subject to several laws and regulations with worldwide application, including as promulgated by:



These
laws and regulations affect where and how our business may be conducted. In addition, our shareholders, lenders, suppliers or other entities with which the Company and its
operating subsidiaries conduct business may be subject to or seek to comply with these laws and regulations. Even though the Company has maintained a focus on its compliance efforts, there is always a
risk that non-compliance issues may arise with respect to the Company or its operating subsidiaries or any employee thereof. Any instances of non-compliance may result in
consequences ranging from negative publicity and reputational damage to criminal and civil liability and the application of fines or disgorgement of profits to the Company on account of any of its
employees or directors or the employees or directors of any of its operating subsidiaries. Any of the foregoing would have a negative impact on our business, financial condition or the results of
operations.

Risks Related to our Operations and the Mobile Telephony Market

We face intense competition in the mobile telephone operator market.

Our mobile telephony operations face competition from other mobile telephone operators in the markets in which they operate, as well as
fixed line operators in some markets. Our main competitors are America Movil, MTN, Zain, France Telecom, Vodafone and Telefonica.

We
expect that additional mobile telephony licenses will be granted in some of our existing markets. Moreover, additional licenses may be awarded in markets where we already face
competition from other technologies that are being or may be developed and/or perfected in the future. In some of our markets, there may be more mobile telephone operators than the market is likely to
sustain. In addition, in some of our markets, our competitors may have a greater coverage area than we do. The mobile telephone operators in each market compete for customers principally on the basis
of services offered, quality of service, coverage area, accessibility of distribution and price. Many of our competitors have substantially greater capital resources than we do. Price competition is
significant.

There
is also a risk that, as new competitors enter into our markets and price competition intensifies, our customers may move to another mobile telephone operator. This may result in a
decline of our revenue, which would adversely affect our results of operations.

Any
failure by us to compete effectively or aggressive competitive behavior by our competitors in pricing their services or acquiring new customers could have a material adverse effect
on our revenues and overall results of operations.

The mobile telephony market is heavily regulated and taxed.

The licensing, construction, ownership and operation of mobile telephone networks, and the grant, maintenance and renewal of mobile
telephone licenses, as well as radio frequency allocations and interconnection arrangements, are regulated by national, state, regional or local governmental

10

---



Table of Contents

authorities
in the markets that we service. In addition, such matters and certain other aspects of mobile telephone operations, including rates charged to customers and the resale of mobile telephone
services, may be subject to public utility regulation in the relevant market. Our operations also typically require governmental permits, including permits for the construction and operation of cell
sites. While we do not believe that compliance with these permit requirements generally has a material adverse effect on our company, we may become subject to claims or regulatory actions relating to
any past or future non-compliance with permit requirements and any change in the regulation of our activities, such as increased or decreased regulation affecting prices or requirements
for increased capital investments, may materially adversely affect us. We saw increased taxation over the last year as a result of budgetory pressure from many governments because of the economic
crisis.

Most of the countries in which we operate do not have universal service obligations and if such obligations were implemented the profitability of our operations may be
negatively impacted.

The purpose of universal service is to provide access to persons in non-urban areas and isolated areas with telephone and
other telecommunications services by the telecommunications build-out in rural areas through subsidies. There is a telecommunications divide in all of the countries in which we operate in
relation to access to telecommunications services (mobile, internet access, higher bandwidth telecommunication services) between urban and rural areas. When such services are available, they usually
come at a significantly higher cost to the customer than in urban areas due to the lower population density in rural areas that are often hard to reach due to the lack of the most basic
infrastructure, in particular roads and electricity. The goal of universal service is to promote the availability of quality services at fair, reasonable and affordable rates in all areas of the
country, to increase access to advanced telecommunications services, and to enhance the availability of such services to all consumers, including those in isolated rural areas at rates that are
reasonably comparable to those charged in urban areas. For instance, India has implemented a universal service obligation in its New Telecom Policy 1999 funded by telecommunications operators
paying a part of their net earnings into the Universal Service Obligation Fund (USOF). We therefore believe that universal service obligations are a trend in telecommunications that may eventually
become law in the countries in which we operate.

To
date, none of the emerging markets in which we operate in have universal service obligations.

We
expect that some of the countries in which we operate may do so in the future. We believe this will have a negative impact on our profitability.

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

We may pursue new license opportunities. In each market we face competition for licenses from major international telecommunications
companies as well as from local competitors. While we typically try not to pay large amounts for mobile licenses, the competition for the granting or renewal of licenses is increasingly intense
worldwide. As such, we might have to pay substantial license fees in certain markets, as well as meet specified network build out requirements. We may not be successful in obtaining or renewing any
mobile telephone licenses or, if licenses are awarded, in obtaining those licenses on terms acceptable to us. If we obtain further licenses or renew existing ones, we may need to seek future funding
through additional borrowings or equity offerings, and we may not obtain such funding on satisfactory terms or at all.

The industry is characterized by rapid technological change, which could render our products obsolete and cause us to incur substantial costs to replace our products.

Fixed network and other system equipment used in the mobile telephone industry have a limited life and must be replaced frequently due
to damage or as a result of ordinary wear and tear.

11

---



Table of Contents

In addition,
substantial expansion of existing networks is required to remain competitive. Our networks are based on the GSM standard. In our Latin America markets, Mauritius and Rwanda, we
have both GSM and 3G networks. The GSM standard has been most appropriate for our markets because it has the greatest availability of handsets with strong functionality and has relatively low repair
and maintenance costs. As new technologies are being developed besides GSM and 3G, such as third generation systems, including WiMAX and LTE, equipment may need to be replaced or upgraded or a mobile
telephone network may need to be rebuilt in whole or in part, at substantial cost, to remain competitive. Unforeseeable technological developments may also render our services unpopular with customers
or obsolete. To the extent our equipment or systems become obsolete, we may be required to recognize an impairment charge to such assets, which may have a material adverse effect on our results of
operations. LTE or 4G is currently under implementation in some countries. Its benefits are still unknown and we may have to invest significant amount of money to follow competition and to secure our
competitivness with this technology.

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

In line with current trends in the U.S. and European Union, where spectrum regulation may intend to change in such a way that spectrum
formerly reserved exclusively for GSM operators could be opened to other uses, such as 3G or LTE, and/or new spectrum is freed such as the 700 Mhz band, we could find that new competitors are given
access to our markets. Although we do not believe such changes will occur in the near future, we believe these developments are likely to influence telecom regulatory trends in other parts of the
world. If such trends become law, our competitive position in the relevant countries may become adversely affected.

If we cannot successfully develop and manage our networks and distribution, for example as a result of natural disasters, we will be unable to expand our customer base and
will lose market share and revenues.

Our ability to increase our customer base depends upon the success of the expansion and management of our networks and distribution.
The build-out of our networks and distribution is subject to risks and uncertainties which may delay the introduction of service and increase the cost of network construction. Such
uncertainties may include natural disasters, the risk of hurricanes, volcanic activity and earthquakes in Central America, and flooding in low-lying areas in Bolivia and Paraguay (as
occurred in the first quarter of 2007). Other risks include sabotage and theft, which is an ongoing risk particularly in Colombia and DRC. To the extent we fail to expand our network and distribution
capabilities on a timely basis, we may experience difficulty in expanding our customer base.

In
addition, our ability to manage our operations successfully is dependent upon our ability to implement sufficient operational resources and infrastructure. The failure or breakdown of
key components of our infrastructure, including our billing systems, may have a material negative effect on our profits and results of operations.

Rapid growth and expansion may cause us difficulty in obtaining adequate managerial and operational resources and restrict our ability to expand successfully our operations.

Our future operating results depend, in significant part, upon the continued contributions of key senior management and technical
personnel. Management of growth will require, among other things:



12

---



Table of Contents



Our
success will also depend on our ability to continue to attract, retain and motivate qualified personnel. Competition for personnel in our markets is intense due to the small number
of qualified
individuals available in most of our markets. Our failure to successfully manage our growth and personnel needs would have a material negative effect on our business and results of operations.

Our operations are dependent upon interconnection agreements and transmission and leased lines.

Our operations are dependent upon access to networks not controlled by us, primarily networks controlled by current or former
government owned public telecommunications operators or competing mobile telephone operators. Our financial results are affected by the cost of transmission and leased lines to secure interconnection.
We may not be able to maintain interconnection or leased line agreements on appropriate terms to maintain or grow our business. A number of regulators have, or are expected to, reduce interconnection
rates. Because we are often one of the larger suppliers of telephone services in the countries we service, this could have the effect of reducing our revenue. In December 2007, the Colombian regulator
significantly reduced the interconnect rate. Since we have a customer base that receives significantly more calls from other networks than it makes, the change in the interconnect rate has had a
significant impact on the revenues and profitability of this operation.

Current concerns about the actual or perceived health risks relating to electromagnetic and radio frequency emissions, as well as the extensive publicity or possible
resultant litigation, may have a negative effect on the market price of our shares, our financial position or the results of our operations.

Media and other reports have suggested that electromagnetic and radio frequency emissions from mobile telephone handsets and base
stations may cause health problems, including cancer. There is also some concern that these emissions may interfere with the operation of certain electronic equipment, including aircraft guidance
systems, automobile braking and steering systems (e.g., GPS), and civil and military radars. Although we expect that the actual or perceived risks relating to mobile communications devices and
base stations, or press reports about these risks will not significantly adversely affect us, its actual impact is difficult to estimate. It may have the effect of reducing our customer growth rate,
customer base or average use per customer, which would have a negative impact on the market price of our shares.

If
a link between electromagnetic or radio frequency emissions and adverse health concerns is demonstrated, government authorities will increase regulation of mobile handsets and base
stations as a result of these health concerns. Mobile telephone operators and handset manufacturers, including us, would be held liable for all or part of the costs or damages associated with these
concerns. Any such regulations, or any litigation brought by potential victims, would also have a materially adverse effect on our financial position and results of operations.

General Risks

Our ability to generate cash depends on many factors beyond our control.

Our ability to generate cash is dependent on our future operating and financial performance. This will be impacted by our ability to
implement successfully our business strategy, as well as general economic, financial, competitive, regulatory, technical and other factors beyond our control. If we

13

---



Table of Contents

cannot
generate sufficient cash, we may, among other things, need to refinance all or a portion of our debt, obtain additional financing, delay capital expenditure or sell assets. We may have
difficulty to access the financial markets as we are not an investment grade rated credit. In addition, banks are refocusing on their domestic markets as a consequence of the financial crisis and we
are operating in Luxembourg with few national banks. This could impact the operating performance of our business.

Our debt may have an adverse effect on our financial health and prevent us from fulfilling our obligations under such debt.

As of December 31, 2009, Millicom's total consolidated indebtedness was $2.3 billion. Of this amount, $0.5 billion
represented the Company's indebtedness and $1.8 billion represented our consolidated share of the indebtedness of our subsidiaries and joint ventures.

Corporate
guarantees issued by the Company secured $0.8 billion of the indebtedness of our operations at December 31, 2009. The Group's share of total debt and financing
secured by either pledged assets, pledged deposits issued to cover letters of credit or guarantees issued by the Company was $1.2 billion at December 31, 2009.

If
we substantially increase our level of indebtedness, it may have important negative consequences for us. For example, it may:



Our ability to receive funds from and to exercise management control over our operations can be dependent upon the consent of our partners who are not under our control.
Disagreements or unfavorable terms in the agreements governing our joint ventures may adversely affect our operations.

We participate in the following operations where we have local partners with sufficient minority rights to prevent us from having full
control: Guatemala, Honduras and Mauritius. Our participation in each operation differs from market to market. Often our ability to withdraw funds, including dividends, from these operations and to
exercise management control over our partners depends on receiving the consent of the other participants. While the precise terms of the arrangements vary, our operations may be negatively affected if
disagreements develop with our partners.

We
rely upon dividends and other payments from our operations to generate the funds necessary to meet the Company's obligations, including the Company's debt obligations. The local
operations are legally separate and distinct from the Company and have no obligation to pay amounts due with respect to the Company's obligations or to make funds available for such payments. Our
local operations do not guarantee the Company's obligations. The ability of our operations to make such

14

---



Table of Contents

payments
to the Company will be subject to, among other things, the availability of funds, the agreement of our partners, the terms of each operation's indebtedness and local law. The majority of our
local operations have entered into financing facilities, which are often guaranteed by the Company, many of which restrict the payment of dividends by those operations to the Company. Claims of
creditors of our operations, including trade creditors, will generally have priority over our claims and the holders of our indebtedness.

Certain insiders own significant amounts of our shares, giving them a substantial amount of management control.

Investment AB Kinnevik our largest shareholder owned 37,835,438 shares in Millicom, representing approximately 35% of the voting shares
as at December 31, 2009. The Kinnevik group and its subsidiaries, the non-independent directors, the Stenbeck estate, and certain Stenbeck Trusts, beneficially owned 38,799,862
shares in Millicom, representing approximately 36% of Millicom's outstanding shares as at December 31, 2009. Kinnevik and its affiliates, having a significant ownership in Millicom, could have
significant influence over our management and affairs. The influence that they have may not always be consistent with your interests.

Some of our directors hold positions with Investment AB Kinnevik ("Kinnevik"), which may present conflicts that may be resolved in a manner not consistent with your
interests.

Two Millicom board members hold executive and/or director positions with Kinnevik. These positions may create, or appear to create,
potential conflicts of interest when these directors are faced with decisions that may have different implications for us or Kinnevik. There is a risk that these conflicts may ultimately be resolved
in a manner not consistent with your interests.

The ability of investors to enforce civil liabilities under U.S. securities laws may be limited.

We are incorporated under the laws of the Grand Duchy of Luxembourg (European Union). Most of our directors and executive officers are
residents of countries other than the United States. Most or a substantial portion of our assets and those of most of our directors and executive officers are located outside the United States. As a
result, it may not be possible for investors in our securities to effect service of process within the United States upon such persons or upon us or to enforce in U.S. courts or outside the United
States judgments obtained against such persons. In addition, it may be difficult for investors to enforce, in original actions brought in courts in jurisdictions located outside the United States,
liabilities predicated upon the civil liability provisions of the U.S. securities laws. We have been advised by our Luxembourg counsel, Allen & Overy that the United States and Luxembourg do
not have a treaty providing for reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by a federal or state
court in the United States based on civil liability, whether or not predicated solely upon United States federal securities laws, is not enforceable in Luxembourg. However, if the party in whose favor
such final judgment is rendered brings a new suit in a competent court in Luxembourg, the party may submit the final judgment that has been rendered in the United States to a Luxembourg court for the
purpose of recognition by such court and enforcement in Luxembourg. A judgment by a federal or state court of the United States against us will be regarded by a Luxembourg court only as evidence of
the outcome of the dispute to which such judgment relates, and a Luxembourg court may choose to rehear the dispute.

15

---





Table of Contents

ITEM 4.    INFORMATION ON THE COMPANY

Background

Overview

We are a global telecommunications group with mobile telephony operations in the world's emerging markets. We also operate fixed
telephony, cable and broadband businesses in five countries in Central America. Our strategy of being a low cost provider, focused on prepaid services using mass market distribution methods, has
enabled us to continue to pursue growth while delivering operating profitability.

As
at December 31, 2009, we had 14 mobile operations in 14 countries focusing on emerging markets in Central America, South America, Africa and Asia. 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; and in Laos in Asia. African Millicom's operation in Sierra Leone was sold on November 25, 2009; Millicom's operations in Sri Lanka and Cambodia were sold respectively
on October 16 and November 26, 2009 (see note 5). 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 fixed 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.

As
of December 31, 2009, the countries where we had mobile operations had a combined population of approximately 267 million. This means that 267 million people are
covered by our mobile licenses and could receive mobile services under the terms of our mobile licenses if our networks covered the entire population. Our total mobile customers reached
34 million as at December 31, 2009.

Most
of our markets are attractive due to their relatively low degree of penetration of fixed and mobile telephony services as compared to more developed markets. Usage of
telecommunications services has historically been low in the countries in which we operate due to poor or insufficient infrastructure, the unavailability and high costs of such services and the low
levels of disposable income. We believe there is a significant opportunity for further growth of our services in the markets because our services are essential for basic communication in the markets
in which we operate, and therefore we believe that the percentage of GDP spent on the services we offer will continue to grow in our markets.

Summary of Highlights and Recent Developments

On March 2, 2009, Millicom announced that the Board appointed Mikael Grahne to succeed Marc Beuls as President and Chief
Executive Officer (CEO). Mikael Grahne had
been the Chief Operating Officer of Millicom since February, 2002 and has been responsible for the development of Millicom's operational strategies, including the development of the tigo®
brand.

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. Completion of the transaction was subject to certain conditions, which were not satisfied before the
year-end.

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 $155 million, $1 million and $353 million, respectively, realising a total net gain of $289 million. Total transaction costs amounted to $11 million.

16

---



Table of Contents

On
December 4, 2009 Millicom officially started its mobile telephone operations in Rwanda.

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
sites (see note 35).

Strategy

Our strategy is to be a leading wireless/broadband operator and to operate with the lowest possible cost base from which we can offer
the consumer better value for money through lower tariffs whilst at the same time offering network quality and wide distribution. We believe that, given the relatively low mobile penetration levels in
most of our markets compared to more developed markets, we can continue to achieve significant growth in our customer base while continuing to improve our operating margins and cash flows by rolling
out our tigo® brand across most of our operations and focusing on our triple "A" operating strategy:



Focusing on growth.We believe there is a significant opportunity for further growth in our markets due to the relatively low mobile
penetration
levels (the weighted average penetration rate in the markets in which we operate is 45.5% as at December 31, 2009) as many of our markets, mainly in Africa, have high growth potential and
substantial unmet demand for basic voice telephony services. We believe we can grow our customer base and revenue by continuing to focus on prepaid services while controlling costs and maintaining our
position with postpaid customers. We see more and more opportunities with value-added services ("VAS"), especially in more mature markets. VAS (non-voice) accounted for 21% of our
recurring revenues in the last quarter of 2009. We will continue to invest in our existing mobile operations, where we believe we can generate attractive returns. In addition, we would consider to
increase our equity ownership in those of our operations where we still have either joint-venture or non-controlling partners, provided it is permitted under the terms of our license,
through buy-outs of our partners when the opportunities arise. We may, using a disciplined financial approach, participate in consolidation within our markets through the careful
evaluation, selection and pursuit of strategic opportunities. We may pursue new license opportunities in our adjacent markets within existing financial guidelines and provided there is
group-wide synergy potential. We will also look to expand into other services such as broadband in our existing markets. We will consider external growth opportunities outside our existing
markets, mainly in Latin America and Africa.

Improving cost efficiencies and capturing synergies.We continue to seek ways to further reduce our cost base by rationalizing our
operations. We
maintain a strict centralized cost control program across our operations which lowers our operating costs. In addition, we expect to realize additional synergies

17

---



Table of Contents

across
our operations, such as sharing of information, human resources, best practices and technologies and centralized negotiations of financing and supply contracts for network equipment.

As
part of our cost reduction program, we have sold most of our towers in Ghana (see note 35), which creates a significant value through a combination of cash, reduction of
operating expenses, decrease of future capital expenditure and retention of a majority stake in the newly created tower company, which bought our Ghanian towers.

Introducing new technologies.We may consider introducing new technologies in markets where customer demand is strong for the relevant
technologies
or products and where we believe the introduction of the new technologies are likely to generate substantial incremental revenue.

Some
voice technologies, like VoIP (Voice over Internet Protocol), are becoming increasingly widespread. VoIP allows voice communication by sending data packages with voice encapsulated
over data networks. These services are increasing their presence to compete with fixed-line services and international calls rather than with mobile telephony services.

We
are beginning to see strong demand for broadband services in some of our markets, particularly in the relatively more mature markets in Latin America. We are meeting this growing
customer demand, with our 3G (HSDPA) networks since this provides a very spectrally efficient wireless solution. This technology has been deployed in Latin America using the current existing 850 and
1900MHz spectrum.

Other
new technologies are starting to appear. One of them is Long Term Evolution (LTE) and mobile WiMAX 802.16m based on a new OFDMA technology. These technologies allow operators to
have an all IP packet only connection. We may acquire LTE and/or WiMAX licenses or spectrum in our countries of operation where they are available to ensure we can offer LTE and/or WiMAX- based
services if and when our customers demand them at reasonable prices.

If
future successful technologies are different from those adopted by us, we may decide additional investment in network equipment and training is desirable.

Introducing new products and services.In 2010, Millicom will continue to launch innovative value-added services such as music related
services,
interactive content services and advanced SMS services to address the needs of our customers. In selected markets, in 2009, Millicom tested the mobile payment and transactional services that will
provide added convenience to Millicom's customers. This will be another tool for us to retain customers and grow revenues and earnings.

Sales, marketing and distribution.We pursue a low-cost, innovative and high-impact approach to sales, marketing and
distribution. Except in a few countries, we do not provide handset subsidies for our prepaid customers. As a result, we typically have low overall customer acquisition costs. In addition, we are
focused on strengthening our distribution footprint and expanding our mass-market customer reach by distributing prepaid cards through mass-market or retail outlets such as
local convenience stores, newspaper stands, and street vendors.

We
believe that our focus on branded prepaid services helps us to expand our market share and reduces our operating costs. We focus our advertising on cost-effective
promotions. We have rebranded almost all of our products under the tigo® brand.

Competitive Strengths

We believe that our competitive strengths enable us to benefit from the increasing demand for the services provided by mobile operators
in emerging markets. Our competitive strengths include:

Established prepaid operator.Our focus on prepaid mobile services for the mass market offers the advantage of lower customer
acquisition and
operating costs, which typically results in higher margins

18

---



Table of Contents

and
a faster average payback time (on average, less than three months). In addition, prepaid customers allow us to eliminate customer bad debt issues and billing and collection costs. The introduction
of
prepaid mobile services has opened up the market for mobile services to customers who have previously been denied access to mobile service. Increased demand for prepaid mobile services is also rising
from business users and those customers who purchase prepaid credits in order to control their telephone costs, creating a new segment of the market.

Delivering profitable growth.One of our key strengths is our ability to grow our businesses while enhancing our operating
profitability. We have
generally been able to acquire our licenses at low cost with minimum build-out requirements. We aim to achieve strong customer growth while decreasing customer acquisition costs through
the creation of well-known perceived price leading brands. Additionally, we have developed an extensive distribution network at low cost that provides our customers with broad service
coverage, further leveraging our brand name in most of our operations.

Track record of innovation.We believe that innovation is another key to our success. In nearly all of our markets, we were the first
to launch
branded prepaid mobile services which now are prevalent in our markets. We have been the first to focus on non-traditional distribution channels to increase our mass-market
prepaid customer reach in our markets. For example, we have used freelance distributors, such as street vendors, and sold prepaid cards in mass market outlets, which has reduced our sales and
marketing costs. We have also introduced e-PIN and per second billing in most of our markets. We pioneered the introduction of all you can eat plans in Africa with our "X-treme
promotions". We are offering 3G broadband services in our Latin American markets, Mauritius and Rwanda.We are offering WiMAX services in some selected countries where we have acquired WiMAX licenses
(such as in Paraguay, Bolivia and El Salvador), and will continue to expand if and when our customers demand these services and we are able to provide them at reasonable prices. Because we focus on
prepaid services and low costs, we believe that we offer the best value proposition to the customer.

Low operating costs and high capital efficiencies.We establish services in markets that we believe offer high potential financial
returns and
substantial operational leverage. We operate sizeable networks covering areas of the highest population density and business activity. Any further build-outs of our network infrastructure
are demand driven. In addition, our migration to GSM has lowered our investment per capacity minute with faster payback times.

Integrated strategy.We actively pursue the many synergies inherent in our multicountry operations and the increasing scale in our
existing markets.
Such synergies include sharing information and best practices about services, human resources, technologies and market strategies; centralized negotiation of financing and of supply contracts for
network equipment, and the rollout of a single brand, tigo®, to most of our operations. For example, our operations in Africa have been able
to draw on the operational and managerial experiences and resources of our operations in Central and South America.

Diversified operations.We believe our 14 mobile operations based in 14 countries on three continents as at December 31, 2009
provide a
balance of established cash flow generation and high-growth potential. Our diversification across countries and continents also lessens our exposure to unfavorable changes in a single
market or currency. For example, we have continued to grow our total mobile customer base and operating profitability despite the expiry of our BCC contract in Vietnam in May 2005 and the divestiture
of our operations in Peru and Pakistan.

Highly skilled senior management.Our highly skilled senior management has extensive experience in both the telecommunications industry
and the
Fast-Moving Consumer Goods sector, which are critical to properly implement our operating strategy. Many of our senior executives have spent more than 10 years working in emerging
markets and have demonstrated their ability to manage costs while managing rapidly growing businesses and starting up and successfully integrating new businesses, as has been the case in Colombia and
recently with our Amnet operations in Central America.

19

---



Table of Contents

License Acquisition

As we established an early presence in most of the markets in which we operate, in most cases we have been able to secure our licenses
at low cost. Historically, we have been successful in renewing our maturing licenses, generally on terms similar to the original licenses, although we may not be able to do so in the future. In some
cases, we operate with prominent local business partners through companies over which we typically exercise management control.

Licenses
are generally sought through a competitive application process in which the license is awarded on the merits of the application. In some cases, our operations pay royalties on
revenue or income to governments and all of our mobile operations pay interconnection fees to other telecommunications operators during the license period. Although the pursuit of mobile telephone
licenses is usually highly competitive, historically our operating companies have been successful in obtaining licenses over other license applicants, including major international telecommunications
companies.

From
time to time, Millicom meets difficulties when negotiating the terms of existing licenses. Millicom is currently engaged in a dispute with the Senegalese government regarding the
maintenance of the existing Sentel license. The government of Senegal alleges that it has cancelled Sentel's license and seeks damages against Sentel and Millicom under various theories. Millicom
believes that the action filed by the Republic of Senegal is baseless and ignores the agreement between Sentel and the Republic of Senegal to submit any dispute concerning the license to an
international arbitration forum. Millicom's commitment to its business in Senegal remains strong and its subsidiaries Millicom International Operations, B.V. and Sentel intend to vigorously
pursue all available remedies in the matter before an international arbitration forum. Millicom is still in effective control of its Senegalese operations and seeking ways to find an amicable solution
with the Senegalese authorities.

Management Structure

The Millicom management team is led by Chief Executive Officer and President, Mikael Grahne, previously Millicom's Chief Operating
Officer, who took over the position from the former Chief Executive Officer, Marc Beuls, on March 2, 2009. The Chief Executive Officer has overall responsibility for the business and Millicom's
strategy. Our Chief Financial Officer, Francois-Xavier Roger, oversees the financial, administrative and accounting areas. Our Chief of Tigo People, Carel Maasland, oversees the development of our
employees, compensation and benefits and the recruitment of new talent.

We
primarily operate in three major geographic regions of the world: Central America, South America and Africa. Mario Zanotti is our Head of Latin America (Central and South America) and
Regis Romero is our Head of Africa. They both report directly to our Chief Executive Officer and are responsible for the day-by-day operations. We believe this structure allows
us to maintain a high degree of coordination, cooperation and sharing of information among the various managers while providing a degree of regional responsibility that ensures quick and effective
decision making.

The Industry

Mobile Telecommunications Industry Overview

Mobile Telecommunications Technology.Mobile telecommunication systems are capable of providing high quality, high capacity voice and
data
communications to and from mobile handsets and devices. Mobile telecommunications systems are capable of handling thousands of calls simultaneously and providing service to hundreds of thousands of
customers in any particular area.

Mobile
telecommunications technology is based upon the division of a given geographical area into a number of cells and the simultaneous use of radio channels in
non-contiguous cells within the system. Each cell contains a low power transmitter/receiver at a base station that communicates by radio signal

20

---



Table of Contents

with
mobile telephones in that cell. Each cell is connected by microwave or optical fiber to a central switching point or Mobile Switching Center (MSC or "switch") that controls the routing of calls
and which, in turn, is connected to the public switched telephone network, if one exists, or to other mobile operators. It is the switch's mobility management function that allows mobile telephone
users to move freely from cell to cell while continuing their calls through a process called hand-off.

Mobile
telecommunications systems generally offer customers the features offered by the most up-to-date fixed-line telecommunications services. Mobile
telecommunications systems are interconnected with both the fixed-line telecommunications network and other mobile networks. As a result, customers can receive and originate local,
long-distance and international calls from their mobile telephones. Mobile telecommunications system operators therefore require an interconnect arrangement with the local
fixed-line telecommunications companies and/or other mobile network operators, and the terms of such arrangements are material to the economic viability of the system.

A
mobile telecommunications system's capacity can be increased in various ways. Increasing demand may be satisfied, in the first instance, by adding available channel capacity to cells
through the addition of extra transmitters. When all available channels are used, further growth can be accomplished through a process known as cell splitting. Cell splitting entails dividing a single
cell into a number of smaller cells, through the construction of additional base stations, thereby allowing for greater channel reuse and hence increasing the number of calls that can be handled in a
given area.

Millicom
uses mainly GSM technology in its operations that are GPRS, EDGE and in some markets 3G enabled. GSM is a digital standard for mobile telecommunications systems that
countries have adopted as a common standard. GSM offers increased value-added services and enables transmissions to be made in encrypted form so that conversations cannot easily be intercepted. The
GSM system allows customers to use their mobile telephones in any country where the GSM system has been adopted and where appropriate roaming agreements are implemented, providing increased mobility
and flexibility. GSM systems are the most ubiquitous worldwide.

In
the United States, a number of digital standards have been developed and are being deployed. One of them is Code Division Multiple Access (CDMA), which is also popular in some parts
of South America and in the Asia-Pacific region. An enhanced version of CDMA is the technology used for the third generation mobile systems (3G) called WCDMA and CDMA2000 1X. What all
third generation (3G) networks have in common is that they support high data bandwidth applications such as full motion video, video conferencing and full Internet access to mobile devices.

WiMAX
stands for Worldwide Interoperability for Microwave Access and is a wireless industry coalition whose members organized to advance IEEE 802.16 standards for broadband wireless
access (BWA) networks. WiMAX 802.16 technology is expected to enable multimedia applications with wireless connections.

Competing Technologies.Some niche technologies are available for certain services. One of these technologies consists of Trunking
services that are
also deployed using radio communications with a cell technology and allows mobility for the user, but do not provide full duplex communication among users. This limitation makes this service less
desirable and this results in low competition as few operators use this technology. Another technology being deployed is "Push to talk" or "Push over Cellular" which utilizes the mobile telephony
network capability of handling data to allow a service similar to Trunking but using more sophisticated mobile handsets. These services are complementary to mobile services and are usually deployed as
an additional product within mobile services.

Some
other voice technologies, like VoIP (Voice over Internet Protocol), are becoming increasingly widespread. VoIP allows voice communication by sending data packages with voice
encapsulated over data networks. These services are increasing their presence to compete with fixed-line services and international calls rather than with mobile telephony services.

21

---



Table of Contents

New
competing technologies have started to be deployed. The first one of them is 3G (WCDMA) using HSDPA since this provides a very spectrally efficient wireless solution. This technology
is being deployed in Asia and Africa in the 2100MHz spectrum while in the Americas 3G is using the current existing 850 and 1900MHz spectrum.

During
the last two years, in our Latin America markets we have introduced 3G networks based on W-CDMA/HSDPA (High-Speed Downlink Packet Access). WCDMA is a
system based on the third generation (3G) of mobile phone standards and technology that allows the transmission of large volumes of data at high speeds. 3G technologies enable us to offer our users a
wider range of more advanced services while achieving greater network capacity through improved spectral efficiency. 3G enables us in Latin America, Mauritius and Rwanda to offer new Services to our
corporate as well as prepaid users like video calls, mobile broadband data, full Internet experience with richer mobile content. The main reason to introduce 3G /HSDPA networks are:

New market opportunities.It allows us to enter new markets and provide new services, such as the wireless broadband market, which we
believe has
significant growth potential throughout Latin America.

Increased data and voice capacity.Our new 3G networks give us more capacity to provide data and voice services than our existing GSM
network using
our current spectrum.

Cost effective deployment.3G networks can be colocated with existing infrastructure allowing faster and more cost effective network
deployment.

Other
new technologies have also started to appear, such as Long Term Evolution (LTE), mobile WiMAX 802.16m and Ultra Mobile Broadband (UMB) based on a new OFDMA technology. This
eventually will allow operators to have an all IP packet only connection. Most of the largest operators in the world are choosing the LTE evolution path.

In
the event that future successful technologies are different from those adopted by the Company, the Company will be forced to make additional investments in network equipment
replacement and training.

Operating Characteristics.The mobile telecommunications industry is typically characterized by high fixed costs and low variable
costs. Until
technological limitations on total capacity are approached, additional mobile telecommunications system capacity can usually be added in increments that closely match demand and at less than the
proportionate cost of the initial capacity. The industry is also seeing declining equipment prices in real terms. Once revenues exceed fixed costs, incremental revenues are expected to yield an
increasing operating profit, giving mobile operators an incentive to stimulate and satisfy demand for their services in the market. The amount of profit, if any, under such circumstances is dependent
upon, among other things, prices and variable marketing costs, which, in turn, are affected by the amount and the extent of competition. As competition increases in markets, prices have fallen with
the result that revenues and operating profits increase at a lower rate than customer growth. In addition, as penetration rates increase, there is a tendency for a higher proportion of new customers
to use prepaid services. Prepaid customers tend to have lower usage than credit customers, but the operating margin on prepaid is generally higher than with credit customers as the risk of customer
bad debt is eliminated and there generally is no subsidizing of handsets.

As
these services are using radio spectrum, which are generally monitored and regulated by governments, the utilization of frequencies generally requires that appropriate licenses are
obtained from pertinent authorities. The granting of licenses may involve significant fees, either paid as fixed upfront amounts or as variable charges.

22

---



Table of Contents

Development of the Mobile Telecommunications Industry

Mobile Telecommunications in Developed Countries.The first mobile telecommunications networks were introduced in Scandinavia in the
early 1980s and
experienced modest growth for the first few years. Over the last years, however, mobile telecommunications have grown rapidly. All developed countries now have mobile telecommunication service and the
levels of penetration have increased substantially in these countries.

Given
the rapid growth of mobile telecommunication traffic in developed countries and high levels of penetration, the industry is increasingly introducing new technologies that will
expand capacity and
improve service. In industrialized nations, mobile operators have implemented "third generation" mobile technology and have plans to introduce "fourth generation" mobile technology that will allow
faster access to the Internet.

Mobile Telecommunications in Developing Countries.While the mobile telecommunications industry is well-established in the developed
world, the mobile telecommunications industry in the developing world is still in a relatively high growth phase. Millicom believes that mobile telecommunications will continue to grow in developing
countries because of the poor quality of the existing fixed-line service, the unsatisfied demand for basic telecommunications service and the increasing demand from users who want the
convenience of mobile telephones. In some countries the mobile communications network provides significantly improved access to the local and international fixed-line network compared with
the existing fixed-line service, as well as access to the Internet Penetration rates (the number of customers per 100 people) are lower in developing countries than in developed countries.
Consequently, Millicom believes that its markets offer high growth potential.

For
developing countries, mobile telecommunications networks can represent a faster and more cost-effective method of expanding telecommunications infrastructure than
traditional fixed-line networks. Fixed-line networks involve extensive outside infrastructure in the form of buried or overhead cable networks, while mobile telecommunications
networks require less construction activity.

Other Mobile industry trends

Another trend in the mobile industry, and a new market opportunity, is the integration of mobile services with broadband, fixed line
and cable TV services to offer packages known as "triple" and "quadruple" play services.

23

---



Table of Contents

Competitive Position in the Market

The following table shows certain estimated information regarding the competitive position of Millicom's continuing operations in each
of its mobile telephony markets as at December 31, 2009. This information was derived from active customers based on interconnect activity on our own networks. Millicom operates in developing
economies and markets and believes that the data research available in these countries is not always accurate, consistent or verifiable. Therefore, the information provided here is given in ranges of
market share to indicate the relative size and market position of Millicom's mobile telephony operations in comparison to its competitors.

Estimated Market Share Ranking at December 31, 2009Market

Greater
than 50%

Between 25%
and 50%

Between 10%
and 25%

Less
than 10%

December 31,
2009(i)Central AmericaEl Salvador



Millicom

Am. Movil
Telefonica
Digicel

Red Intelfon


1 of 5Guatemala



Millicom
Am. Movil

Telefonica




1 of 3Honduras

Millicom



Am. Movil
Digicel

Honducel


1 of 4South AmericaBolivia



Entel
Millicom
NuevaTel






2 of 3Colombia

Am. Movil



Telefonica

Millicom


3 of 3Paraguay

Millicom

Personal

Am. Movil

Vox


1 of 4AfricaChad

Celtel (Zain)

Millicom






2 of 2DRC



Millicom
Celtel

Vodacom
CCT

Standard


1 of 5
(ii)Ghana

MTN

Millicom

One touch

Kasapa T. (Hutchison)
Zain


2 of 5Mauritius

Orange

Millicom



Mahanagar T.


2 of 3Rwanda

MTN



RwandaTel

Millicom


3 of 3Senegal

Sonatel Mobiles (France T).

Millicom



Expresso
Kirene


2 of 4Tanzania



Vodacom
Millicom
Zain



Zantel
TTCL Mobile
Bol
SasaTel


2 of 7AsiaLaos

Lao Tel.



ETL Mobile
Millicom

Lao Asia Tel.
(LAT)


3 of 4


(i)Source: Millicom market share derived from active customers based on interconnect activity on our own networks.(ii)in Kinshasa/Bas Congo area.


24

---



Table of Contents




Operations

Description of operations

Descriptions of each of our operations and other related businesses are provided below. The description of our operations is divided
into the following regions and businesses:



The
table below sets forth our revenue from continuing operations by operating segment, in percent of total revenues, for the periods indicated.

2009

2008

2007

2006

2005Central America


39
%

44
%

48
%

55
%

57
%South America


32
%

32
%

33
%

23
%

18
%Africa


23
%

23
%

19
%

22
%

25
%Cable


6
%

1
%







Total


100
%

100
%

100
%

100
%

100
%


25

---





Table of Contents

Subsidiaries and their Market Presence

The following table shows certain information for each of Millicom's mobile operations as at December 31, 2009.

Market

Company Name

Ownership

Method of
Consolidation(1)

Start-Up/
Acquisition
Date

Estimated
Population
of Area
under
License(2)

Mobile
Penetration
as of
December 31,
2009(3)(percent)





(millions)

(percent)Central AmericaEl Salvador

Telemóvil El
Salvador S.A.


100.0%

S


1993


7


102%Guatemala

Comunicaciones
Celulares S.A.


55.0%

JV


1990


13


81%Honduras

Telefónica
Cellular S.A.


66.7%

JV


1996


8


89%South AmericaBolivia

Telefónica Celular
de Bolivia S.A.


100.0%

S


1991


10


54%Colombia

Colombia Móvil S.A. E.S.P.


50.0%
+1 share

S


2006


46


95%Paraguay

Telefónica Celular
del Paraguay S.A.


100.0%

S


1992


7


86%AfricaChad

Millicom
Tchad S.A.


100.0%

S


2004


10


17%DR of Congo

Oasis S.P.R.L.


100.0%

S


2005


69


8%Ghana

Millicom Ghana
Company Limited


100.0%

S


1992


24


51%Mauritius

Emtel Limited


50.0%

JV


1989


1


80%Rwanda

Tigo Rwanda S.A.


87.5%

S


2009


10


20%Senegal

Sentel GSM S.A.


100.0%

S


1999


14


42%Tanzania

MIC Tanzania
Limited


100.0%

S


1994


41


28%AsiaLao People's D.R.

Millicom Lao Co. Limited


74.1%

S


2003


7


17%Total












267


(1)JV = Joint Ventures. Under IFRS, joint ventures are consolidated using the proportional method of accounting in which only our share of the assets,
liabilities, income and expenses of the joint ventures in which we have an interest are consolidated. Millicom determines the existence of joint control by reference to the joint venture agreements,
articles of association, capital structure and voting protocols of the board of directors of the relevant entity, as well as the influence it has over day-to-day
operations.
S = Subsidiary. Subsidiaries are entities over which we have control and are fully consolidated.(2)Source: The U.S. Central Intelligence Agency's "The World Factbook" for 2009.(3)Source: Millicom. We derive penetration rates from estimates of the total active customers in the relevant market based on
interconnect traffic.


26

---



Table of Contents




Selected Operating Data

The following table presents, at the dates and for the periods indicated, selected operating data for each of Millicom's mobile
continuing operations.

As at December 31,Total Customers

Prepaid Customers as %
of Total CustomersMarket

2009

2008

2007

2009

2008

2007Central AmericaEl Salvador


2,780,229


2,528,056


2,217,560


92%


92%


91%Guatemala


5,379,467


4,413,519


3,681,405


96%


97%


97%Honduras


4,742,014


4,239,676


2,925,959


95%


95%


95%Subtotal Central America


12,901,710


11,181,251


8,824,924


95%


95%


95%South AmericaBolivia


2,023,412


1,399,048


1,055,823


93%


94%


96%Colombia


3,743,671


3,313,851


2,769,884


83%


87%


90%Paraguay


3,048,134


2,747,872


2,067,019


89%


90%


92%Subtotal South America


8,815,217


7,460,771


5,892,726


87%


90%


92%AfricaChad


1,017,159


541,159


323,356


100%


100%


100%DR Congo


1,511,105


1,048,419


546,500


100%


100%


100%Ghana


3,094,176


2,887,927


2,023,091


100%


100%


100%Mauritius


437,428


421,683


365,018


92%


93%


93%Rwanda


74,785














Senegal


2,090,067


1,852,461


1,118,505


100%


100%


100%Tanzania


3,978,457


2,297,003


1,191,678


100%


100%


100%Subtotal Africa


12,203,177


9,048,652


5,568,148


100%


100%


99%Total


33,920,104


27,690,674


20,285,798


95%


95%


95%


CENTRAL AMERICA

Central America consists of Millicom's mobile operations in El Salvador, Guatemala and Honduras. Millicom Central America's licenses
covered approximately 28 million people as at December 31, 2009.

El Salvador

El Salvador's government system is a democratic republic. Following deterioration in the country's democratic institutions in the
1970s, a civil war took place between 1980 and 1992 and came to an end as the two opposing sides signed a peace accord. The former president,
Elías Antonio Saca González of the right-wing Arena political party, was elected in 2004 for a five-year term ending on June 1, 2009. New
presidential elections took place on March 16, 2009 and Mauricio Funes, of the left-wing FMLN political party was elected as new president.

Despite
being the smallest country geographically in Central America, El Salvador has the third largest economy. Economic growth has been modest in recent years and contracted by 2.6% in
2009. El Salvador leads the region in remittances per capita with inflows equivalent to nearly all export income and about a third of all households receive these financial inflows. In 2006 El
Salvador was the first country to ratify the Central America-Dominican Republic Free Trade Agreement ("CAFTA"). CAFTA has bolstered exports of processed foods, sugar, and ethanol, and supported
investment in the apparel sector, which faced Asian competition with the expiration of the Multi-Fiber Agreement in

27

---



Table of Contents

2005.
In anticipation of the declines in the apparel sector's competitiveness, the previous administration sought to diversify the economy by promoting the country as a regional distribution
and logistics hub, and by promoting tourism investment through tax incentives. El Salvador has promoted an open trade and investment environment, and has embarked on a wave of privatizations extending
to telecom, electricity distribution, banking, and pension funds. In late 2006, the government and the Millennium Challenge Corporation signed a five-year, $461 million compact to
stimulate economic growth and reduce poverty in the country's northern region, the primary conflict zone during the civil war, through investments in education, public services, enterprise
development, and transportation infrastructure. With the adoption of the US dollar as its currency in 2001, El Salvador lost control over monetary policy. Any counter-cyclical policy response to the
downturn must be through fiscal policy, which is constrained by legislative requirements for a two-thirds majority to approve any international financing. El Salvador had a population of
about 7 million people at the end of 2009. The 2009 GDP real growth rate was estimated at a negative 2.3% and GDP per capita at about $6,000.

El
Salvador's telecommunications market is among the most liberalized in Central America. In 1996, the government passed a telecommunications law designed to encourage competition in all
areas of the sector and permitted foreign investment for the first time. The law governs all activities of the telecommunications sector, with particular emphasis on the regulation of the public
telephony service, utilization of radio spectrum, access to essential resources and numbering plans. Since the sector privatization in 1998, foreign and local operators have made significant
investments in infrastructure improvement. This has resulted in considerable growth in the number of mobile connections, partly as a result of the underdeveloped fixed-line network with
waiting time for connections often running to several years. Mobile operators have capitalized on this by offering fast, high quality service with nationwide coverage.

Millicom
has a 100% equity interest in Telemóvil El Salvador, S.A. Millicom accounts for this operation as a subsidiary using the full consolidation accounting
method.

Telemóvil
launched its operations in 1993 and was the only mobile services provider until 1999. Since its entry into the market, Telemóvil has expanded its
coverage of the main cities rapidly and remains the market leader. The GSM network was launched in August 2004. Services offered also include broadband internet, fixed wireless telephony and public
telephony. Tigo's 3G/HSDPA Network was launched in September 2008 offering services such as video calls, mobile internet (datacards) and all the current telecommunication services using 3G network.

In
2009 there were 5 mobile services providers in the country. Telefónica and Telecom (initially owned by France Telecom) entered the market in 1999 as the second and
third mobile operator, respectively. Digicel (privately owned) entered the market in 2001 with a GSM network as the fourth operator. Digicel was recently acquired by the Caribbean operator with the
same name. América Móvil of Mexico acquired France Telecom's interest in Telecom in 2003. In October 2005, Intelfon (privately owned) entered the market as the fifth
mobile operator, offering services based on the iDen push-to-talk technology. Intelfon has a negligible market share to date.

Telemóvil
was awarded a 15-year mobile license in September 1991 which was subsequently extended until 2018. Telemóvil acquired WiMAX spectrum
in 1998.

As
at December 31, 2009, Millicom's network in El Salvador comprised 900 physical sites and covered 92% of the total population.

Guatemala

Guatemala's government system is a constitutional democratic republic. In 1996, peace accords were signed which brought an end to a
36-year civil war. Although Guatemala has completed a successful transition from military to civilian government, the military retains considerable political

28

---



Table of Contents

power.
In November 2007, Mr. Alvaro Colom was elected President with 52.82% of votes. Mr. Colom's Party is UNE, is of center-left tendency and does not control majority of
seats in Congress.

Guatemala
is the most populous of the Central American countries. The agricultural sector accounts for about one-tenth of GDP and half of the labor force; key agricultural
exports include coffee, sugar, and bananas. The 1996 signing of peace accords, which ended 36 years of civil war, removed a major obstacle to foreign investment, and Guatemala since then has
pursued important
reforms and macroeconomic stabilization. The Central American Free Trade Agreement (CAFTA) entered into force in July 2006 spurring increased investment and diversification of exports, with the
largest increases in ethanol and non-traditional agricultural exports. While CAFTA has helped improve the investment climate, concerns over security, the lack of skilled workers and poor
infrastructure continue to hamper foreign participation. The distribution of income remains highly unequal with more than half of the population below the national poverty line and 15% in extreme
poverty. Guatemala has one of the highest malnutrition rates in the world. Other ongoing challenges include increasing government revenues, negotiating further assistance from international donors,
curtailing drug trafficking and rampant crime, and narrowing the trade deficit. President Colom entered into office with the promise to increase education, healthcare, and rural development, and in
April 2008 he inaugurated a conditional financial transfer program modeled after programs in Brazil and Mexico that provide financial incentives for poor families to keep their children in school.
Given Guatemala's large expatriate community in the United States, it is the top remittance recipient in Central America, with inflows serving as a primary source of foreign income equivalent to
nearly two-thirds of exports. Economic growth turned negative in 2009 as export demand from US and other Central American markets contracted and foreign investment slowed amid the global
recession and economic recovery will probably be negligible in 2010. Guatemala had a population of about 13 million people at the end of 2009. The 2009 GDP real growth rate was estimated at a
negative 0.5% and GDP per capita at about $5,200.

Between
1996 and 1998, Guatemala implemented a liberalization and privatization program. The General Telecommunications Law was passed in 1996 and opened the sector to competition with
immediate effect, including the removal of all regulatory restrictions on prices and quality of service, and also prepared the ground for privatization of the incumbent operator Guatel,
re-named Telgua, which took place in 1998. The law also created a regulatory authority, the Superintendencia de Telecomunicaciones (SIT), which is primarily responsible for the allocation
of radio spectrum, resolving access disputes and administering the national numbering plan.

Millicom
has a 55% equity interest in Comunicaciones Celulares, S.A. (Comcel). The remaining 45% of the company is owned by Miffin Associates Corp., a Panamanian company
controlled by our local partner Mr. Mario David Lopez Estrada. Millicom accounts for this operation as a joint venture using the proportionate consolidation accounting method.

Comcel
was the first mobile operator in Guatemala when it launched commercial operations in 1990. The company enjoyed a monopoly position until 1999 when Telefónica and
Telgua (owned by América Móvil) entered the market as the second and third operators. In 2001, BellSouth of the U.S. entered the market as the fourth operator but
Telefónica of Spain acquired BellSouth's operations in 2004. América Móvil offers an integrated telecommunications solution including fixed and mobile
telephony, cable TV and internet services. América Móvil and Telefónica are Comcel's most challenging competitors. In March 2003 two additional mobile
licenses were granted. One license was granted to Electrónica Industrial, S.A., which sold the usufruct of the spectrum to Comcel in November 2006. The other license was granted
to Digicel Guatemala S.A., which launched commercial operations in 2009.

Comcel
operates GSM/GPRS/EDGE and 3G/HSDPA networks. The GSM/GPRS/EDGE network was launched in August 2004 and the 3G/HSDPA network was launched in August 2008. Comcel also

29

---



Table of Contents

provides
international long-distance services, roaming service, internet services and local telephony services.

In
January 1990, Comcel was awarded its initial 20-year license to operate a nationwide 800MHz network. In March 2003, Comcel was awarded a revised license to operate 10MHz
of frequency for a period of 15 years until 2018. In August 1998, as validated in October 2001, the license to operate another 4MHz spectrum was awarded for the period until 2013. This license
can then be extended for a further 15 years. Comcel acquired 25 MHz in the 2.5 GHz spectrum to operate WiMAX in July 2006.

As
at December 31, 2009, Millicom's network in Guatemala comprised 2,194 physical sites and covered 98% of the total population.

Honduras

Honduras' government system is a democratic constitutional republic. Since the regional peace process that took place in the late
1980s, democracy in Honduras has been strengthened. Presidential elections took place in November 2005, with the opposition candidate Manuel Zelaya Rosales of the Partido Liberal party being elected
and taking office in January 2006. Mr. Rosales left power in June 2009 and an intermediary government took his place to run the country until the new elections, which were held in November 2009
with the same political parties leading the polls; with the win of the candidate Porfirio Lobo Sosa running for the National Party. This new government has been largely accepted by the international
community.

Honduras,
the second poorest country in Central America, has a highly unequal distribution of income and high un- and underemployment. The economy relies heavily on a narrow
range of exports, notably apparel, bananas, and coffee, making it vulnerable to natural disasters and shifts in commodity prices; however, investments in the maquila and non-traditional
export sectors are slowly diversifying the economy. Nearly half of Honduras's economic activity is directly tied to the United States, with exports to the United States equivalent to 30% of GDP and
remittances for another 22%. CAFTA came into force in 2006 and has helped foster investment, but physical and political insecurity may deter potential investors. The economy is expected to register
marginally positive economic growth in 2010, insufficient to improve living standards for the nearly 60% of the population in poverty. Despite improvements in tax collections, the government's fiscal
deficit is growing due to increases in current expenditures from increasing public wages. Tegucigalpa lacks an
IMF agreement; its Stand-By Agreement expired in April 2009 and former President Zelaya's commitment to a fixed exchange rate undermined a follow-on. Honduras had a population
of about 8 million people at the end of 2009. The 2009 GDP real growth rate was estimated at a negative 3.1% and GDP per capita at about $4,200.

The
Comisión Nacional de Telecomunicaciones (Conatel) was created in October 1995 as the national regulatory authority and reports directly to the Ministry of
Telecommunications. It operates a licensing system for all telecommunication services in Honduras and is in charge of promoting the modernization and development of the sector by encouraging private
investment, free competition and improved quality of service. Although Empresa Hondureña de Telecomunicaciones (Hondutel), the state owned national incumbent operator, has a monopoly
over local and long-distance telephony services, the government has opened value added services and mobile telephony to competition. Mobile operators (Millicom's Celtel, the market leader;
Megatel, owned by América Móvil and most recently Digicel) have the right to carry international traffic for their own customer base.

Millicom
has a 66.67% equity interest in Celtel. The remaining 33.33% of Celtel is owned by Proempres Panama S.A., a privately-held company controlled by our local
partners, Mr. Roberto Isaias Dassun and other members of his family. Millicom and Proempres entered into a revised shareholders' agreement following the buy-out of a third
shareholder, Motorola Inc. of the United States, in 2005, under which the two shareholders exercise joint control of Celtel. Millicom accounts for this operation as a joint venture using the
proportionate consolidation accounting method.

30

---



Table of Contents

Celtel
launched commercial operations in 1996 as the first mobile operator in Honduras and today operates a GSM and a 3G network. Until late 2003, Celtel enjoyed a monopoly status in the
mobile market, when Megatel entered the market with a GSM network as the second operator. In the first quarter of 2008, Megatel launched its 3G Network. The third mobile license was issued to Hondutel
(the State-owned fixed line incumbent) but its operations have only limited coverage in the 5 main cities of the country. A fourth license was issued to Digicel Honduras S.A., who launched
operations on November 2008 with a GSM network.

Celtel
operates a GSM/GPRS/EDGE network and a 3G/HSDPA network. The 3G/HSDPA network was launched in August 2008. Celtel also provides international long-distance services
and local telephony services.

In
June 1996, Celtel was awarded a 10-year license to operate a nationwide mobile network for a price of US$5.1 million. The license was transformed into a
25-year license
in March 2005 with an expiry date of June 2021 at a cost of US$4.8 million. Celtel has already acquired a WiMAX license but have not yet performed a commercial launch.

As
at December 31, 2009, Millicom's network in Honduras comprised 1,419 physical sites and covered 93% of the total population.

SOUTH AMERICA

Millicom's mobile operations in South America are located in Bolivia, Colombia and Paraguay. Our South American licenses covered
approximately 63 million people as at December 31, 2009.

Bolivia

Bolivia's system of government is a Unitary Democratic Republic. The government has pursued an economic and social reform agenda since
the early 1990s. Democratic civilian rule was established in 1982, but leaders have faced difficult problems of deep-seated poverty, social unrest and illegal drug production. In December
2005 Bolivians elected Movement Toward Socialism leader Evo Morales as president by the widest margin of any leader since the restoration of civilian rule in 1982, after he ran on a promise to change
the country's traditional political class and empower the nation's poor majority. However, since taking office, his controversial strategies have exacerbated racial and economic tensions between the
Amerindian populations of the Andean west and the non-indigenous communities of the eastern lowlands.

One
of these strategies was the "recuperation of the natural resources to the hands of the state": nationalization of the entire hydrocarbon sector (gas, production, transportation,
refining, and storage companies), the main mining companies, and also Entel, the main telecom operator previously privatized in 1997. This nationalization process has been confirmed under the new
constitution approved in January 2009. New elections were held in December 2009 and Evo Morales was confirmed as president.

The
new constitution guarantees the "concession previous rights". As a result, our Concession Contract rights were not affected. One of the most relevant changes resulting from the new
constitution was the elimination of the Sirese system, an autonomous government agency responsible for regulating the five
basic utility sectors: telecommunications, electricity, transport, oil and gas and water. These functions were taken over by a Government Ministry.

Bolivia
is one of the poorest and least developed countries in Latin America. Following a disastrous economic crisis during the early 1980s, reforms spurred private investment,
stimulated economic growth, and cut poverty rates in the 1990s. The period between 2003 and 2005 was characterized by political instability, racial tensions, and violent protests against
planssubsequently abandonedto export Bolivia's newly discovered natural gas reserves to large northern hemisphere

31

---



Table of Contents

markets.
In 2005, the government passed a controversial hydrocarbons law that imposed significantly higher royalties and required foreign firms then operating under risk-sharing contracts
to surrender all production to the state energy company in exchange for a predetermined service fee. After higher prices for mining and hydrocarbons exports produced a fiscal surplus in 2008, the
global recession in 2009 slowed growth. A decline in commodity prices that began in late 2008, a lack of foreign investment in the mining and hydrocarbon sectors, a poor infrastructure, and the
suspension of trade benefits with the United States will likely pose challenges for the Bolivian economy in 2010. Bolivia had a population of about 10 million people at the end of 2009. The
2009 GDP real growth rate was estimated at 2.8% and GDP per capita at about $4,600.

Millicom
has a 100% equity interest in Telecel. In addition to offering mobile services (GSM and 3G) on a nationwide basis, Telecel offers national and international
long-distance services and data transmission (WiMAX and 3G). Millicom accounts for this operation as a subsidiary using the full consolidation accounting method.

Telecel
launched commercial operations in 1991 through an offering of analogue mobile services in Bolivia's three main cities of La Paz, Santa Cruz and Cochabamba. Telecel introduced the
first prepaid mobile telephony offering in Bolivia at the end of 1996 and launched digital services through its TDMA network in 1997. Telecel started offering nationwide GSM services in December 2005
and is the first and only operator in Bolivia to offer 3G services since 2008.

From
1991 to 1996, Telecel was the only mobile operator in Bolivia. Móvil de Entel, the mobile subsidiary of incumbent operator Entel, launched its mobile services in
1996. In 1997, the government of Bolivia privatized Entel by selling a 50.9% stake to Telecom Italia. Entel was recently renationalized. In 2001 NuevaTel (a joint venture, now 72% owned by Trilogy
International Partners of the United States, and 28% by Cooperative of Telecommunications Cochabamba, one of Bolivia's largest telecommunication co-operatives) entered the market with a
GSM network. By 2002, Móvil de Entel also started offering heavily subsidized GSM services. Consequently, Móvil de Entel became the leading operator in terms of customer
numbers. In December 2005, Telecel introduced tigo® with its new GSM network and at the end of 2006 Telecel had consolidated its position as the second largest operator in the Bolivian
mobile market.

Telecel
was awarded a 20-year license in 1990 to operate a mobile network in Bolivia's three main cities (La Paz, Santa Cruz and Cochabamba). The license was extended in 1995
and will expire in November 2015. Telecel's license was extended in 1997 to cover the rest of the country for a period of 20 years. In December 2002, Telecel was also awarded a
40-year license to provide long-distance telecommunication services in Bolivia. This license is mainly used to carry Telecel's mobile traffic. In May 2006, Telecel was awarded
a 40-year data concession to provide services in Bolivia.

As
at December 31, 2009, Millicom's network in Bolivia comprised 777 physical sites and covered 51% of the total population.

Colombia

Colombia's system of government is a constitutional republic. The president of the Republic of Colombia is Mr. Alvaro Uribe who
has been in office since August 2002 and was re-elected for another 4-year term in May 2006. A 40-year conflict between government forces and
anti-government insurgent groups and illegal paramilitary groups, both heavily funded by the drug trade, escalated during the 1990s. The insurgents lack the military or popular support
necessary to overthrow the government and violence has been decreasing since 2002 but insurgents continue attacks against civilians and large parts of the countryside are under guerrilla influence.
Most paramilitary members have demobilized since 2002 in an ongoing peace process, although their commitment to ceasing illicit activity is unclear. President Alvaro Uribe has stepped up efforts to
reassert government control throughout the country.

32

---



Table of Contents

Colombia
experienced accelerating growth between 2002 and 2007, chiefly due to advancements in domestic security, to rising commodity prices, and to President Uribe's promarket economic
policies. Colombia's sustained growth helped reduce poverty by 20% and cut unemployment by 25% since 2002. Additionally, investor friendly reforms to Colombia's hydrocarbon sector and the
US-Colombia Trade Promotion Agreement (CTPA) negotiations attracted record levels of foreign investment. Inequality, underemployment, and narcotrafficking remain significant challenges,
and Colombia's infrastructure requires significant updating in order to sustain expansion. Economic growth slipped in 2008, and turned negative in 2009, as a result of the global financial crisis and
weakening demand for Colombia's exports, despite aggressive measures by the Central Bank to lower interest rates. In response, Uribe's administration has cut capital controls, arranged for emergency
credit lines from multilateral institutions, and promoted investment incentives such as Colombia's
modernized free trade zone mechanism, legal stability contracts and new bilateral investment treaties and trade agreements. The government has also encouraged exporters to diversify their customer
base away from the United States and Venezuela, Colombia's largest trading partners, although China surpassed Venezuela as Colombia's number two export destination in late 2009. Nevertheless, the
business sector continues to be concerned about the impact of a global recession on Colombia's economy, an appreciating domestic currency, as well as the approval of the CTPA, which is stalled in the
US Congress. Colombia had a population of about 46 million people at the end of 2009. The 2009 GDP real growth rate was estimated at a negative 0.1% and GDP per capita at about $9,200.

In
October 2006, Millicom acquired 50% plus one share of the share capital of Colombia Móvil S.A. ESP for a price of $124 million. Millicom accounts for this
operation as a subsidiary, using the full consolidation accounting method.

UNE
Telecomunicaciones S.A. ESP, a company owned and controlled by the municipality of Medellín, and Empresa de Telecomunicaciones de Bogotà
ETB S.A. ESP, a company owned and controlled by the municipality of Bogotà, each own 24.99% of the share capital of Colombia Móvil. Emtelco (a subsidiary of EPM),
Colvatel (a subsidiary of ETB) and Empresa Aguas del Oriente Antioqueño (a subsidiary of EPM) each own one share in Colombia Móvil in order to comply with the minimum
legal requirement of five shareholders.

Mobile
telephony was introduced in Colombia in 1993. The country was divided into three zones, with two licenses per zone, in band A and B in the 850 Mhz frequency band. Millicom
operated in the northern zone of Colombia through a subsidiary called Celcaribe S.A. from 1993 to 2001 when it sold the business to América Móvil. After an initial
period with six regional mobile players, the industry went through a consolidation process and today there are four mobile companies: Movistar, a subsidiary of the Telefónica group,
Comcel, a subsidiary of América Móvil, Avantel, a digital trunking operator (privately owned) and Colombia Móvil, majority owned by Millicom.

Colombia
Móvil S.A. ESP was awarded three licenses in February 2003 to offer Personal Communications System (PCS) services in the three zones, covering all of
Colombia. The PCS licenses each have a term of 10 years and allow Colombia Móvil to offer voice, data and video services without additional license requirement for value added
services. Additionally, Colombia Móvil has one license for offering carrier services, with a term of ten years, extendable for an additional ten years. Colombia
Móvil S.A. ESP is operating in Colombia with GSM/GPRS technology, on the 1900 MHz band, with 40MHz of spectrum in the 1900MHz band composed of 30 MHz awarded with the PCS license
in 2003 with a duration of ten years and 10MHz awarded in August 2008 for the same validity period as the PCS license.

In
addition to the PCS license, Colombia Movil has another license that permits it to offer several telecommunication services, named "Título Habilitante Convergente"
which was awarded in April 2008 and it has a term of 10 years renewable. Through this license, Colombia Movil is offering value added services, has offered international gateway services since
July 2003 and is able to offer bearer services.

33

---



Table of Contents

Colombia
is a "calling party pays" country. Interconnection is mandatory and it cannot be interrupted without previous permission from the regulator. Colombia Móvil has
fully operational interconnection agreements for voice and SMS services with the other mobile operators and is considering the interconnection conditions for other data services, such as MMS.

The
Communications Ministry manages the radio electric spectrum and in addition there is a regulatory entity known as the Telecommunications Regulatory Commission (CRT), which is in
charge of issuing and controlling the regulatory framework applicable to the industry.

The
Colombian telecommunications market is very competitive with about 30 fixed local operators, two mobile operators, one mobile PCS, one digital trunking and around thirty five long
distance operators, which are owned by private and public shareholders. Colombia Móvil has interconnection with all fixed operators through direct or indirect agreements.
Interconnection charges have been commercially agreed or imposed by regulation on December 2007 important reductions in interconnection charges were issued. Mobile operators mutually pay
interconnection charges for call termination. As of December 31, 2009 Colombia Móvil had a market share of less than 10%.

Colombia
Móvil rebranded and redesigned its services using tigo® in the last quarter of 2006.

As
at December 31, 2009, Millicom's network in Colombia comprised 2,816 physical sites and covered 75% of the total population.

Paraguay

Paraguay's governmental system is a Constitutional Republic. The 35-year military dictatorship of Alfredo Stroessner was
overthrown in 1989 and, despite a marked increase in political infighting in recent years, relatively free and regular presidential elections have been held since then. President Nicanor Duarte Frutos
of the Partido Colorado political party oversaw a period of economic recovery and greater stability of public finances after taking office in 2003. Presidential elections which took place in 2008
resulted in the election of Fernando Lugo (a former Roman Catholic bishop allied with the main opposition party, the Liberal party).

Landlocked
Paraguay has a market economy marked by a large informal sector, featuring reexport of imported consumer goods to neighboring countries, as well as the activities of thousands
of microenterprises and urban street vendors. A large percentage of the population, especially in rural areas, derives its living from agricultural activity, often on a subsistence basis. Because of
the importance of the informal sector, accurate economic measures are difficult to obtain. On a per capita basis, real income has stagnated at 1980 levels. Most observers attribute Paraguay's poor
economic performance to political uncertainty, corruption, limited progress on structural reform, and deficient infrastructure. The economy rebounded between 2003 and 2008, however, as growing world
demand for commodities combined with high prices and favorable weather to support Paraguay's commodity-based export expansion. Paraguay is the sixth largest soy producer in the world. Drought hit in
2008, reducing agricultural exports and slowing the economy even before the onset of the global recession. The economy fell 3.5% in 2009, as lower world demand and commodity prices caused exports to
contract. The government reacted by introducing fiscal and monetary stimulus packages. Paraguay had a population of about 7 million people at the end of 2009. The 2009 GDP real growth rate was
estimated at a negative 3.5% and GDP per capita at about $4,100.

The
Telecommunications Law of 1995 was aimed at liberalizing the sector through the creation of the Comisión Nacional de Telecomunicaciones (Conatel), the regulatory
authority of the telecommunications sector. Although the law succeeded in opening up the mobile and value added sectors, including the internet service provider market, state owned incumbent Copaco
has retained its monopoly position in the fixed-line and international calls market. This monopoly remains despite Conatel?s decision to enforce regulation which will allow
international connectivity to Internet Fiber

34

---



Table of Contents

Optic
networks in the border with Argentina or Brazil, as VoIP services, though this is rejected by Copaco Workers Union.

Telecel
Paraguay is 100% owned by Millicom and started operations in 1992. It primarily operates a GSM network which is GPRS/EDGE enabled. Telecel also operates the largest
broadband wireless network with WiMAX in Paraguay and was the market leader in the Paraguayan broadband market in 2007. In 2008, Telecel launched 3G/HSDPA services.

Until
1998, Telecel enjoyed a monopoly position in the mobile market when Personal (owned by Telecom Italia) entered the market as the second operator. In 1999, Vox (a joint venture
between KDDI Corporation of Japan and Mr. Toyotoshi, a local businessman) entered the market with a GSM network as the third operator. Hutchison Whampoa-owned Porthable entered the market as
the fourth mobile operator in 2001, followed in 2005 by América Móvil, which acquired Porthable, re-named CTI, from Hutchison Whampoa, currently operating
under the brand name Claro.

Telecel
was awarded a 10-year license for an 800MHz network in 1991, which was renewed in October 2001 until October 2006, when the license was again renewed until 2011. In
1997, The 1900MHz PCS license that expired in November 2007 was renewed for an additional 5 year period (until November 2012). This license is renewable for successive five-year
periods. The ISP services and data transmission licenses were awarded in 1999, renewed in 2005 and 2004 and will expire in 2010 and 2009, respectively.

In
August 2008 Tigo launched the Fiber to the Home services (FTTH), with an initial phase of 25 Central Offices and an initial capacity of 2000 ports, covering the metropolitan area of
Asuncion, Ciudad del Este and Encarnación.

As
at December 31, 2009, Millicom's network in Paraguay comprised 815 physical sites and covered 91% of the total population.

AFRICA

Millicom's Africa cluster consists of its mobile operations in Chad, the Democratic Republic of Congo, Ghana, Mauritius, Rwanda,
Senegal and Tanzania. Our African licenses covered approximately 169 million people as at December 31, 2009.

Chad

Chad's government system is a unitary republic based on the amended constitution of June 2005. The country endured three decades of
civil war as well as an invasion by Libya before peace was restored in 1990. The government drafted a democratic constitution and held flawed presidential elections in 1996 and 2001. In 1998, a
rebellion broke out in northern Chad, which continues to sporadically flare up despite several peace agreements between the government and the rebels. In 2005, new rebel groups emerged in western
Sudan (Darfur) and have made probing attacks into eastern Chad. Power remains in the hands of an ethnic minority. In June 2005, President Idriss Déby held a referendum successfully
removing constitutional term limits. In April 2006, an attempted coup against Mr. Déby's government was defeated. In May 2006, Mr. Déby was
re-elected president for a five-year term. At the time of the election, the country was facing a growing conflict with Sudan, high unemployment and a growing insurgency fueled
by deserting members of the Chadian military and the United Front for Democratic Change rebel group. During the first two weeks of February 2008, rebel groups opposing the Government of
Mr. Deby made attacks on cities along the Sudanese border and into N'Djamena. By order of the Government, all networks were shut down in N'Djamena and along the Sudanese border.

Chad's
primarily agricultural economy will continue to be boosted by major foreign direct investment projects in the oil sector that began in 2000. At least 80% of Chad's population
relies on

35

---



Table of Contents

subsistence
farming and raising livestock for its livelihood. Chad's economy has long been handicapped by its landlocked position, high energy costs, and a history of instability. Chad relies on
foreign assistance and foreign capital for most public and private sector investment projects. A consortium led by two U.S. companies invested $3.7 billion to develop oil
reservesestimated at 1 billion barrelsin southern Chad. Chinese companies are also expanding exploration efforts and are currently building a 300-km
pipeline and the country's first refinery. The nation's total oil reserves are estimated at 1.5 billion barrels. Oil production came on stream in late 2003. Chad began to export oil in 2004.
Cotton, cattle, and gum arabic provide the bulk of Chad's non-oil export earnings. Chad had a population of about 10 million people at the end of 2009. The 2009 GDP real growth rate
was estimated at a negative 1% and GDP per capita at about $1,500.

The
Ministry of Posts & Telecommunications was responsible for regulation of the telecoms sector until the Telecommunications Act was passed in 1998. The enactment of the law
paved the way for the creation of a new regulatory authority, the Office Tchadien de Régulation des Télécommunications (OTRT), in 2000. In the same year,
the Société des Télécommunications du Tchad (Sotel Tchad) was established to operate basic fixed-line telephony services in the
country during a five-year exclusivity period. The amount of fixed telephone lines installed was estimated at 13,000 in 2004. The government is considering a partial privatization of Sotel
Tchad although no timetable has yet been set.

Millicom
has an 100% equity interest in Millicom Tchad and accounts for this operation as a subsidiary, using the full consolidation accounting method.

Celtel
Tchad, in which Kuwait based Zain (formerly MTC) is the 100% majority shareholder, is the only other major mobile operator in Chad.

Millicom
Tchad launched commercial operations in the capital city, N'Djamena, in October 2005. The company offers tigo® branded prepaid services over its GSM network and
services include GPRS, EDGE, MMS and e-PIN and has an international gateway. In November 2004, Millicom Tchad was awarded a 10-year license to operate a nationwide GSM
network in Chad. The company's license was amended in July 2005 to allow for international gateway operations and in January 2007 for GPRS/EDGE. Millicom Tchad does not have a WiMAX license
because no such licenses have yet been issued in Chad.

As
at December 31, 2009, Millicom's network in Chad comprised 312 physical sites and covered 70% of the total population.

Democratic Republic of Congo (DRC)

The DRC's government system is a unitary republic. Following the withdrawal of Rwandan forces from eastern DRC in 2002, the Pretoria
Accord was signed by all relevant parties to end four years of regional war involving Angola, Chad, Namibia, Sudan and Zimbabwe supporting the Congolese regime being challenged by Rwanda and Uganda. A
transitional government was set up in July 2003 with Joseph Kabila. He was joined by four vice-presidents representing the former government, former rebel groups and the political
opposition. New elections had been due by June 2005 after a transition period of two years. The transitional government held a successful constitutional referendum in December 2005 and elections
considered generally free and fair for the presidency, National Assembly, and provincial legislatures in 2006. These were the first democratic elections in approximately 40 years, since the
election of Patrice Lumumba, Congo's first ever elected head of state. President Kabila was inaugurated president in December 2006. Provincial assemblies were constituted in early 2007, and elected
governors and national senators in January 2007. In 2008, the war in the East started again, with one million refugees displaced, and the international community and the United Nations fully involved
in the humanitarian crisis.

36

---



Table of Contents

The economy of the Democratic Republic of the Congoa nation endowed with vast potential wealthis slowly recovering from two decades of
decline. Conflict that began in August 1998 has dramatically reduced national output and government revenue, increased external debt, and resulted in the deaths of more than 5 million people
from violence, famine, and disease. Foreign businesses curtailed operations due to uncertainty about the outcome of the conflict, lack of infrastructure and the difficult operating environment.
Conditions began to improve in late 2002 with the withdrawal of a large portion of the invading foreign troops. The transitional government reopened relations with international financial institutions
and international donors, and President Kabila began implementing reforms, although progress has been slow and the International Monetary Fund curtailed their program for the DRC at the end of March
2006 because of fiscal overruns. Much economic activity still occurs in the informal sector, and is not reflected in GDP data. Renewed activity in the mining sector, the source of most export income,
boosted Kinshasa's fiscal position and GDP growth from 2006-2008, however, the government's review of mining contracts that began in 2006, combined with a fall in world market prices for
the DRC's key mineral exports inflicted major damage on the sector. An uncertain legal framework, corruption and a lack of transparency in government policy are long-term problems for the
mining sector and the economy as a whole. The global recession cut economic growth in 2009 to half of its 2008 level, but donor assistance and diligence on the part of the central bank have brought
foreign exchange reserves to their highest levels in 25 years after the financial crisis caused reserves to fall to less than one day's worth of imports in early 2009. The DRC signed a new
Poverty Reduction and Growth Facility with the IMF this year. DRC had a population of about 69 million people at the end of 2009. The 2009 GDP real growth rate was estimated at 3% and GDP per
capita at about $300.

At
the end of 2008, the international financial crisis hit DRC severly with all commodities (wood, minerals) exports dropping heavily. Consequently, 50% of the mining companies closed
down and laid off more than 300 thousand employees, resulting in a deep recession in the Katanga region. This crisis resulted in the Congolese franc dropping against US dollar.

DRC's
incumbent fixed line operator is the "Office Congolais des Postes et des Télécommunications" (OCPT). It operates an outdated, poorly managed analogue
fixed-line network of approximately 10,000 lines mainly concentrated in the capital city of Kinshasa. The Autorité de Régulation de la Poste et des
Télécommunications du Congo (ARPTC) is in charge of regulating the telecommunications sector. Legislation has been prepared but not yet implemented which will formally
end the OCPT's monopoly and allow for market liberalization. To date, the government has not developed a telecommunications policy. As the DRC lacks the funds to invest in a modern
fixed-line infrastructure, the country's mobile sector has been facing high demand in recent years.

Millicom
has a 100% equity interest in Oasis S.P.R.L. and accounts for this operation as a subsidiary using the full consolidation accounting method.

Millicom
acquired Oasis from Orascom Telecom on September 13, 2005 for total consideration of $35 million and promptly engaged in the process of rebuilding the company's
network coverage, product and service offering, marketing strategy and distribution network. This turnaround was completed during 2006 together with an accelerated network build-out and
the building of a regional organization to support direct distribution effectively. Oasis also has an international gateway.

Discussions
have continued with the relevant authorities about whether, as a result of the acquisition of Oasis by Millicom, a license transfer fee of $15 million may be due under
a ministerial decree dated July 29, 2005. Millicom's position is that no transfer fee is due because the wording of the law in question does not apply to the specific transaction structure by
which Millicom acquired Oasis.

Three
operators (Starcel, Comcel and Afritel) were offering limited analogue and CDMA mobile services in DRC when Oasis entered the market with its GSM offering. These operators had
ceased to exist by the end of 2003. Initially Celtel Congo, owned by Kuwait based Zain (formerly MTC), was the

37

---



Table of Contents

only
other GSM operator in the market, becoming the leading provider of mobile services in DRC with coverage in almost 100 cities. In 2001, Congolese Wireless Networks (CWN) entered into a joint
venture with South African mobile operator Vodacom, creating a new operator, Vodacom Congo, which launched GSM services in DRC in April 2002 and extended its coverage to a large number of cities. The
fourth operator, CCT, jointly owned by Chinese telecom equipment provider ZTE (51%) and the DRC government (49%), launched its GSM network in January 2002.

After
several years of underinvestment, Oasis' market position had declined to a number four position in terms of customers when it was acquired by Millicom in mid-September
2005. Since then, Millicom has built up and re-launched the operation by introducing tigo® in January 2007 by offering a combination of improved coverage and quality of mobile
voice services, innovative products and services, a direct distribution network, and a new pricing strategy. Starting with 50 thousand customers in January 2007, tigo DRC ended 2008 with more
than 1 million customers.

In
November 1997 Oasis was awarded a 20-year license to operate a fixed-line network in DRC. An amendment to the license was signed in October 1999 which allows
the company to construct a nationwide GSM network. Oasis does not have a WiMAX license. However WiMAX operators already exist in DRC, positioned mainly in Kinshasa.

Other
GSM licenses were granted in 2008 to the following operators: Niletel (present in Sierra Leone), Hits Telecom (present in Tanzania and Equatorial Guinea) and MTN.

According
to the Ministry of Telecommunications, which is charged with the organization of 3G licenses, 3G licenses should be auctioned in 2010.

As
at December 31, 2009, Millicom's network in DRC comprised 742 physical sites, of which 198 are off, and covered 24% of the total population.

Ghana

On March 6, 1957, Ghana (formerly the Gold Coast), became the first sub-Saharan country in colonial Africa to gain
independence. The country's constitution was temporarily suspended in 1981, following a series of alternating military and civilian governments. A new constitution, restoring multi-party politics, was
approved in 1992 with Lt. Jerry Rawlings being democratically voted into power for two consecutive four-year terms from 1992 to 2000. President Rawlings was, however, constitutionally
prevented from running for a third term in 2000, thus allowing John Kufuor an opportunity to govern Ghana from 2000 through the end of his second term, in December 2008. In December 2008, Ghanaians
again enjoyed a free and fair election, voting President Evans Atta Mills as president from 2009 through 2012.

Endowed
with many natural resources, Ghana has roughly twice the per capita output of the poorest countries in West Africa. Even so, Ghana remains heavily dependent on international
financial and technical assistance. Gold, cocoa production and individual remittances are major sources of foreign exchange. Oil production is expected to expand in late 2010 or early 2011. The
domestic economy continues to revolve around agriculture, which accounts for approximately 35% of GDP and employs approximately 55% of the work force, mainly small landholders. Ghana signed a
Millennium Challenge Corporation (MCC) Compact in 2006, which aims to assist in transforming Ghana's agricultural sector. Ghana opted for debt relief under the Heavily Indebted Poor Country (HIPC)
program in 2002, and also benefits from the Multilateral Debt Relief Initiative that took effect in 2006. Thematic priorities under its current Growth and Poverty Reduction Strategy, which provides
the framework for development partner assistance, are: macroeconomic stability; private sector competitiveness; human resource development; and good governance and civic responsibility. Sound
macro-economic management along with high prices for gold and cocoa helped sustain GDP growth in

38

---



Table of Contents

2008
and 2009. Ghana had a population of about 24 million people at the end of 2009. The 2009 GDP real growth rate was estimated at 4.7% and GDP per capita at about $1,500.

Ghana
has been at the forefront of Africa in liberalizing its telecommunications sector. In the early 1990s, the government recognized that the industry was underdeveloped but had the
potential to stimulate economic growth. Consequently, the government introduced several initiatives to liberalize the industry to pave the way for competition and infrastructural improvement. The
National Communications Authority (NCA) was established in 1996 to oversee the implementation of government regulations and to act as the primary regulatory body for the industry.

Millicom
Ghana (tigo) was the first mobile operator in Ghana, having commenced operations in 1992. Millicom Ghana introduced the concept of prepaid services in Ghana in 1998. Tigo was
the second largest mobile operator in Ghana as of December 31, 2009. In addition to Millicom Ghana, four other companies offer mobile services in the country: Kasapa, MTN, OneTouch and Westel.
After nearly a decade of relatively slow growth, the mobile market in Ghana started seeing considerable growth in penetration starting in 2001 as a result of several favorable factors, including the
development of a regulatory framework, increased competition and the improving macroeconomic environment. Mobile penetration has increased in recent years from 7% to almost 51% at the end of 2009.

MTN,
a South African mobile operator previously known as Areeba, began operations in 1996 as the third operator and operates a nation-wide GSM 900 MHz network. As at December
2008 it was estimated to have the highest customer base amongst all the mobile operators in Ghana. The start of operations of MTN resulted in significant erosion in Millicom Ghana's market share and a
consequential loss of its leadership position mainly due to the fact that it was not operating GSM service until 2002. MTN currently has the largest network coverage in Ghana. OneTouch is a division
of Ghana Telecom, Ghana's main fixed line service provider, operating a GSM 900 MHz network. In 2000, OneTouch entered the market as the fourth operator when Millicom Ghana was applying for its GSM
license. OneTouch was not allowed to launch commercial operations until July 2002. Kasapa, majority owned by Hutchison Whampoa, entered the market as the second operator with an AMPS network in 1995
when Millicom was enjoying its market monopoly. The company now operates
(CDMA) service with limited coverage. Kasapa, formerly known as Celltel, is the smallest Mobile operator in Ghana. Westel, the national fixed line operator was bought by Zain during 2007. Westel has
both fixed and mobile license and started providing services in 2008. Glo, a Nigerian operator, delayed its launch to 2009.

The
telecommunications sector in Ghana is regulated by the National Communications Authority (NCA). NCA has been in operation for the past decade and reports to the Ministry of
Communications. The primary function of the NCA includes the issuance of telecommunication business licenses, the regulation of interconnection rates and ensuring the provision of good quality
services to the public.

In
December 2004, the government awarded GSM licenses to all four mobile operators in Ghana. Before this date operations were run based on permission to use an allocated frequency.
Millicom Ghana's GSM license authorizes it to provide mobile and local fixed wireless services. Although Millicom Ghana applied for a GSM license in 2000, it was not allowed to launch GSM services for
approximately two years until July 2002 when it launched its GSM operation, which led to an important growth in its customer base. In December 2004, NCA issued Millicom Ghana a formal GSM operating
license that is valid for 15 years. Under this license, Millicom Ghana has 8 MHz of spectrum in the 900 band and has been granted an additional 10 MHz in the 1800 band. Millicom Ghana also
acquired an International Gateway license in June 2005. This license is valid for 10 years.

In
March 2006, Millicom Ghana introduced tigo® and offered an array of Value-Added Services (VAS): General Packet Radio Services (GPRS), Wireless Application Protocol (WAP),
Multimedia

39

---



Table of Contents

Messaging
Services (MMS), Caller Ring Back Tones (CRBT) and other interactive value added services. Millicom Ghana acquired a 3G license in the last quarter of 2008, but it has not yet started to
prepare its current network to be compatible.

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
sites (see note 35). As at December 31, 2009, Millicom's network in Ghana comprised 767 physical sites and covered 73% of the total population.

Mauritius

Mauritius' government system is a parliamentary democracy. After almost four centuries under Dutch, French and British control, the
country gained its independence in 1968. A stable democracy with regular free elections, Mauritius has attracted considerable foreign investment and has earned one of Africa's highest per capita
incomes. Sir Anerood Jugnauth has been president since 2003 and Navinchandra Ramgoolam of the Labor Party was elected prime minister in the July 2005 elections.

Since
independence in 1968, Mauritius has developed from a low-income, agriculturally based economy to a middle-income diversified economy with growing industrial, financial,
and tourist sectors. For most of the period, annual growth has been in the order of 5% to 6%. This remarkable achievement has been reflected in more equitable income distribution, increased life
expectancy, lowered infant mortality, and a much-improved infrastructure. The economy rests on sugar, tourism, textiles and apparel, and financial services, and is expanding into fish
processing, information and communications technology, and hospitality and property development. Sugarcane is grown on about 90% of the cultivated land area and accounts for 15% of export earnings.
The government's development strategy centers on creating vertical and horizontal clusters of development in these sectors. Mauritius has attracted more than 32,000 offshore entities, many aimed at
commerce in India, South Africa, and China. Investment in the banking sector alone has reached over $1 billion. Mauritius, with its strong textile sector, has been well poised to take advantage
of the Africa Growth and Opportunity Act (AGOA). In 2009, the drop in global demand for Mauritian exports caused a 4% drop in GDP. 3009 GDP per capita was estimated at about $12,400.

The
Information and Communication Technology Authority (ICTA) is the country's telecommunications regulator. Mauritius has the highest mobile and fixed-line penetration rates
in sub-Saharan Africa. The domestic telecommunications market is dominated by Mauritius Telecom.

Millicom
has a 50% equity interest in Emtel Limited. The remaining 50% of the company is owned by a local partner, Currimjee Jeewanjee & Co. Ltd, a leading
diversified group in Mauritius. The two shareholders in Emtel jointly control the company. Millicom accounts for this operation as a joint venture, using the proportionate accounting method.

Emtel
entered the market in 1989 as the first mobile operator in the country. Until 1996, Emtel enjoyed a monopoly position when Cellplus, owned by incumbent Mauritius Telecom, entered
the market as the second operator with the launch of a GSM network. As Emtel launched its GSM service offering in 1999, three years after its competitor, Emtel experienced a significant decline in
market share at the end of the 1990s. Emtel launched 3G services in Mauritius in November 2004, making it the first mobile operator to offer such services in Africa. A third mobile operator, Mahanagar
Telephone (Mauritius) Ltd., entered the market in December 2006 using CDMA technology.

Emtel
operates a GSM network which is GPRS enabled and a UMTS/3G/HSDPA network.

Emtel
owns licenses for mobile services, international long-distance and internet services. Emtel was awarded a 10-year license in 1989, including a seven year
exclusivity period. Emtel's license was modified in November 2000 and is valid for a period of 15 years. Furthermore, Emtel obtained additional spectrum for UMTS/3G services in November 2004,
an international long-distance license in

40

---



Table of Contents

December
2003 (valid until 2018) and an internet service license in May 2004 (valid until 2019). Since May 2006, Emtel has had temporary rights to offer WiMAX based services on a trial basis, and
acquired a WiMAX license in March 2007. Emtel has a WiMAX network with currently 11 base stations and an HSDPA network of 65 base stations. HSPA trials are currently in progress. Implementation of the
Telecommunications Directive (1 of 2008) to reduce interconnect tariffs to the state-owned fixed-line infrastructure was implemented in May 2008.

As
at December 31, 2009, Millicom's network in Mauritius comprised 229 physical sites and covered 91% of the total population.

Rwanda

In 1959, three years before independence from Belgium, the majority ethnic group, the Hutus, overthrew the ruling Tutsi king. Over the
next several years, thousands of Tutsis were killed, and some 150,000 driven into exile in neighboring countries. The children of these exiles later formed a rebel group, the Rwandan Patriotic Front
(RPF), and began a civil war in 1990. The war, along with several political and economic upheavals, exacerbated ethnic tensions, culminating in April 1994 in the genocide of roughly 800,000 Tutsis and
moderate Hutus. The Tutsi rebels defeated the Hutu regime and ended the killing in July 1994, but approximately 2 million Hutu refugeesmany fearing Tutsi
retailationfled to neighboring Burundi, Tanzania, Uganda, and Zaire. Since then, most of the refugees have returned to Rwanda, but several thousand remained in the neighboring Democratic
Republic of the Congo and formed an extremist insurgency bent on retaking Rwanda, much as the RPF tried in 1990. Rwanda held its first local elections in 1999 and its first post-genocide
presidential and legislative elections in 2003. In 2009, Rwanda staged a joint military operation with the Congolese Army in DRC to rout out the Hutu extremist insurgency there and Kigali and Kinshasa
restored diplomatic relations. Rwanda also joined the Commonwealth in late 2009.

Rwanda
is a poor rural country with about 85% of the population engaged in (mainly subsistence) agriculture and some mineral and agro-processing. In 2008, minerals from DRC
overtook coffee and tea as Rwanda's primary foreign exchange earner. The 1994 genocide decimated Rwanda's fragile economic base, severely impoverished the population, particularly women, and
temporarily stalled the country's ability to attract private and external investment. However, Rwanda has made substantial progress in stabilizing and rehabilitating its economy to
pre-1994 levels. GDP has rebounded and inflation has been curbed. Nonetheless, a majority still live below the poverty line of 250 Rwandan francs per day (about US$0.43). Despite Rwanda's
fertile ecosystem, food production often does not keep pace with demand, requiring food imports. Rwanda continues to receive substantial aid money and obtained IMF-World Bank Heavily
Indebted Poor Country (HIPC) initiative debt relief in 2005-06. Rwanda also received a Millennium Challenge Account Compact in 2008. Africa's most densely populated country is trying to
overcome the limitations of its small, landlocked economy by leveraging regional trade. Rwanda joined the East African Community and is aligning its budget, trade, and immigration policies with its
regional partners. The government has embraced an expansionary fiscal policy to reduce poverty by improving education, infrastructure, and foreign and domestic investment and pursuing market-oriented
reforms, although energy shortages, instability in neighboring states, and lack of adequate transportation linkages to other countries continue to handicap growth. The global downturn hurt export
demand and tourism while poor rains this year have lowered growth in agriculture. Rwanda had a population of about 10 million people at the end of 2009. The 2009 GDP real growth rate was
estimated at 5.5% and GDP per capita at about $1,000.

The
enabling framework for the liberalisation of the telecommunications sector was put in place by the current Telecommunications Law, passed in 2001. The Telecommunications Law
established RURA, the regulator, granting it the authority to regulate telecommunications and setting up a regulatory board to carry out that function. Rwanda currently has three GSM licences in
force. The overall aim of the telecom reform policy was to increase universal affordable access to telecommunications in the

41

---



Table of Contents

interests
of social and economic development. A privatisation strategy for Rwandatel was adopted in 2003, in which the government committed to sell all of its shares in the operator. In order to
promote competition in the telecommunications sector, Rwandatel sold its 28% stake in MTN Rwandacell in 2004. As the main cellular provider, MTN Rwandacell currently has coverage in all of the
provinces in Rwanda, covering about 75% to 90% of the country. The operator mainly supplies mobile services, but is now offering internet services via its general packet radio service (GPRS) cell
phone network. The operator has also started to roll out wireless broadband data services using WiMax, and, with its new fixed-line licence, has started offering fixed-line
services.

In
late 2008, Millicom was successful in its tender against three other bidders for the third national mobile license in Rwanda. Millicom set up Tigo Rwanda S.A. and, after the
roll out of the network, services were launched in December 2009. As at December 31, 2009, Millicom had approximately 75 thousand customers in Rwanda.

As
at December 31, 2009, Millicom's network in Rwanda comprised 111 physical sites.

Senegal

Senegal's government system is a unitary republic under multiparty democratic rule, having gained its independence in 1960. The
political environment in the country passed a key milestone when the opposition socialist party led by Abdoulaye Wade came to power in the 2000 presidential elections and was re-elected
President in free and fair elections in February 2007. Senegal remains one of the few stable democracies in Africa.

In
January 1994, Senegal undertook a bold and ambitious economic reform program with the support of the international donor community. This reform began with a 50% devaluation of
Senegal's currency, the CFA franc, which was linked at a fixed rate to the French franc. Government price controls and subsidies have been steadily dismantled. After seeing its economy contract by
2.1% in 1993, Senegal made an important turnaround, thanks to the reform program, with real growth in GDP averaging over 5% annually during 1995-2008. Annual inflation had been pushed down
to the single digits. As a member of the West African Economic and Monetary Union (WAEMU), Senegal is working toward greater regional integration with a unified external tariff and a more stable
monetary policy. High unemployment, however, continues to prompt illegal migrants to flee Senegal in search of better job opportunities in Europe. Senegal was also beset by an energy crisis that
caused widespread blackouts in 2006 and 2007. The phosphate industry has struggled for two years to secure capital, and reduced output has directly impacted GDP. In 2007, Senegal signed agreements for
major new mining concessions for iron, zircon, and gold with foreign companies. Firms from Dubai have agreed to manage and modernize Dakar's maritime port, and create a new special economic zone.
Senegal still relies heavily upon outside donor assistance. Under the IMF's Highly Indebted Poor Countries (HIPC) debt relief program, Senegal has benefited from eradication of two-thirds
of its bilateral, multilateral, and private-sector debt. In 2007, Senegal and the IMF agreed to a new, non-disbursing, Policy Support Initiative program. Senegal had a population of about
14 million people at the end of 2009. The 2009 GDP real growth rate was estimated at 5.1% and GDP per capita at about $1,700.

The
telecommunications sector in Senegal was reformed in 1985 with the creation of state owned Sonatel. The country made commitments under the World Trade Organization's Basic
Telecommunications Agreement to introduce a regulatory structure promoting competition by the end of 1997 and new legislation was adopted in 1996, providing for the opening up of Sonatel's capital to
private foreign and national partners and liberalization of some segments of the telecommunications market. Consequently, France Telecom acquired a 33% stake in Sonatel in 1997 and later increased the
holding to 42.3%. Other shareholders include the Senegalese government (27.7%) and employees (10%), with the remaining shares being traded on the local stock exchange.

42

---



Table of Contents

In
2001 the government passed an updated Telecommunications Law aimed at bringing about further liberalization of the sector, mainly through the establishment of a new regulatory
authority, the "Agence de Régulation des Télécommunications" (ART). ART is responsible for licensing, spectrum management, tariff approval, interconnection
rates and frequency allocation. The law also paved the way for the opening of rural telephony to private investment as a means of achieving universal service.

Senegal
has developed one of the most extensive and modern telecommunication infrastructures in Africa. Mobile services were introduced in 1996 and, since the introduction of competition
in 1999 with the start of Sentel's commercial operations, the number of mobile customers has grown substantially. In addition to Millicom's Sentel, the other mobile operators in Senegal include
Sonatel, controlled by France Télécom, Expresso controlled by Sudatel (services launched in January 2009) and Kirene.

Sentel
was awarded a 20-year concession to operate a nationwide network in July 1998. The concession is renewable every five years after the expiry of the original
concession, in 2018, subject to the approval of the Senegalese authorities and provided Sentel has complied with the terms of the concession. At the time of the grant of the concession, the Senegalese
government had announced certain amendments to the concession. No amendments to the concession have been implemented to date. The government that took office in 2000 repeatedly publicly questioned the
status and the validity of Sentel's concession. In August 2002, Millicom and the government entered into an agreement whereby they agreed to negotiate in good faith certain mutually acceptable new
conditions that would constitute an amendment of Sentel's 1998 concession. In 2008, the government again questioned the status and the validity of Sentel's concession.

On
November 11, 2008, Millicom International Operations B.V. (MIO B.V.), a wholly-owned Millicom subsidiary, and Sentel instituted 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 instituted court proceedings in Senegal against Millicom and Sentel, and has sought court approval for the revocation of Sentel's license and
sought damages against Sentel and Millicom. Millicom believes that the action filed by the Republic of Senegal is baseless and also breaches the agreement between Sentel and the Republic of Senegal to
submit any dispute concerning the license to an international arbitration forum.

Sentel
launched its commercial operations in 1999 as the second mobile operator in the country and it was the first mobile operator to introduce GPRS services. Sentel launched
tigo® in November 2005. Sentel does not yet have a WiMAX license.

As
of December 31, 2009 Millicom had a 100% equity interest in Sentel.

As
at December 31, 2009, Millicom's network in Senegal comprised 589 physical sites and covered 71% of the total population.

Tanzania

Tanzania's system of government is a federal republic formed by the union in 1964 of Tanganyika and Zanzibar. President Jakaya Mrisho
Kikwete came to power after winning the last democratic elections held on December 14, 2005. One-party rule came to an end in 1995 with the first democratic elections held in the
country since the 1970s. Zanzibar's semi-autonomous status and popular opposition have led to two contentious elections since 1995, which the ruling party won despite international
observers' claims of voting irregularities. President Kikwete is continuing to carry out economic reforms that gained momentum during the two terms in office of the previous president, Benjamin Mkapa.

43

---





Table of Contents

Tanzania is in the bottom ten percent of the world's economies in terms of per capita income. The economy depends heavily on agriculture, which accounts for more
than 40% of GDP, provides 85% of exports, and employs 80% of the work force. Topography and climatic conditions, however, limit cultivated crops to only 4% of the land area. Industry traditionally
featured the processing of agricultural products and light consumer goods. The World Bank, the IMF, and bilateral donors have provided funds to rehabilitate Tanzania's
out-of-date economic infrastructure and to alleviate poverty. Long-term growth through 2005 featured a pickup in industrial production and a substantial increase in
output of minerals led by gold. Recent banking reforms have helped increase private-sector growth and investment. Continued donor assistance and solid macroeconomic policies supported a positive
growth rate, despite the world recession. Tanzania had a population of about 41 million people at the end of 2009. The 2009 GDP real growth rate was estimated at 4.5% and GDP per capita at
about $1,400.

Tanzania
was among the first African countries to liberalize its telecommunications sector, with all segments of the market except fixed-line services now accessible to the
private sector. In 1997, the government introduced its National Telecommunications Policy covering the period until 2020. Key goals of the policy initiative are to increase tele-density,
develop fixed-line service coverage of rural areas, facilitate investments by domestic and international companies and institutions, and provide a regulatory framework to encourage private
sector involvement and competition, with the goal to gradually divest the state's shareholding in the incumbent operator TTCL. The Tanzania Communications Regulatory Authority (TCRA) was established
in 2003 and is responsible for the allocation and management of radio spectrum in Tanzania.

Following
the buy-out of the non-controlling shareholder, Ultimate Communications Limited, in January 2006, Millicom owns 100% of MIC Tanzania Limited. Due to an
attachment order on all the shares in MIC Tanzania, the 15.6% shareholding acquired from the non-controlling shareholder has yet to be registered at the local Companies Registrar's office.
The attachment order is the result of a lawsuit instituted in Tanzania by a disgruntled former employee. Millicom expected the issue of the judgment lifting the attachment order to occur during 2009.
The attachment order was lifted during 2009. Millicom accounts for this operation as a subsidiary, using the full consolidation accounting method.

MIC
Tanzania was the first mobile operator in Tanzania, launching commercial services in 1994 that initially covered Dar el Salaam, Zanzibar, Arusha and Mwanza. In 1999, it introduced
its first GSM service offering and analogue services were discontinued in October 2005.

In
addition to Millicom's, there are 10 other licenses for mobile operators in Tanzania. Millicom's main competitors are Vodacom Tanzania (65% owned now by Vodafone which recently took
control of the operation and is 35% owned by local partner, it entered the market in August 2000 and has become the leading provider of mobile services in Tanzania in terms of customers), Zain
Tanzania (in which Kuwait-based MTC has a 100% shareholding, it launched GSM services in the country in November 2001) and Zantel (jointly owned by the government of Zanzibar, Emirate
Telecommunication Company, Kintbury Investment of the Channel Islands and a local technology firm, it introduced GSM services in Zanzibar and the islands of Unguja and Pemba in August 1999, and
entered the Tanzanian mainland in June 2005 through a national roaming agreement with Vodacom Tanzania).

There
are 3 CDMA operators with less than 3% of market share (TTCL, Bol and Rural NetCo Ltda). In November 2007, Excellentcom Tanzania Ltd was licensed as a GSM mobile
operator but has yet to start operations. Additionally, licenses were recently awarded to Epocha, Dovotel and MyCell, all of which are supposed to be rolling out their networks in 2010 or 2011.

In
January 1994, MIC Tanzania was awarded a 15-year license to operate a nationwide mobile network and, in January 2004, the company's license was extended to a
25-year license expiring in January 2019. MIC Tanzania does not have a WiMAX license, but believes it will obtain one as part of

44

---



Table of Contents

the
migration to the new converged licensing framework. Such license is presently under negotiation since all spectrum already has been awarded.

In
May 2007, we migrated to the converged licensing framework which is technological neutral. MIC Tanzania has been issued three separate licenses for Network Facilities Services,
Network Services and Application Services. These licenses are valid for 25 years, 25 years and 5 years, respectively.

As
at December 31, 2009, Millicom's network in Tanzania comprised 990 physical sites and covered 60% of the total population.

AMNET

Amnet was founded in 1968 and entered into the Central American market with its first acquisition in Costa Rica in 1997. In 1998 it
acquired one of the main cable TV operators in El Salvador and one year later it adopted the commercial name Amnet (American Network). In the same year it became the first internet provider in
Costa Rica. In 2002 Amnet started offering digital Pay TV in El Salvador and Costa Rica and, in 2004, Amnet started offering internet services and data transmission, voice and video,
followed by fixed telephony services for both residential and corporate segments in 2005.

Today,
Amnet has a large network in Central America with approximately 1.3 million homes passed, which together with Millicom's existing mobile network gives Millicom
opportunities for future growth with cost efficiencies. Amnet has approximately 631 thousand Revenue Generating Units ("RGUs") across Central America with cable and broadband customers in El
Salvador, Honduras and Costa Rica as well as corporate data customers in Guatemala, Nicaragua, El Salvador and Honduras.

Amnet
provides both analog and digital cable TV, broadband Internet, telephony, VOIP and Data Transmission. 60% of its network is composed of a two-way capability system
bandwidth of 750 MHz. The remaining one-way video signal network is being rebuilt due to its limited capacity in order to accommodate various services, such as Internet, VOD, VOIP, and
data transmission. This kind of network has the benefit for multi-service support for mobile customers, particularly for 3G and next-generation services in the near future.

With
the addition of Amnet to Millicom's existing mobile operations within Central America, Millicom started offering bundled services as a quadruple player in the telecommunications
industry. In addition Amnet's optical fiber network can be extended to the existing mobile radio base stations which could strengthen Millicom's competitiveness.

Costa Rica

Costa Rica is a democratic republic government system. It has a population of 4 million within an area of 51,100 square km.
Costa Rica's economy depends on tourism, agriculture, and electronics exports. Exports have become more diversified in the past 10 years due to the growth of the high-tech
manufacturing sector, which is dominated by the microprocessor industry and the production of medical devices. Tourism continues to bring in foreign exchange, as Costa Rica's impressive biodiversity
makes it a key destination for ecotourism. Foreign investors remain attracted by the country's political stability and relatively high education levels, as well as the fiscal incentives offered in the
free-trade zones. CAFTA entered into force on January 1, 2009, after significant delays within the Costa Rican legislature. The country has the highest GDP of the region with a very
dynamic economy that has reached growth of up to 8%. Nevertheless, economic growth slowed in 2009 as the global downturn reduced export demand and investment inflows.

Today,
Amnet provides cable TV services in Costa Rica. It also serves the internet market together with RACSA (a subsidiary of ICE group), the state owned telecommunications company
which holds

45

---



Table of Contents

the
internet license. Using its fiber optic infrastructure, Amnet has been the main network provider to RACSA, which uses it to provide data services to corporate clients.

The
government of Costa Rica moved to a total liberalized telecom market in the country from 2008. A new Telecommunications Law was enacted in June 2008 and the new regulatory body SUTEL
is already operating. Amnet has already requested licenses to provide telephony, internet, data and value added services. The government is also taking steps to introduce competition in the mobile
market. The timeframe established by the Vice Ministry of Telecommunications indicates that mobile licenses will be granted in the first half of 2010.

El Salvador

Please refer to the earlier section on El Salvador.

Amnet
is the leading player in the cable industry in El Salvador with a market share of approximately 80% of the market. Amnet also provides broadband, and telephony services. Bundled
services are
becoming increasingly popular and Millicom's acquisition has strengthened Amnet's position since it will now be able to offer the full quadruple play bundled service packages: cable, broadband, fixed
telephony and mobile services, providing its client base with value added services.

Guatemala

Please refer to the earlier section on Guatemala.

Amnet,
through its VPN technology, provides a broad number of services with corporate VOIP, IP video conferencing and IP-PBX. Through private lines, Amnet supplies dedicated
circuits between two or more client's offices.

Honduras

Please refer to the earlier section on Honduras.

The
broadband business began to develop in the late 1990s and today Amnet is one of the major providers of cable modem broadband access. Honduras has a TV household penetration of only
67% and the country's cable TV household penetration is 41%. Amnet is in the process of network rebuild, and recently launched triple play (cable TV, internet, fixed telephony), to be followed in the
near future by an integration of Millicom's mobile services. Internet services are offered for residential customers and packages are offered for small and medium businesses. For a bigger corporate
level, internet services are offered in larger capacities. In addition Amnet offers services such as data transmission, corporate networks, point- to-point connection and fiber access in
the region.

Nicaragua

The Pacific coast of Nicaragua was settled as a Spanish colony in the early 16th century. Independence from Spain was declared
in 1821 and the country became an independent republic in 1838. Violent opposition to governmental manipulation and corruption spread to all classes by 1978 and resulted in a short-lived civil war
that brought the Marxist Sandinista guerrillas to power in 1979. Nicaraguan aid to leftist rebels in El Salvador caused the United States to sponsor
anti-Sandinista contra guerrillas through much of the 1980s. Free elections in 1990, 1996, and 2001, saw the Sandinistas defeated. In the elections of November 2006, the former Marxist
Guerrilla leader Daniel Ortega was reelected and its popularity was reconfirmed as its party won the municipal elections in November 2008. Economic growth will slow in 2009, due to decreased export
demand from the U.S. and Central American markets, lower commodity prices for key agricultural exports, and low remittance growthremittances account for almost 15% of GDP.

46

---



Table of Contents

In
2005, the fixed line sector was officially privatized and a competition law was issued in 2006, however full liberalization is pending, which is not the case for the mobile sector,
which is open to full competition. The Government is contemplating to add competition to the market by introducing a new player using a competitive bidding process set to start this year.

DISCONTINUED AND DIVESTED OPERATIONS

In 2007, Millicom completed the sale of Millicom Paktel, for total proceeds of $285 million realizing a net gain of
$258 million. Millicom incurred costs of $14 million on the transaction and of the net proceeds of $271 million, Millicom received $263 million in 2007 and the remaining
$8 million in January 2008.

During
2009, Millicom completed the sale of the its mobile operations in Sri Lanka (on October 16, 2009), Sierra Leone (on November 25, 2009) and Cambodia (on
November 26, 2009). A total net gain of $289 million was recognized from the sale of these operations (see note 5). Millicom's operations in Sri Lanka, Sierra Leone and Cambodia
ceased to be consolidated from the date of sale. Millicom incurred total costs of $11 million on the above mentioned transactions.

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. Completion of the transaction was subject to certain conditions, which were not satisfied before the
year-end. As a result, Millicom's operation in Laos was classified as a disposal group held for sale and discontinued operations as of December 31, 2009 (see note 6).

OTHER

Property, Plant and Equipment

We own, or control through long-term leases or licenses, properties consisting of plant and equipment used to provide
mobile telephone services. In addition, we and our operating companies own, or control through leases, properties used as administrative office buildings and other facilities. These properties include
land, interior office space and space on existing structures of various types used to support equipment used to provide mobile telephone services. The leased properties are owned by private and
municipal entities.

Plant
and equipment used to provide mobile telephone services consist of:



Insurance

We maintain the types and amounts of insurance which we believe to be customary in the industry and countries in which we operate. We
have conducted a review and analysis of our worldwide insurance coverage with the assistance of AON Sweden AB. We consider our insurance coverage to be adequate both as to risks and amounts for the
business we conduct. As our insurance policies expire around the Group, we are standardizing our coverage along the recommendations suggested by AON. These changes will increase our coverage terms at
similar costs.

47

---



Table of Contents

ITEM 4A.    UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion should be read in conjunction with and is qualified in its entirety by reference to
our consolidated financial statements and the related notes thereto included in this report. The following discussion should be read in conjunction with "Presentation of Financial and Other
Information" and "Selected Consolidated Financial and Operating Data". Except for the historical information contained in this report, the discussions in this section contain forward looking
statements that involve risks and uncertainties. Actual results could differ materially from those discussed below. See "Forward Looking Statements".

Unless otherwise indicated, all financial data and discussions relating thereto in this discussion and analysis are based upon financial statements prepared in
accordance with IFRS.

Operating Results

Millicom finalized the sale of its operations in Cambodia, Sierra Leone and Sri Lanka during 2009 and the sale of its operations in
Pakistan in February 2007. In addition, in May 2009, Millicom decided to dispose of its operation in Laos. Accordingly these operations have been classified as discontinued operations. The below
discussion focuses on the results from continuing operations.

Years Ended December 31, 2009 and 2008

The following table sets forth certain income statements items for the periods indicated:

Impact on
Comparative Results
for PeriodYear Ended December 31,Amount of
Variation

Percent
Change2009

2008(in thousands of U.S. dollars, except percentages)Revenues


3,372,727


3,150,559


222,168


7
%Cost of sales


(1,202,902
)

(1,114,822
)

(88,080
)

8
%Gross profit


2,169,825


2,035,737


134,088


7
%Sales and marketing


(647,009
)

(657,480
)

10,471


(2
)%General and administrative expenses


(606,213
)

(498,597
)

(107,616
)

22
%Other operating expenses


(65,580
)

(61,438
)

(4,142
)

7
%Operating profit


851,023


818,222


32,801


4
%Interest expense


(173,475
)

(135,932
)

(37,543
)

28
%Interest and other financial income


11,573


32,277


(20,704
)

(64
)%Revaluation of previously held interests


32,319





32,319


N/AOther non operating (expenses) income, net


(32,181
)

(52,265
)

20,084


(38
)%Profit from associates


2,329


8,706


(6,377
)

(73
)%Profit before tax from continuing operations


691,588


671,008


20,580


3
%Charge for taxes


(187,998
)

(268,813
)

80,815


(30
)%Profit for the year from continuing operations


503,590


402,195


101,395


25
%Profit from discontinued operations, net of tax


300,342


2,246


298,096


13,272
%Non controlling interests


46,856


113,075


(66,219
)

(59
)%Net profit for the year attributable to equity holders


850,788


517,516


333,272


64
%


We derive our revenues mainly from the provision of telecommunications services such as monthly subscription fees, airtime usage fees, roaming fees, interconnect
fees, connection fees for subscription services and other services and equipment sales and cable services such as broadband internet, fixed line telephony, VOIP, data transmission and cable
television.

48

---



Table of Contents

Total revenues increased by 7% for the year ended December 31, 2009 to $3,373 million from $3,151 million for the year ended
December 31, 2008. Excluding the effect of the movement in currencies, revenues increased by 10% year-on-year. Currently the growth in revenue is heavily impacted by the
growth in the number of customers.

Customers

2009

2008

GrowthCentral America


12,901,710


11,181,251


15%South America


8,815,217


7,460,771


18%Africa


12,203,177


9,048,652


35%Total


33,920,104


27,690,674


22%


As of December 31, 2009, our worldwide total mobile customer base increased by 22% to 33,920,104 mobile customers from 27,690,674 mobile customers as of
December 31, 2008. Prepaid customers accounted for 95% or 32,073,052 of the total mobile customers.

Our
mobile attributable customer base increased to 29,715,765 customers as at December 31, 2009 from 24,080,521 customers as of December 31, 2008, an increase of 23%.

The
high capital expenditure resulted in improvements in the quality of our networks and increased capacity and coverage which attracted additional customers. Expansion of the
distribution network also helped drive customer growth by increasing the points of sale where we sell our products, which makes the products more accessible. We are further driving higher penetration
rates in our markets by
continuing to drive down the entry price for our services by using innovative distribution channels and techniques. Future customer growth is highly dependent on the level of capital expenditure
invested in the business; increased points of sale; innovative product development and continued focus on a competitive value proposition.

In
Central America, Guatemala grew its mobile customer base by 22% year-on-year, Honduras grew by 12% year-on-year and El Salvador by 10%.
In South America, total mobile customers increased by 18% with Bolivia, Colombia and Paraguay showing increases of 45%, 13% and 11% respectively. Customer growth was particularly strong in Africa. The
two best performing markets in terms of net mobile customer additions were Chad, which grew by 88% year-on-year, and Tanzania, which grew by 73%
year-on-year, close to 4 million mobile customers. DRC also showed a significant year-on-year net mobile customer growth of 44%. In Senegal, net
mobile customers increased by 13% year-on-year, despite the dispute with the Senegalese government regarding the Sentel license (see note 31) and the launch of a new
MVNO in the third quarter of 2009. Services were launched in Rwanda at the beginning of December and, by the end of the year, we had attracted some 75 thousand customers.

Overall,
we expect customer intake to continue to be quite volatile, with variable factors including the macro environment, seasonality, competitor promotions and our own marketing
activities. In addition, the trend towards mandatory SIM card registration in some African markets is likely to contribute to this volatility.

Our
Cable business now passes 1.3 million homes in Central America a 10% increase on 2008, and provides services to 474 thousand households giving a penetration of 37% of
homes passed. Customers take on an average of 1.3 services each and our aim is to increase this take-up of services by our customers by investing in upgrades to our networks so that they
are bidirectional and both broadband internet and cable TV can be accommodated.

49

---



Table of Contents

Total
homes passed and revenue generating units for our cable businesses for the years ended December 31, 2009 and 2008 were as follows:

2009

2008

GrowthHomes passed (in thousands)


1,287


1,171


10%Revenue generating units (in thousands)


631


534


18%


Revenues:Revenues for the years ended December 31, 2009 and 2008 by operating segment were as follows:

Revenue

2009

2008

GrowthUS$ '000

US$ '000Central America


1,314,760


1,376,848


(5
)%South America


1,075,914


1,019,332


6
%Africa


782,150


711,364


10
%Cable


199,903


43,015


365
%Total


3,372,727


3,150,559


7
%


Central AmericaRevenue decreased by 5% in 2009 to $1,315 million from $1,377 million for the year ended December 31, 2008.
Revenues in Central America are heavily impacted by remittances from the US and we have seen no meaningful improvement in the flow of these remittances which were down 10%
year-on-year for our markets in the region. In addition, there has been weakness in the Guatemala quetzal in recent months which has impacted reported revenues.

Local
currency average revenue per user (ARPU) for Central America was down 18% on last year, with Honduras showing the weakest trend. The main factor of the decline in Honduras was the
new tax on inbound international traffic introduced in July. A similar tax was introduced in El Salvador at the end of the year which is expected to have a similar impact. In addition, the
interconnect rate in El Salvador was cut by more than 50% in the last quarter of 2009, with tariffs being reduced accordingly. Across Central America, our customers have shown an increased appetite
for promotions and offers built on price as they seek to optimize the use of their disposable income.

South AmericaRevenue grew by 6% in 2009 to $1,076 million from $1,019 million for the year ended December 31, 2008. ARPU was
higher than in the previous year, reaching $12.1, reflecting stronger local currencies year-on-year as well as an improving trend in local currency ARPU. The aggressive
marketing of 3G services across the region and of Paquetigos (bundles of minutes, SMS and Internet sold for use within a certain period of time) in Colombia and Paraguay has helped to increase prepaid
recharges and, therefore, ARPU.

AfricaRevenue grew by 10% in 2009 to $782 million from $711 million for the year ended December 31, 2008. ARPU for Africa in
dollar terms was 50 cents higher than in 2008. In local currency, revenues were up 26% year-on-year, representing the strongest performance of 2009.

CableRevenues in 2009 for Cable reached $200 million. Despite the tough economic environment in Central America, our Cable business is
demonstrating good growth, reflecting the attractive opportunity in cable broadband and TV services.

Our
focus in 2010 will be on increasing customer penetration and usage within our existing footprint rather than extensive coverage roll-out.

Further
revenue growth will likely come from all of our operations as we continue to implement our triple "A" strategy, particularly in the countries where Tigo® was most
recently launched. This strategy will continue to drive higher penetration rates in our markets. The average revenue per user (ARPU) will most likely fall over time as we penetrate deeper into the
populations and reach

50

---



Table of Contents

customers
with less disposable income. However, this might not happen immediately as we continue to see price elasticity amongst our existing customers and as we continue to develop our valued added
services.

In
addition, innovation has become a major focus of the Group as we seek to continue to grow revenues in maturing markets by developing additional products and services through which we
can gain a greater share of customers' disposable income. In the course of 2009, we increased the contribution to recurring revenues from value added services from 14% in the first quarter to 21% in
the fourth quarter. We expect innovation to be an important driver of growth in the years ahead.

Cost of sales:Cost of sales increased by 8% for the year ended December 31, 2009 to $1,203 million from $1,115 million
for the
year ended December 31, 2008. The primary cost of sales incurred by us is in relation to the provision of telecommunication services relates to interconnection costs, roaming costs, leased
lines to connect the switches and main base stations, and the depreciation of network equipment. The interconnection and roaming costs are directly related to revenues and increased as a result of the
growth in revenues described above. The cost of leased lines increased as we continued to expand our networks and depreciation increased due to the higher capital expenditures on our networks. Gross
profit margin slightly decreased from 65% for the year ended December 31, 2008 to 64% for the year ended December 31, 2009.

Future
gross margin percentages will be mostly affected by the mix of revenues generated from calls, VAS and data made exclusively within our networks and those between our networks and
other networks. Calls made exclusively within our networks have a higher gross margin because we do not incur interconnect charges to access other networks.

Sales and marketing:Sales and marketing expenses decreased by 2% for the year ended December 31, 2009 to $647 million from
$657 million for the year ended December 31, 2008. Sales and marketing costs were comprised mainly of commissions to dealers for obtaining customers on our behalf and selling prepaid
reloads, general advertising and promotion costs for tigo®, point of sales materials for the retail outlets, and staff costs. As a percentage of revenues, sales and marketing expenses
decreased from 21% for the year ended December 31, 2008 to 19% for the year ended December 31, 2009.

Future
sales and marketing costs will be impacted by the expansion of the distribution network which requires higher spending on brand awareness point of sales materials. The level of
future sales and marketing spend will impact both revenues and operating profits.

General and administrative expenses:General and administrative expenses increased by 22% for the year ended December 31, 2009 to
$606 million from $499 million for the year ended December 31, 2008. This increase is mainly explained by the increase in network maintenance costs to support the expansion in our
mobile operations, but also higher staff costs from more employees needed to manage the growth of Millicom's business. As a percentage of revenues, general and administrative expenses increased from
16% for the year ended December 31, 2008 to 18% for the year ended December 31, 2009.

We
continue to seek ways to further reduce our overall general and administrative cost base by identifying synergies to rationalize our support costs, such as sharing information, human
resources, best practices and technologies amongst the operating companies. We also look to centralize negotiations of our financings and of our supply contracts for network equipment and handsets.

In
addition, in January 2010, Millicom's operation in Ghana signed a sale and lease-back agreement for most of its sites (see note 35). The agreement marks Millicom's
first outsourcing of passive infrastructure and is consistent with Millicom's strategy of improving both our capital and operating efficiency by focusing on our core activities. Millicom is exploring
similar opportunities in

51

---



Table of Contents

some
other countries where we operate and we feel we can benefit from the same efficiencies as in Ghana.

Other operating expenses:Other operating expenses increased by 7% for the year ended December 31, 2009 to $66 million from
$61 million for the year ended December 31, 2008. The costs related to the corporate staff and other group support functions has increased, and the necessity to oversee and support the
significant growth in the operating companies will contribute to increase other operating expenses.

Operating profit:Operating profit for the years ended December 31, 2008 and 2008 by segment were as follows:

Operating profit

2009

2008

GrowthUS$ '000

US$ '000Central America


584,341


642,851


(9
)%South America


227,904


149,848


52
%Africa


84,582


95,935


(12
)%Cable


31,295


6,537


379
%Unallocated


(77,099
)

(76,949
)

Total


851,023


818,222


4
%




Operating profit margin

2009

2008

Change
in % ptsCentral America


44%


47%


(3
)South America


21%


15%


6Africa


11%


13%


(2
)Cable


16%


15%


1Total


25%


26%


(1
)


Operating margin in Central America decreased from 47% for the year ended December 31, 2008 to 44% for the year ended December 31, 2009, reflecting
the impact of increasing taxes on calls in Honduras and El Salvador.

In
South America, we were able to improve our operating margins due to the improving performance of our Colombian operations where the margin improved from negative 16% in 2008 to
negative 7%
for 2009. Operating margin for our South America operating segment overall increased from 15% for the year ended December 31, 2008 to 21% for the year ended December 31, 2009

In
Africa, increasing depreciation charges from Millicom's high capital expenditure in the region as it aggressively rolled out the triple "A" operating strategy for the region
negatively impacted operating margins. This led to a reduction in Africa operating profit margin from 13% for the year ended December 31, 2008, to 11% for the year ended December 31,
2009. During 2009, Millicom's operation in the DRC moved equipment to focus on the two regions with the highest economic activity in the country until the economic circumstances in the rest of the
country improve.

The
Cable operating segment increased its operating margin to 16% for the year ended December 31, 2009 from 15% for the year ended December 31, 2008.

In
the future, Millicom's operating profitability will depend on the ability to continue growing revenues while maintaining control of costs and capital expenditures. Millicom is
striving to improve the profitability of its operations in Colombia and the DRC and expects both of these operations to generate operating profits in the near future.

Interest expense:Interest expense for the year ended December 31, 2009 increased by 28% to $173 million for the year ended
December 31, 2009, from $136 million for the year ended

52

---



Table of Contents

December 31,
2008. In the third quarter of 2008, Millicom reviewed its position to repay the 10% Senior Notes early. The Board of Directors decided not to redeem the Notes but to keep them
until the contractual maturity date (December 1, 2013). This decision impacted the future expected cash flows and, as a result, the 5% premium accrued in 2007 was completely reversed and
interest income amounting to $29 million was recorded in 2008 (see note 26). In addition, borrowings increased, although the interest rates declined. A significant portion of Millicom's
gross debt is at variable rates, which declined significantly. Millicom intends, in the near future, to hedge part of its interest rate exposure to reach a 50% balance of variable interest rate debt
(see note 33).

Interest and other income:Interest and other income for the year ended December 31, 2009 decreased by 64% to $12 million
from
$32 million for the year ended December 31, 2008. A reduction in interest rates, together with lower cash balances during the year ended December 31, 2009 compared to the same
period last year, impacted the interest income.

Revaluation of previously held interests:On March 13, 2009, Millicom's joint venture in Guatemala completed the acquisition of
the remaining
55% interest in Navega.com S.A. ("Navega"see note 4). Millicom decided to early adopt IFRS 3R and has 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

Other non operating (expenses) income, net:Other non operating (expenses) income, net was an expense of $32 million for the year
ended
December 31, 2009 and an expense of $52 million for the year ended December 31, 2008, both referred to exchange losses. These lower exchange losses, mainly on borrowings, were due
as a number of currencies strengthened against the dollar during 2009.

Charge for taxes:The net tax charge for the year ended December 31, 2009 decreased to $188 million from $269 million for
the
year ended December 31, 2008. This decrease was mainly due to the impairment in 2008 of the deferred tax asset booked in 2007 in our operation in Colombia.

As
a consequence, the Group's effective tax rate decreased from 40% in 2008 to 27% in 2009.

The
Group effective tax rate was also impacted by operating companies that are taxed on revenues rather than profit before tax. There is a risk that these situations could change and
that these operating companies could be taxed on profits before tax in future years. This would likely increase the Group effective tax rate.

Net profit for the year attributable to equity holders of the company:The net profit for the year ended December 31, 2009 was
$851 million compared to a net profit of $518 million for the year ended December 31, 2007. Profit from continuing operations increased from $402 million for the year ended
December 31, 2008 to $504 million for the year ended December 31, 2009 for the reasons stated above. The profit from discontinued operations for the year ended December 31,
2009 was $300 million (including a $289 million net gain on disposals of Millicom's operations in Cambodia and Sri Lankasee note 5) compared to a profit from
discontinued operations for the year ended December 31, 2008 of $2 million.

53

---



Table of Contents

Years Ended December 31, 2008 and 2007

The following table sets forth certain income statements items for the periods indicated:

Impact on
Comparative Results
for PeriodYear Ended December 31,Amount of
Variation

Percent
Change2008

2007(in thousands of U.S. dollars, except percentages)Revenues


3,150,559


2,429,082


721,477


30
%Cost of sales


(1,114,822
)

(868,842
)

(245,980
)

28
%Gross profit


2,035,737


1,560,240


475,497


30
%Sales and marketing


(657,480
)

(464,343
)

(193,137
)

42
%General and administrative expenses


(498,597
)

(392,286
)

(106,311
)

27
%Other operating expenses


(61,438
)

(72,949
)

11,511


(16
)%Operating profit


818,222


630,662


187,560


30
%Interest expense


(135,932
)

(180,771
)

44,839


(25
)%Interest and other financial income


32,277


55,912


(23,635
)

(42
)%Other non operating expenses (income), net


(52,265
)

9,984


(62,249
)

(623
)%Profit from associates


8,706


4,400


4,306


98
%Profit before tax from continuing operations


671,008


520,187


150,821


29
%Charge for taxes


(268,813
)

(83,710
)

(185,103
)

221
%Profit for the year from continuing operations


402,195


436,477


(34,282
)

(8
)%Profit from discontinued operations, net of tax


2,246


274,507


(272,261
)

(99
)%Non controlling interests


113,075


(13,842
)

126,917


(917
)%Net profit for the year attributable to equity holders


517,516


697,142


(179,626
)

(26
)%


We derive our revenues mainly from the provision of telecommunications services such as monthly subscription fees, airtime usage fees, roaming fees, interconnect
fees, connection fees for subscription services and other services and equipment sales.

Total
revenues increased by 30% for the year ended December 31, 2008 to $3,151 million from $2,429 million for the year ended December 31, 2007. The increase
is mainly due to growth in the number of mobile customers. Total mobile customers for the years ended December 31, 2008 and 2007 by operating segment were as follows:

Customers

2008

2007

GrowthCentral America


11,181,251


8,824,924


27%South America


7,460,771


5,892,726


27%Africa


9,048,652


5,568,148


63%Total


27,690,674


20,285,148


37%


As of December 31, 2008, our worldwide total mobile customer base increased by 37% to 27,690,674 mobile customers from 20,285,148 mobile customers as of
December 31, 2007. Prepaid customers accounted for 95% or 26,316,527 of the total mobile customers.

Our
mobile attributable customer base increased to 24,080,524 customers as at December 31, 2008 from 17,471,986 customers as of December 31, 2007, an increase of 38%.

The
higher capital expenditure resulted in improvements in the quality of our networks and increased capacity and coverage which attracted additional customers. Expansion of the
distribution network also helped drive customer growth by increasing the points of sale where we sell our products, which makes the products more accessible. We drove higher penetration rates in our
markets by

54

---



Table of Contents

continuing
to drive down the entry price for our services by using innovative distribution channels and techniques.

In
Central America, Honduras grew its mobile customer base by 45% year-on-year, Guatemala grew by 20% year-on-year and El Salvador by 14%.
In South America, total mobile customers increased by 27% with Paraguay and Bolivia both showing increases of 33% and Colombia showing an increase of 20%. Growth was particularly strong in Africa. The
two best performing markets in terms of net mobile customer additions were Tanzania which grew by 93% year-on-year and DRC, which grew by 92%
year-on-year, to over 1 million mobile customers. Chad also showed a significant year-on-year net mobile customer growth of 67%. In Senegal, net
mobile customers increased by 66% year-on-year, but this growth occurred mainly in the first half of 2008. The dispute with the Senegalese government over the Sentel license
(see note 31) led to a decline in mobile customer growth in the later part of the year.

Revenues:Revenues for the years ended December 31, 2008 and 2007 by operating segment were as follows:

Revenue

2008

2007

GrowthUS$ '000

US$ '000Central America


1,376,848


1,149,368


20%South America


1,019,332


809,881


26%Africa


711,364


469,833


51%Cable


43,015





Total


3,150,559


2,429,082


30%


Central AmericaRevenue grew by 20% in 2008 to $1,377 million. The lower growth of revenues as compared to recent years was mainly due to a
slowing in the growth in remittances of funds from the US during the last quarter of 2008, when previous year remittances were still growing by 5% year on year in Guatemala and Honduras and by 3% in
El Salvador. In addition, during 2008, inflation in Central America, particularly on food and other essentials, raised in excess of 20% per annum, affecting consumption of the customers, although in
the last quarter inflation began to ease again. The higher cost of basic needs meant that there were fewer discretionary dollars available to customers for the purchase of mobile minutes.

Tax
changes in the last quarter of 2008 in Honduras and El Salvador on incoming international calls increased the calling costs from overseas into Honduras by $3 cents per minute and
into El Salvador by $4 cents per minute. This reduced the total international minutes of calling, although overall minutes of use held up well, showing that the calling patterns of our existing
customers did not changed significantly in 2008 despite the tougher economic environment.

South AmericaRevenues were positively impacted by the weak dollar which impacted the top line in translation for the first nine months of 2008.
However, revenue increased by 26%, to $1,019 million for the year ended December 31, 2008, from $810 million for the year ended December 31, 2007. The currencies in South
America devalued as agricultural commodities, a key export, fell in price in the last quarter of the year.

In
Bolivia there was some price pressure in the market but Tigo differentiated its offer by having low recharges to increase the perception of affordability. Also, in terms of
accessibility, Tigo had 37% e-PIN penetration and some 8 thousand active e-PIN points of sale which made its products attractive in terms of affordability.

Tigo
Colombia achieved a very positive development in its postpaid customer base in 2008 where it observed a 51% growth. In October 2008, Tigo became the second operator offering 3G
services in Colombia. Including 3G revenues, VAS experienced growth of 112% in 2008.

55

---



Table of Contents

In
Paraguay, for 2008, the focus was on the launch of 3G, the growth of VAS and improving the inventory levels of scratch cards and airtime in the points of sale. VAS accounted for 32%
of recurring revenue, growing some 78% in 2008 with SMS reaching 89% penetration by the end of 2008.

AfricaRevenue grew by 51%, to $711 million for the year ended December 31, 2008, from $470 million for the year ended
December 31, 2007. The effect of the strengthening dollar compared to the local currencies continued to be a factor that impacted the top line. However, Africa remained Millicom's fastest
growing region and an increasing proportion of total Group capex was invested in the region in 2008. In 2008, the African region was characterized by extensive network expansion and a
build-up of the necessary capacity to accommodate the projected growth in the customer
base. With increased capacity, Tigo was able to roll out products such as its 'Xtreme' offer ("all one can eat for one payment a day"). This offer was adapted by region to vary the price according to
affordability and network capacity, to allow Millicom to take advantage of spare network capacity in each area.

In
DRC, Tigo found traction with 130% revenue growth year-on-year, despite inflation and then currency devaluation in the last quarter of 2008 and some
instability in the East of the country. In DRC currency devaluation had only limited impact on our business as we trade locally in dollars. Our concern focused more on the impact of the worldwide
economic slowdown on DRC and the lower consumption that could follow the devaluation of the local currency. Tigo doubled its points of sale in DRC to 61 thousand in 2008.

Chad
saw the introduction of per second billing which helped increase the perception of price leadership and increased points of sale to some 14 thousand.

In
Senegal, mobile penetration was 43% and Tigo had 36% market share at year end, with a third operator entering the market in the last quarter of 2008. With the arrival of this
operator, the Senegalese government re-opened the issue on the status of our license in Senegal. This uncertainty caused by Government action had a negative impact on mobile customer
growth in the latter part of the year (see note 31).

Penetration
in Ghana reached 44% and Tigo had a market share of 28% at year end; it was number two in the market. One Touch, the third operator, was acquired by Vodafone and Zain
recently entered the market.

CableCable was a business with approximately 533 thousand revenue generating units (RGU) across Central America with cable and broadband
customers in El Salvador, Honduras and Costa Rica and smaller corporate data businesses in Guatemala and Nicaragua. Revenues increased to $43 million for the year ended December 31,
2008, mainly driven by the broadband business and RGUs increased by 16% year on year. Millicom has an extensive HFC (Hybrid Fiber-Coax) network with 1.2 million homes passed and
today some 69% have two-way coaxial cable.

Cost of sales:Cost of sales increased by 28% for the year ended December 31, 2008 to $1,115 million from $869 million
for the
year ended December 31, 2007. The primary cost of sales incurred by us is in relation to the provision of telecommunication services relates to interconnection costs, roaming costs, leased
lines to connect the switches and main base stations and the depreciation of network equipment. The interconnection and roaming costs were directly related to revenues and increased as a result of the
growth in revenues described above. The cost of leased lines increased as we continued to expand
our networks and depreciation increased due to the higher capital expenditures on our networks. Gross profit margin slightly increased from 64% for the year ended December 31, 2007 to 65% for
the year ended December 31, 2008.

Sales and marketing:Sales and marketing expenses increased by 42% for the year ended December 31, 2008 to $657 million from
$464 million for the year ended December 31, 2007. Sales and marketing costs were comprised mainly of commissions to dealers for obtaining customers on our

56

---



Table of Contents

behalf
and selling prepaid reloads, general advertising and promotion costs for tigo®, point of sales materials for the retail outlets, and staff costs. The increase in sales and marketing
costs was mainly due to higher dealer commissions related to the higher revenues and the increase in mobile customers, and to the increased spending on brand awareness and point of sales materials. As
a percentage of revenues, sales and marketing expenses increased from 19% for the year ended December 31, 2007 to 21% for the year ended December 31, 2008.

General and administrative expenses:General and administrative expenses increased by 27% for the year ended December 31, 2008 to
$499 million from $392 million for the year ended December 31, 2007. This increase is mainly explained by the increase in network maintenance costs to support the expansion in our
mobile operations, but also higher staff costs related to the greater number of employees needed to manage the growth of Millicom's business. As a percentage of revenues, general and administrative
expenses remained stable at 16% for the years ended December 31, 2008 and 2007.

Other operating expenses:Other operating expenses decreased by 16% for the year ended December 31, 2008 to $61 million from
$73 million for the year ended December 31, 2007. 2007 figures were impacted by the reduction to the goodwill in our Colombian operation of $23 million. However, the costs related
to the corporate staff and other group support functions has increased, and the necessity to oversee and support the significant growth in the operating companies will contribute to increase other
operating expenses.

Operating profit:Operating profit for the years ended December 31, 2008 and 2007 by segment were as follows:

Operating profit

2008

2007

GrowthUS$ '000

US$ '000Central America


642,851


526,369


22%South America


149,848


106,591


41%Africa


95,935


66,716


44%Cable


6,537





Unallocated


(76,949
)

(69,014
)

11%Total


818,222


630,662


30%




Operating profit margin

2008

2007

Change
in % ptsCentral America


47%


46%


1South America


15%


13%


2Africa


13%


14%


(1
)Cable


15%


%


Total


26%


26%





Those Millicom operations with the highest market share, specifically in Central America (El Salvador, Guatemala and Honduras) and in South America
(Bolivia and Paraguay), which have already achieved critical mass, were able to improve their operating margins in 2008.

In
addition Millicom's operation in the Democratic Republic of Congo continued to have operating losses, as it aggressively rolls out the triple "A" operating strategy for the company,
incurring sales and marketing and network rollout costs ahead of an expected increase in revenues as a result of the 92%
increase in customers in 2008. This lead to a reduction in Africa operating profit margin from 14% for the year ended December 31, 2007, to 13% for the year ended December 31, 2008.

Interest expense:Interest expense for the year ended December 31, 2008 decreased by 25% to $136 million the year ended
December 31, 2008, from $181 million for the year ended December 31, 2007. This is primarily due to Millicom's third quarter 2008 review of its position to repay the Notes

57

---



Table of Contents

prior
to maturity. The Board of Directors decided not to redeem the Notes but to keep them until the contractual maturity date (December 1, 2013). This decision impacted the future expected
cash flows and, as a result, the 5% premium accrued in 2007 was completely reversed and an interest income amounting to $29 million was recorded in 2008 (see note 26).

Interest and other income:Interest and other income for the year ended December 31, 2008 decreased by 42% to $32 million from
$56 million for the year ended December 31, 2007. This was mainly due to the expenditure to acquire our Amnet business (see note 4), which reduced the balance of cash and cash
equivalents available to the Group.

Other non operating expenses (income), net:Other non operating expenses (income), net was income of $10 million for the year
ended
December 31, 2007 and was an expense of $52 million for the year ended December 31, 2008. This decrease was primarily the result of higher exchange losses, mainly on borrowings,
as a number of currencies weakened against the dollar in the last quarter of 2008.

Charge for taxes:The net tax charge for the year ended December 31, 2008 increased to $269 million from $84 million for
the
year ended December 31, 2007. This increase was mainly due to the impairment of the deferred tax asset booked in 2007 in our operation in Colombia.

In
October 2006, when the Group acquired Colombia Móvil, the operation had tax loss carry forwards. When completing the purchase price allocation, Millicom assessed that
it was not probable that these tax loss carry-forwards would be used in the short term. Thus no deferred tax asset was recognized on acquisition. Given the 2007 actual results of Colombia
Móvil and its forecasted performance, Colombia Móvil was expected to be profitable in a foreseeable future. Accordingly, an amount of $86 million was recorded in
deferred tax assets corresponding to $39 million related to tax losses after the acquisition
and $47 million related to tax losses prior to the acquisition. Management estimated that these tax losses were to be used against future taxable profit. As part of these losses existed at the
time of the acquisition some of the goodwill recorded at acquisition was reversed resulting in an expense of $23 million in 2007 recorded under the caption "other operating expenses".

As
the business conditions have been negatively impacted by the change in the interconnect rates, Colombia performance deteriorated since the first recognition of deferred tax assets.
Therefore, it was no longer considered probable that Millicom could utilize these fiscal loss carryforwards in the near future. Therefore the previously recognized deferred tax asset was impaired
through the income statement.

As
a consequence, the Group's effective tax rate increased from 16% in 2007 to 40% in 2008.

The
corporate expenses and interest exceed the income at the corporate holding companies, and therefore the net total is not tax deductible. This causes the effective tax rate to
increase. Millicom has been both increasing the corporate income by charging the operating companies management and brand fees and decreasing the corporate interest expense by replacing corporate debt
with operating company debt.

The
Group effective tax rate was also impacted by operating companies that are taxed on revenues rather than profit before tax. There is a risk that these situations could change and
that these operating companies could be taxed on profits before tax in future years. This would likely increase the Group effective tax rate.

Net profit for the year attributable to equity holders of the company:The net profit for the year ended December 31, 2008 was
$518 million compared to a net profit of $697 million for the year ended December 31, 2007. Profit from continuing operations decreased to $402 million for the year ended
December 31, 2008 from $436 million for the year ended December 31, 2007 for the reasons stated above. The profit from discontinued operations for the year ended
December 31, 2008 was $2 million compared to a profit from discontinued operations for the year ended December 31, 2007 of $275 million.

58

---



Table of Contents

Liquidity and Capital Resources

Overview

We believe that our funding is sufficient for our present requirements.

As
of December 31, 2009, Millicom's total consolidated outstanding debt and other financing was $2,347 million (2008: $2,158 million). Of this amount,
$455 million (2008: 453 million) represented the Company's indebtedness and $1,892 million (2007: $1,705 million) represented the consolidated indebtedness of our
subsidiaries and joint ventures.

At
the operating company level, we seek, in the long term, to finance the costs of developing and expanding mobile operations on a project-by-project basis.
Operations are typically financed initially by contributions from Millicom in the form of equity, shareholders' loans and, in some cases, debt. In many cases, we seek to replace such equity and debt
with third party financing, which after the initial stages of an operating company's development, is non-recourse to Millicom whenever possible. Sources of financing at the operating
company level have included vendor financing provided by equipment suppliers, project financing from commercial banks and international agencies such as the International Finance
Corporation ("IFC"), PROPARCO, FMO, EKB and the Overseas Private Investment Corporation ("OPIC") and bank lines of credit.

We
seek to obtain financing at an operating company level in the relevant local currency so as to limit the impact of currency fluctuations, although this is not always possible because
of the lack of long term credit facilities in most countries where we trade.

Cash Upstreaming

The continued improvement in the operating and financial performance of our operations has allowed us to continue to upstream excess
cash to the Company, through a combination of dividends, technical service fees and shareholders' loans reimbursement. For the year ended December 31, 2009, we upstreamed $591 million
from 9 of the 14 countries in which we operate. This upstreamed cash will be used to service our corporate debt obligations and for further investment. In 2008, we upstreamed $543 million from
9 of 16 countries in which we operated. In 2007, we upstreamed $656 million from 13 of 16 countries in which we operated, which included the proceed from the sale of our operation in Pakistan,
Paktel.

Cash Flows

Years Ended December 31, 2009 and 2008

For the year ended December 31, 2009, cash provided by operating activities was $1,225 million, compared to
$1,058 million for the year ended December 31, 2008. The increase is mainly due to the growth of the profitability, as described in the preceding paragraphs.

Cash
used by investing activities was $930 million for the year ended December 31, 2009, compared to $1,779 million for the year ended December 31, 2008. In
the year ended December 31, 2009 Millicom used $53 million in the acquisition of Joint ventures and subsidiaries (see note 4), compared to a use of $532 million for the
year ended December 31, 2008, mainly related to the acquisition of Amnet. Millicom also used $727 million to purchase property, plant and equipment compared to $1,161 million for
the same period in 2008.

Financing
activities provided total cash of $124 million for the year ended December 31, 2009, compared to $299 million for the year ended December 31, 2008.
In the year ended December 31, 2009, we repaid debt of $507 million while raising funds of $628 million through new financing and $3 million through the issuance
of shares.

59

---



Table of Contents

The
net cash inflow provided by discontinued operation amounted to $417 million for the year ended December 31, 2009 (mainly related to the net proceeds from the sale of
Millicom's operations in Sri Lanka and Cambodia), compared to an outflow of $69 million for the year ended December 31, 2008.

The
net cash inflow for the year ended December 31, 2009 was $837 million compared to an outflow of $500 million for the year ended December 31, 2008.
Millicom had closing cash and cash equivalents balances of $1,511 million as at December 31, 2009 compared to $674 million as at December 31, 2008.

Years Ended December 31, 2008 and 2007

For the year ended December 31, 2008, cash provided by operating activities was $1,058 million, compared to
$772 million for the year ended December 31, 2007. The increase is mainly due to the growth of the profitability, as described in the preceding paragraphs.

Cash
used by investing activities was $1,779 million for the year ended December 31, 2008, compared to $756 million for the year ended December 31, 2007. In
the year ended December 31, 2008 Millicom used $532 million in the acquisition of Amnet. Millicom also used $1,161 million to purchase property, plant and equipment compared to
$768 million for the same period in 2007.

Financing
activities provided total cash of $299 million for the year ended December 31, 2008, compared to $207 million for the year ended December 31, 2007.
In the year ended December 31, 2008, we repaid debt of $640 million while raising funds of $1,196 million through new financing and $3 million through the issuance
of shares.

The
net cash outflow for the year ended December 31, 2008 was $500 million compared to an inflow of $518 million for the year ended December 31, 2007.
Millicom had closing cash and cash equivalents balances of $674 million as at December 31, 2008 compared to $1,175 million as at December 31, 2007.

Investments, Acquisition, Divestments and Capital Expenditures

Investments

Millicom will continue to invest in its existing mobile operations, where we believe we can generate attractive returns. In addition,
we may increase our equity ownership in certain existing operations through opportunistic buy-outs of local partners. We may participate in consolidation within our markets through the
careful evaluation, selection and pursuit of strategic opportunities and we may enter into new markets in Latin America and Africa by acquiring existing operators. We may also pursue new license
opportunities in our adjacent markets where the investment offers group-wide synergy potential. Such synergies include sharing information and best practices about services, human
resources, technologies, market strategies, and the centralized negotiation of financings and supply contracts for network and customer equipment. We may also expand our footprint through acquisitions
or greenfield projects in areas close to our existing businesses such as, for example, cable or content assets.

Acquisitions

In 2009, Millicom's joint venture in Guatemala acquired the remaining non-controlling interest in Navega.com S.A.
("Navega") and Millicom acquired the remaining non-controlling interest in its operation in Chad. Millicom's share of the Navega acquisition cost amounted to $49 million and
Millicom's share of the net cash acquired amounted to $10 million; net cash used for this acquisition therefore amounted to $39 million. The initial consideration for the remaining
non-controlling interest

60

---



Table of Contents

in
Chad amounted to $8 million and was paid in cash. If certain conditions are met, Millicom will have to pay further $2 million within the 14 months following the balance
sheet date.

On
October 1, 2008, the Group acquired 100% interest in Amnet Telecommunications Holding Limited (together with its subsidiaries "Amnet" or "Amnet Group"). Amnet is a provider of
broadband and cable television services in Costa Rica, Honduras and El Salvador, of fixed telephony in El Salvador and Honduras, and of corporate data services in the above countries as
well as Guatemala and Nicaragua. Acquisition cost amounted to $546 million and net cash acquired to $14 million; net cash used for the acquisition of Amnet therefore amounted to
$532 million.

Divestments

During 2009, Millicom completed the sale of its mobile operations in Sri Lanka (on October 16, 2009), Sierra Leone and Cambodia
(respectively on November 25 and 26, 2009). A total net gain of $289 million was recognized from the sale of these operations. Millicom's operations in Sri Lanka, Sierra Leone and
Cambodia ceased to be consolidated from the date of sale.

On
January 21, 2007, Millicom signed with China Mobile Communications Corporation an agreement relating to the sale of our 88.68% interest in Paktel Limited to for an enterprise
value of $460 million, resulting in net proceeds of approximately $284 million. Transaction was completed on February 13, 2007.

Capital Expenditures

Our capital expenditure of property, plant and equipment, licenses and other intangibles by operating segment for the years ended
December 31, 2009, 2008 and 2007 has been as follows:

2009

2008

2007Central America


110,738


294,011


291,678South America


163,045


369,167


325,077Africa


398,244


601,080


337,299Cable


64,569


11,548


Unallocated items and discontinued operations


892


166,885


101,548Total


737,488


1,442,691


1,055,602


We expect to direct some of our capital expenditures towards our new operation in Rwanda and the roll out of tigo® across the rest of our African
operations in 2010.

In
December 2010, Millicom's operation in Ghana signed a sale and lease-back agreement for most of its sites (see note 35). The agreement marks Millicom's first
outsourcing of passive infrastructure and is consistent with Millicom's strategy of improving both our capital and operating efficiency by focusing on our core activities. Millicom is exploring
similar opportunities in some other countries where we operate and we feel we can benefit from the same efficiencies as in Ghana.

Commitments to Purchase Network Equipment within One Year

As of December 31, 2009, we had commitments to purchase network equipment, land and buildings and other fixed assets with a
value of $186 million from a number of suppliers, all of which was within one year except $3 million within two years. We expect to meet these commitments from our current cash balance
and from the cash generated from our operations.

As
of December 31, 2008, we had commitments to purchase network equipment, land and buildings and other fixed assets with a value of $539 million from a number of
suppliers, all of which was within one year except $15 million within two years.

61

---



Table of Contents

Financing

We finance our operations on a project-by-project basis at both the operational and parent entity level. Once a
license is awarded, we make an initial investment in the form of equity and, in some cases, debt. The local operation typically is granted between six and 12 months to build out its initial
mobile telephone network. During this initial phase, we frequently supplement our investment with financing provided by equipment suppliers for the purchase of network equipment. Generally, such
financing covers a period of 18 months to three years and is often guaranteed by Millicom. We seek to refinance the vendor financing with longer-term borrowing from commercial banks
and international agencies. Where available, we endeavor to obtain financing in local currencies and without recourse to Millicom. However, Millicom may guarantee such project financing for an initial
period. We intend to continue to pursue a project-by-project approach to fund our systems. If additional investment is required, we seek, whenever possible, to fund such
investment
through shareholder loans from the Company. As our local operations become more established and local financial markets become more developed, we are increasingly able to finance at the operational
level in the local currency on a non-recourse basis. As of December 31, 2009, 41% of our debt at the operating level was denominated in local currency.

Millicom's
total consolidated net indebtedness as of December 31, 2009 was $2,347 million and our total consolidated net indebtedness (representing total consolidated
indebtedness after deduction of cash, cash equivalents, short-term time deposits and pledged deposits) was $732 million. Our annual interest expense for the years ended
December 31, 2009 and 2008 was $173 million and $136 million, respectively.

10% Senior Notes

On November 24, 2003, Millicom issued $550 million aggregate principal amount of 10% Senior Notes (the
"10% Senior Notes") due on December 1, 2013. The 10% Senior Notes bear interest at 10% per annum, payable semi-annually in arrears on June 1 and
December 1. The effective interest rate is 10.7%.

The
10% Senior Notes are general unsecured obligations of Millicom and rank equal in right of payment with all future unsecured and unsubordinated obligations of Millicom. The
10% Senior Notes are not guaranteed by any of Millicom's subsidiaries, joint ventures or affiliates, and as a result are structurally subordinated in right of payment to all indebtedness of
such subsidiaries, joint ventures and affiliates.

If
Millicom experiences a Change of Control Triggering Event, defined as a credit risk rating decline resulting from a change in control, each holder will have the right to require
Millicom to repurchase its notes at 101% of their principal amount plus accrued and unpaid interest and all other amounts due, if any.

During
2007, Millicom repurchased $90 million of the 10% Senior Notes incurring in a charge of $5 million which is recorded under the caption "Other non operating
income (expenses), net".

In
October 2007, Millicom decided that it would redeem the balance of the Notes in December 2008 and pay the contractual redemption premium of 5%. As a result, Millicom reclassified the
10% Senior Notes from non-current to current and recorded an additional interest expense of $31 million for the year ended December 31, 2007, which represented the
increase in financial liabilities due to the recognition of the 5% pre-payment expense and an increase in the amortized cost of the Notes due to the earlier settlement date. Millicom
reviewed its position to repay the Notes in September 2008 and the Board of Directors decided not to early redeem the Notes but to keep them until the contractual maturity date (December 1,
2013). This decision impacted the future expected cash flows and, as a result, the 5% premium accrued in 2007 was completely reversed and an interest

62

---



Table of Contents

income
amounting to $29 million was recorded in 2008. In addition the 10% Notes were reclassified as non-current.

4% convertible Notes

In January 2005, Millicom raised $200 million aggregate principal amount of 4% Convertible Notes due 2010 (the
"4% Convertible Notes"). The net proceeds of the offering were received on January 7, 2005 in the amount of $196 million.

The
4% Convertible Notes were general unsecured obligations of Millicom and rank equal in right of payment with all future unsecured and unsubordinated obligations of Millicom. The rate
of interest payable on the 4% Convertible Notes was 4% per annum. Interest is payable semi-annually in arrears on January 7 and July 7 of each year, beginning on
July 7, 2005. The effective interest rate was 9.6%.

The
4% Convertible Notes were constituted by a trust deed dated January 7, 2005 between Millicom and The Bank of New York, as Trustee for the holders of notes.

Millicom
apportioned part of the value of the 4% Convertible Notes to equity and part to debt. The value allocated to equity as of December 31, 2007 was $39 million (2006:
$39 million) and the value allocated to debt was $179 million (2006: $171 million).

As
of December 31, 2007, $1 million of the 4% Convertible Notes were converted into 28,686 SDRs.

On
January 22, 2008, Millicom converted a further $196 million of the outstanding bonds into 5,420,235 Ordinary Shares and 202,236 SDRs. On the same day Millicom repaid in
cash the remaining $3 million of bonds that were not converted, including accrued interest. The conversion resulted in an increase of equity amounting to $175 million in January 2008.

Other Debt and Financing

Millicom's share of total other debt and financing analyzed by operation is as follows:

2009

2008US$ '000

US$ '000Colombia(i)


508,904


456,356Amnet(ii)


247,334


231,523Tanzania(iii)


212,405


168,793El Salvador(iv)


159,332


192,045Ghana(v)


137,650


138,999Guatemala(vi)


100,351


11,000Honduras(vii)


100,339


90,817Bolivia(viii)


99,075


103,111Chad(ix)


94,157


45,777DRC(x)


78,865


63,256Senegal(xi)


63,469


58,309Paraguay(xii)


59,931


64,147Other


30,598


80,422Total other debt and financing


1,892,410


1,704,555Of which:Due after more than 1 year


1,458,423


1,208,011Due within 1 year


433,987


496,544


63

---



Table of Contents

Significant individual financing facilities are described below:

(i)    Colombia

In March 2008, Colombia Movil S.A. E.S.P ("Colombia Movil"), Millicom's operation in Colombia, entered into a COP391 billion ($191 million as
at December 31, 2009), 5 year facility with a club of Colombian banks. This facility bears interest at Deposits to Fixed Terms ("DTF") plus 4.5% and is 50% guaranteed by the
Company. As at December 31, 2009 $191 million (2008: $173 million) was outstanding on this facility.

In
October 2006, the Company acquired a majority ownership 50% plus 1 share in Colombia Movil. At the time of the acquisition the Company had a COP169 billion ($83 million)
Hermes guaranteed export credit facility with Citigroup maturing in January 2012. This facility was bearing interest at Indice de Precios al Consumidor ("IPC") plus 6.30% and was 100% guaranteed by
the non-controlling shareholders. This facility was settled in 2009. As at December 31, 2008 $37 million was outstanding under this facility.

Colombia
Movil S.A. E.S.P. also had local currency loans from the non-controlling shareholders outstanding as at December 31, 2009 of $274 million (2008:
$230 million). These loans bear interest at DTF plus 4.15% and mature between 2011 and 2013.

In
addition, as at December 31, 2009 Colombia Movil S.A. E.S.P. had $44 million (2008: $16 million) of other debt and financing, in US$ and local currency.

(ii)   Amnet

In October 2008 Millicom Cable N.V. signed a 1 year financing agreement with RBS and Standard Bank for $200 million to partly finance the
acquisition of Amnet. The loan was bearing interest for the first six months at $ LIBOR plus 2.5%, for months seven to nine at $ LIBOR plus 2.875% and months ten to twelve at $ LIBOR plus 3.125%. The
loan was increased by $30 million in December 2008 through a financing agreement with Nordea. The total loan, amounting to $230 million, was fully guaranteed by the Company. The facility
was settled in 2009. $230 million was outstanding as at December 31, 2008.

In
September 2009, Millicom Cable N.V., a subsidiary of the Company, refinanced the above agreement with a 2 years, $250 million senior term loan facility fully
guaranteed by the Company with Standard Bank, RBS, Nordea, DnB Nor, and Morgan Stanley. This loan agreement is allocated to the 3 main Amnet operating entities in Costa Rica,
El Salvador, and Honduras. The loan is bearing interest for the first 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, up to 5.75% for the last quarter in 2011. $247 million was outstanding as at December 31, 2009.

As
at December 31, 2009 Amnet had no other debt and financing (2008: $2 million).

(iii) Tanzania

In December 2008, Millicom Tanzania Limited, Millicom's operation in Tanzania entered into facilities totaling $228 million comprising of a five year local
currency syndicated tranche for TZS95 billion at the 180 days treasury Bill rate plus 3%, a seven year $116 million EKN guaranteed financing with 45% of the facility fixed 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, 2009, the amount outstanding under these facilities was $200 million (2008: $152 million).

64

---



Table of Contents

In
March 2007 Millicom Tanzania Limited entered into a new 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 $5 million. The outstanding US$ amount under these facilities as at December 31, 2009
amounted to $12 million (2008: $17 million).

Millicom
Tanzania Limited had no other debt and financing outstanding as at December 31, 2009 and 2008.

(iv)  El Salvador

In September 2006, Telemovil El Salvador S.A., Millicom's operation in El Salvador, entered into a $200 million 5 year loan. The loan
was syndicated amongst a group of local and international banks and was arranged by ABN AMRO, Citigroup and Standard Bank. The loan bears interest at $ LIBOR plus 1.75%. As of
December 31, 2009, $130 million of this facility was outstanding (2008: $180 million).

In
December 2008, Telemovil El Salvador S.A., entered into a $12 million 2 year loan with Banco Agrícola Comercial S.A. The loan bears
interest at $ LIBOR plus 6%. As of December 31, 2009, $6 million of this facility was outstanding (2008: $12 million).

In
December 2009, El Salvador entered into a 2 year loan with Scotiabank, bearing interest at $ LIBOR plus 5.0%. As at December 31, 2009, $23 million
was outstanding.

As
at December 31, 2009 and 2008, there was no other debt or financing outstanding.

(v)   Ghana

In December 2007 Millicom (Ghana) Limited, Millicom's operation in Ghana, entered into a $60 million local 5 year Facility. The loan bears interest
at $ LIBOR plus 2%. In parallel a $80 million offshore 7 year DFI (Development Finance Institution) financing which bears interest at $ LIBOR plus 2.25% was arranged. As at
December 31, 2009, $132 million (2008: $139 million) was outstanding under these facilities.

In
December 2009 the company entered into a 3.5 year $22 million Ericsson arranged financing with EKN and Nordea priced at $ LIBOR + 0.85% fully
guaranteed by the Company. As at 31 December 31, 2009, $6 million outstanding under this facility.

(vi)  Guatemala

In March 2009, Millicom's operation in Guatemala and its sister company Asesoria en Telecomunicaciones SA ("Asertel") entered into four facilities with
3 year maturities for a total of $122 million with Banco de Desarollo Rural S.A., Banco Industrial S.A., Banco G&T Continental S.A., and Blue Tower
Ventures Inc. Millicom's share of these facilities amount to $67 million, out of which $50 million is guaranteed by the Company.

Comcel
also signed another 6 year facility with IFC for $100 million. As at December 31 2009, Millicom's share of the outstanding debt amounted to
$19 million, bearing interest at $ LIBOR plus 4.50%.

In
addition as at December 31, 2009, Comcel had other short term financing of $14 million (2008: $11 million).

(vii) Honduras

Telefonica Celular S.A., Millicom's operation in Honduras, has facilities with several local banks maturing between 2010 and 2015. These facilities are in
dollars and in Lempiras and are unsecured. Interest rates are either fixed or variable, ranging as of December 31, 2009 between 7.75% and 11%

65

---



Table of Contents

(2008:
between 7.4% and 16%). As at December 31, 2009, Millicom's share of the outstanding debt under these facilities was $100 million (2008: $91 million).

(viii)  Bolivia

In December 2007, Telefonica Celular de Bolivia SA ("Telecel Bolivia"), Millicom's operation in Bolivia, signed a financing agreement for
$40 million with the Nederlandse Financieringsmaatschappij Voor Ontwikkelingslanden, N.V. (FMO), also known as the Netherlands Development Finance Company. The A tranche of
$20 million was provided directly by the FMO. This tranche is repayable over 7 years and bears an interest at $ LIBOR rate plus 2.25%. The B tranche of $20 million
is provided equally by Nordea and Standard bank. This tranche is repayable over 5 years and bears interest at $ LIBOR plus 2%. Both tranches are guaranteed by the Company. As of
December 31, 2009, $35 million of this financing agreement was outstanding (2008: $40 million).

In
March 2008, Telecel Bolivia signed a 4 year and 9 months financing agreement for $30 million with the International Finance Corporation. The loan bears interest
at $ LIBOR plus 2% and is fully guaranteed by the Company. As of December 31, 2009, $25 million of this financing agreement was outstanding (2008: $30 million).

In
addition to the above, Telecel Bolivia also had supplier financings with Huawei (at interest rates of $ LIBOR plus 2%) and FPLT totaling $26 million (2008:
$32 million) and $13 million of other debt and financing outstanding as at December 31, 2009 (2008: $1 million).

(ix)  Chad

In May and August 2007, Millicom's operation in Chad signed respectively a $31 million 5 year Facility with China Development Bank at
$ LIBOR +2% and a Euro 15 million 5 year Facility with Proparco at
Euribor +2%. As at December 31, 2009 $23 and $12 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 fixed 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 priced TIAO +1.85% and guaranteed
by Nordea. This guarantee is secured by a pledged deposit of $53 million by the Company (see note 18). As at December 31, 2009 $13 and $46 million respectively were
outstanding under these facilities.

(x)   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 finance equipment purchases from Huawei. The loan bears interest at $ LIBOR plus 2% and is repayable over 17 equal quarterly installments commencing
in 2009. This financing is 100% guaranteed by the Company. As of December 31, 2009, $75 million was outstanding under this facility (2008: $59 million).

In
addition Oasis had other debt and financing of $4 million (2008: $4 million).

(xi)  Senegal

In December 2005, Sentel GSM, Millicom's operation in Senegal entered into a XAF12,500 million loan agreement with Crédit Lyonnais
Sénégal ("CLS"). This loan bears a fixed interest rate of 8% and is fully repayable at maturity, in December 2010. The outstanding amount in US$ as at
December 31, 2009 was $27 million (2008: $26 million). Sentel GSM also entered into a 5 year additional Tranche of XAF7,500 million with CLS in July 2007. This
tranche bears an 8.5% fixed interest rate. The outstanding amount under this additional Tranche in US$ as at December 31, 2009 was $10 million (2008: $14 million).

66

---





Table of Contents

In addition as at December 31, 2009, Senegal had $13 million (2008: nil) of vendor financing with Nokia Siemens.

(xii) Paraguay

In July 2008, Telefonica Cellular Del Paraguay, Millicom's operation in Paraguay entered into a $107 million, 8 year loan with the European
Investment Bank ("EIB"). The loan is bearing interest at $ LIBOR plus 0.125%. The outstanding amount as at December 31, 2009 and 2008 was $50 million. The EIB is guaranteed
for commercial risks by a group of banks.

In
addition as at December 31, 2009, Telefonica Cellular Del Paraguay had $10 million (2008: $14 million) of other debt and financing outstanding.

Guarantees

In the normal course of business, the Company has issued guarantees to secure some of the obligations of some of its operations under
bank financing agreements. As of December 31, 2009, the Company has issued $801 million of guarantees (2008: $712 million).

Pledged assets

The Group's share of total debt and financing secured by either pledged assets, pledged deposits issued to cover letters of credit or
guarantees issued by the Company as at December 31, 2009 is $1,172 million (2008: $1,313 million). The assets pledged by the Group for these debts and financings at the same date
amount to $610 million (2008: $610 million).

Effect of Exchange Rate Fluctuations

Exchange rates for currencies of the countries in which our companies operate fluctuate in relation to the US$ and such fluctuations
may have a material adverse effect on our earnings, assets or cash flows when translating local currency into US$. For each venture that reports its results in a currency other than the US$, a
decrease in the value of that currency against the US$ reduces our profits while also reducing our assets, our liabilities, as well as our future dividends. To the extent that our operations retain
earnings or distribute dividends in local currencies, the amount of US$ we receive is affected by fluctuations of exchange rates for such currencies against the US$, which could affect our results of
operations. In addition, exchange rates are impacting Millicom's earnings, assets and cash flows as we have US$ denominated debt, pushed down to the operations, because of lack of available debts in
local currencies.

We
generally do not hedge our foreign currency exposures, because of lack of available instruments in the countries where we operate. Millicom had a net exchange loss of
$32 million for the year ended December 31, 2009, compared to a loss of $52 million for the year ended December 31, 2008.

Trend Information

We believe there is a significant opportunity for rapid growth in our markets due to relatively low mobile penetration in economies
with high growth potential and substantial pent-up demand for basic voice telephony services especially in Africa. We believe we can grow our customer base and revenue by continuing to
focus on prepaid services while controlling costs and maintaining our position with postpaid customers. In addition, innovation has become a major focus of the Group as we seek to continue to grow
revenues in maturing markets by developing additional products and services through which we can gain a greater share of customers' disposable income. In the course of 2009, we increased the
contribution to recurring revenues from value added services from 14% in the first quarter to 21%

67

---



Table of Contents

in
the fourth quarter. We expect innovation to be an important driver of growth in the years ahead. We are developing a number of non-traditional distribution channels in our
operations to expand our market share and reduce our operating costs. There is, however, a risk that, as new competitors enter our prepaid markets, as was the case Honduras and Ghana over the last few
years, and price competition intensifies, our prepaid customers may be more likely to move from one mobile operator to another than our postpaid customers. This also has the effect of driving prices
down, thus eroding the profitability of the mobile operators. In addition, there is the risk of additional taxes, especially in those countries that face budget constraints. In that event, we believe
our strong service coverage and increasing use of non-traditional distribution channels, competitive tariffs and brand awareness will enable us to compete effectively in our prepaid
markets. However, this may not always be the case and, if we determine that the business is not sustainable, we may decide to exit the relevant market.

Research and Development, Patents and Licenses, etc.

As we established an early presence in most of the markets in which we operate, we have been able to secure our licenses at low cost.
Historically, we have been successful in renewing our maturing licenses, generally on terms similar to the original licenses, although we may not be able to do so in the future. When necessary, we
enter into partnerships with prominent local business partners through companies over which we typically exercise management control.

We
do not engage in research and development and we do not own any patents.

Off-balance Sheet and Other Arrangements

Millicom has a number of commitments and contingencies, as described in Note 31 to the consolidated financial statements.

Critical Accounting Policies

The consolidated financial statements as of December 31, 2009 are prepared in accordance with consolidation and accounting
policies consistent with those of the previous financial years.

In
preparing the consolidated financial statements, management needs to make assumptions, estimates and judgments, which are often subjective and may be affected by changing
circumstances or changes in its analysis. Material changes in these assumptions, estimates and judgments have the potential to materially alter our results of operations. We have identified below
those of our accounting policies that we believe could potentially produce materially different results if we were to change our underlying assumptions, estimates and judgments. For a detailed
discussion of these and other accounting policies, see Note 2 of the "Notes to the Consolidated Financial Statements".

Basis of Consolidation

Entities over which we have control are fully consolidated. Entities over which we have joint control are consolidated using the
proportional method that combines our proportional share of assets, liabilities, income and expenses. The definition of control is the power to govern the financial and operating policies of an entity
so as to obtain benefits from it and is based on criteria such as the ability to vote through items at the shareholder and board level. The method of consolidation used for each entity is based on
management's assessments as to whether they have full or joint control.

Functional and presentation currencies

Items included in the financial 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"). The functional currency of each subsidiary, joint venture and associates reflects the economic substance

68

---



Table of Contents

of
the underlying events and circumstances of these entities. The Company is located in Luxembourg and its subsidiaries, joint ventures and associates operate in different currencies. The Group's
consolidated financial statements are presented in U.S. dollar (the "presentation currency"). The functional currency of the Company is the U.S. dollar because of the significant influence of the U.S.
dollar on its operations.

Goodwill

Goodwill represents the excess of cost of an acquisition over the Group's share in the fair value of the identifiable assets less the
liabilities and contingent liabilities of the acquired subsidiary, joint venture or associate at the date of transaction. If the fair value of the identifiable assets, liabilities or contingent
liabilities or the cost of the acquisition can be determined only provisionally, then Millicom initially accounts for the goodwill using these provisional values. Within twelve months of the
acquisition date, Millicom then recognizes any adjustments to these provisional values once the fair value of the identifiable assets, liabilities and contingent liabilities and the cost of the
acquisition have been finally determined. Adjustments to the 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 benefit 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 so allocated:



Impairment
is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units), to which the goodwill relates. Where
the recoverable amount of the cash-generating unit (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 (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 of the operation. Goodwill disposed of in this circumstance is measured based on the relative
values of the operation disposed and the portion of the cash-generating unit retained.

Trademarks and Customer bases

Trademarks and customer bases are recognized as intangible assets only when acquired in business combinations or ownership increase
transactions in joint ventures. Their cost corresponds to the fair value as at the date of acquisition. Trademarks and customer bases have a finite useful life 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. The estimated useful
life for trademarks and customer bases are based on the specifications of the market

69

---



Table of Contents

in
which they exist. Trademarks and customer bases are recorded under the caption "Intangible assets, net".

Impairment of Non-current Assets

The Group assesses at each reporting date 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. The Group determines the recoverable amount based on the higher of its fair
value less cost to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows 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 flows discounted to their present value using a discount rate that reflects current market
conditions of the time value of money and the risk specific to the asset. In addition to the 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.

An
assessment is made at each reporting date 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 that is the case, the carrying amount of the asset is increased to its recoverable amount. The 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 profit 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.

Where
no comparable market information is available, management bases its view on recoverability primarily on cash flow forecasts. In addition to the evaluation of possible impairment to
the assets carrying value, the foregoing analysis also evaluates the appropriateness of the expected useful lives of the assets.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are included in the current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified within non-current
assets. Loans and receivables are carried at amortized
cost using the effective 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.

Financial instruments at fair value through profit or loss

Financial instruments at fair value through profit or loss are financial instruments held for trading. Their fair value is determined
by reference to quoted market prices on the balance sheet 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 flow analysis and option pricing models. A financial instrument is classified in this
category if acquired principally for the purpose of selling in the short-term. Derivatives

70

---



Table of Contents

are
also categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

Non-current assets (or disposal groups) held for sale and related liabilities

Non-current assets (or disposal groups) are classified 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. The liabilities of disposal groups are
classified as "Liabilities directly associated with assets held for sale".

Borrowings and transaction costs

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized
cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated income statement over the period of the borrowing using the effective
interest method.

The
fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non-convertible bond. This amount is recorded as a
liability on an amortized cost basis until extinguishment, conversion or maturity of the bonds. The remainder of the proceeds is allocated to the conversion option, which is recognized and included in
equity, net of income tax effects.

Borrowings
are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet
date.

Transaction
costs which are not capitalized are recognized as an expense when incurred.

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 outflow of resources embodying economic benefits 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. The
expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current
pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as an
interest expense.

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 sales within the Group.

Revenue
is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition
criteria must also be met before revenue is recognized:

Revenues from provision of telecom services

These 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

71

---



Table of Contents

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. The estimated life of the customer relationship is calculated based on the percentage of disconnections for the same type
of customer which has occurred historically.

Where
customers forward purchase a specified amount of airtime, revenues are recognized as credit is used. Unutilized airtime is carried in the balance sheet and is included under
deferred revenue within "other current liabilities".

Revenues
from value added services such as text messaging, video messaging, ringtones, games etc., are recognised net of payments to the providers of these services when the providers
are responsible for the contents and for determining the price paid by the customer and as such the Group is considered to be acting in substance as an agent only. 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 (if sold with other services, multiple element arrangements accounting would then apply) are recognized when the
significant risks and rewards of ownership of handsets and accessories have been passed to the buyer.

Revenue
arrangements with multiple deliverables ("Bundled Offers" such as equipments and services sold together) are divided into separate units of accounting if the deliverables in the
arrangement meet certain criteria. The 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.

Share based Compensation

Up until May 2006, share options were granted to Directors, management and key employees. The fair value of the equity instruments
granted in exchange for the services received is recognized as an expense over the vesting period. The total amount to be expensed over the vesting period is determined by reference to the fair value
of the options granted, excluding the impact of any non-market vesting conditions (for example profitability and sales growth targets). Non market vesting conditions are included in
assumptions about the number of options that are expected to vest. At each balance sheet date, the Group revises its estimate of the number of options that are expected to vest. It recognizes the
impact of the revision of original estimates, if any, in the consolidated income statement, with a corresponding adjustment to equity. The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of earnings per share.

Subsequent
to May 2006, restricted share awards are granted to the Directors, management and key employees.

The
cost of these equity-transactions is recognized, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled,
ending on the date on which the relevant employee becomes fully entitled to the award (the vesting date). The cumulative expense recognized for equity-settled transactions at each reporting date until
the vesting date reflects the extent to which 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 vesting irrespective of
whether or not the

72

---



Table of Contents

market
conditions are satisfied, provided that all other performance conditions are satisfied. Where the terms of an equity settled award are modified, as a minimum an expense is recognized as if the
terms had not been modified. In addition, an expense is recognized for any modification, which increases the total fair value of the share based payment arrangement, or is otherwise beneficial to the
employee as measured at the date of modification.

Deferred tax

Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax base of
assets and liabilities and their carrying amount for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences, 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, affects neither the
accounting profit nor taxable profit or loss.

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

The
carrying amount of deferred income tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that
it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred
income tax assets and liabilities are measured at the tax rate expected to apply to the year when the assets is realized or the liability is settled, based on tax rates and tax
laws that have been enacted or substantively enacted at the balance sheet 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 offset, if legally enforceable rights exist to set off current tax assets against current tax liabilities and the deferred taxes relate
to the same taxable entity and the same taxation authority.

Discontinued operations

Revenues and expenses associated with discontinued operations are presented in a separate line on the consolidated income statement.
Comparative figures in the consolidated income statement representing the discontinued operations are also reclassified to a separate line. Discontinued operations are those with identifiable
operations and cash flows (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.

Recent Accounting Developments

IFRS Developments

The consolidated financial statements as of December 31, 2009 are prepared in accordance with consolidation and accounting
policies consistent with those of the previous financial years, with the exception of the early adoption as of January 1, 2009 of IFRS 3R, 'Business combinations', and IAS 27R,
'Consolidated and separate financial statements'.

73

---



Table of Contents

The
Group early adopted IFRS 3R, 'Business combinations', in 2009 for the step-up acquisition of Navega.com S.A. (see note 4). Millicom revalued its
previously held interests in Navega.com S.A. at fair value, recognising the resulting gain in the consolidated income statement.

The
revised standard, in general, continues to apply the acquisition method to business combinations but with some significant changes compared with IFRS 3. For example, all
payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the statement of
comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at
the non-controlling interest's proportionate share of the acquiree's net assets. All acquisition-related costs should be expensed.

As
the Group has early adopted IFRS 3R, it is required to early adopt IAS 27R, 'Consolidated and separate financial statements', at the same time. IAS 27R requires
the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and
these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting treatment when control is lost. Any remaining interest in the entity is
re-measured to fair value, and a gain or loss is recognized in profit or loss.

IAS 38
(amendment), 'Intangible Assets' is applied by the Group from the date IFRS 3R was adopted. The amendment to the IAS 38 clarifies guidance in measuring the
fair value of an intangible asset acquired in a business combination and it permits the grouping of intangible assets as a single asset if each asset has similar useful economic lives. The amendment
did not result in a material impact on the Group's consolidated financial statements.

The
following new standards and amendments to standards, which affect the presentation of the consolidated financial statements, were mandatory for the first time for the financial year
beginning January 1, 2009.



74

---



Table of Contents

In
addition, the following amendments to standards and interpretations, which could affect Millicom's financial position and accounting policies, are mandatory for the first time for the
financial year beginning January 1, 2009, but are not currently relevant nor have a material impact for the Group.



Finally,
the following new standards and interpretations have been issued, but are not effective for the period of these financial statements and have not been early adopted.

75

---



Table of Contents



76

---



Table of Contents

Tabular Disclosure of Contractual Obligations

Contractual Obligations

We have various contractual obligations to make future payments, including debt agreements, payables for license fees and lease
obligations. The following table summarizes our obligations under these contracts due by period as of December 31, 2009.

Within
1 year

Within
25 years

After
5 years

Total(in thousands of U.S. dollars)Debt (including finance leases and after unamortized financing fees)


433,987


1,882,729


30,171


2,346,887Future interest commitments


142,709


230,392


1,263


374,364Operating leases


66,223


226,289


139,894


432,406Capital expenditure


182,451


3,206





185,657Total


825,370


2,342,616


171,328


3,339,314


The following table summarizes our obligations under these contracts due by period as of December 31, 2008.

Within
1 year

Within
25 years

After
5 years

Total(in thousands of U.S. dollars)Debt (including finance leases and after unamortized financing fees)


496,544


1,573,444


88,038


2,158,026Future interest commitments


169,116


408,065


10,980


588,161Operating leases


43,113


140,581


143,644


327,338Capital expenditure


523,416


15,375





538,791Total


1,232,189


2,137,465


242,662


3,612,316


ITEM 6.    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Board of Directors

Directors

Millicom's directors are as follows:

Name

Position

Independent

Year
Elected

Date of
Expiration
of TermDaniel Johannesson

Chairman

Yes


2003


May 2010Kent Atkinson

Member

Yes


2007


May 2010Mia Brunell Livfors

Member

No


2007


May 2010Donna Cordner

Member

No(i)


2004


May 2010Michel Massart

Member

Yes


2003


May 2010Marten Pieters(ii)

Member

Yes


2008


May 2009Allen Sangines-Krause

Member

Yes


2008


May 2010Paul Donovan

Member

Yes


2009


May 2010


(i)Independent from November 30, 2009.(ii)Up to February 6, 2009.


77

---



Table of Contents

Daniel Johannesson (born 1943)Non-executive Chairman, Chairman of the Compensation and Nomination
Committees.    Mr. Johannesson was elected to the Board of Millicom in May 2003. He became Chairman on March 8, 2004. He has held a number of executive
positions at major Swedish and Norwegian companies including Chief Executive Officer of Telenor Bedrift and Executive Vice President at the construction company Skanska, where he was responsible for
their telecommunications and facilities management interests. He was also Chief Executive Officer of Investment AB Kinnevik and Director General of the Swedish national railway operator, SJ. He is
also Chairman of Unibet Group PLC.

Kent Atkinson (born 1945)Non-executive Director and Member of the Audit and Compensation
Committees.    Mr. Atkinson was elected to the Board of Millicom in May 2007. Previously, Mr. Atkinson was employed by the Bank of London and South
America (later acquired by Lloyds Bank) and held a number of senior managerial positions in Latin America and the Middle East before returning to the UK. He was Regional Executive Director for Lloyds
TSB's South East Region from 1989 until he joined the main board in 1994 as Group Finance Director, a position he held for eight years until his retirement as an executive. He remained on the Lloyds
TSB board for a further year as a non-Executive Director. Mr. Atkinson is the Senior Independent Director and Chairman of the Audit Committee of Coca-Cola HBC SA.
He is a non-Executive Director and Chairman of the Group Audit, Risk and Compliance Committee of Standard Life plc, and a member of Standard Life's Investment Committee.
Mr. Atkinson is also a non-Executive Director of Gemalto NV, a member of its Audit Committee and
its Strategy and M&A Committee, and he is also a non-Executive Director and Chairman of the Audit Committee of Northern Rock plc and a member of Northern Rock's Risk Committee.

Mia Brunell Livfors (born 1965)Non-executive Director and Member of the Compensation Committee.Ms. Brunell was
elected to the Board of Millicom in May 2007. From August 2006, Ms. Brunell has been Chief Executive Officer 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 joined Kinnevik owned company Modern Times Group MTG AB in 1992, and was appointed
Chief Financial Officer in 2001. As Chief Financial Officer, Ms. Brunell played a central role in MTG's development. Currently, Ms. Brunell is a member of the Board of Directors of
Korsnäs AB, Mellersta Sveriges Lantbruks AB, Metro International S.A., Tele2 AB, Transcom WorldWide S.A., Modern Times Group (MTG), Hennes & Mauritz AB (H&M).

Donna Cordner (born 1956)Non-executive Director.Ms. 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. Until July 2005, Ms. Cordner was the Chief Executive Officer of HOFKAM Limited, which is the largest rural microfinance company in Uganda, and continues to
advise HOFKAM as a consultant. She was named Executive Vice President of Corporate Finance and Treasury for Tele2AB effective March 2007 and was Market Area Director and Chief Executive Officer for
Russia between March 2008 and July 2009.

Michel Massart (born 1951)Non-executive Director, Chairman of the Audit Committee and Member of the Nomination
Committee.Mr. Massart was elected to the Board of Millicom in May 2003. Until June 2002, he was a partner of PricewaterhouseCoopers in Belgium, where he
set up the corporate finance department in 1997. He is a former member of the Board of the Institute of Statutory Auditors. He is a professor at Solvay Brussels School of Economics &
Management, Belgium.

Marten Pieters (born 1953)Non-executive Director, Member of the Audit Committee and Member of the Nomination
Committee.Mr. Pieters was elected to the Board of Millicom in May 2008. He was Chief Executive Officer of MSI, which became Celtel, from 2003 through its
acquisition by MTC in

78

---



Table of Contents

early
2007. During this time, he was a driving force in Celtel's development as one of the leading pan-African telecommunications operators, serving some 20 million customers in 14
countries. Previously, from 1989 to 2003, Mr. Pieters worked at KPN, where, from 2000, he was a member of the executive management board of KPN Telecom with specific responsibility for KPN's
Business Solutions Division. Prior to this he was Executive Vice President, KPN International Operations, covering Central and Eastern Europe, Asia and the US. Before this he was Managing Director of
one Telecoms district, having joined KPN as Secretary to the Board of Management. Before starting his career in telecommunications, Mr. Pieters worked for 11 years at Royal Smilde Foods
as Director of Finance and Strategic Planning and eventually as Chief Executive Officer in the Netherlands. On February 6, 2009, Mr. Pieters resigned from the Board of Millicom.

Allen Sangines-Krause (born 1959)Non-executive Director, Member of the Nominations Committee.Mr. Sangines-Krause was
elected to the Board of Millicom in May 2008. He worked for Goldman Sachs between 1993 and 2007, working in a variety of senior positions from Chief Operating Officer 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.

Paul Donovan (born 1958)Non-executive Director, Member of the Audit Committee.Mr. Donovan was elected to the Board
of Millicom in May 2009. He was appointed director and Chief Executive Officer of Eircom on 1 July 2009 and before that, Mr. Donovan was Chief Executive, EMAPA Region for the Vodafone
Group until 2008. Mr. Donovan's background includes a decade in fast moving consumer goods before he moved into the technology sector, principally with BT and Vodafone. His career with Vodafone
started 10 years ago and for the last five years, he has overseen Vodafone's operations in subsidiaries in Eastern Europe, Middle East and Asia Pacific. Africa, the US, India and China were
added to his remit in 2006. As part of his role, he sat on the boards of numerous subsidiaries and joint ventures during this period. He holds a BA (with Honors) from University College, London and an
MBA from the Bradford University Management Centre with a specialization in Finance and Business Policy. Mr. Donovan is an Executive Director of Eircom.

Board Practices

The Board has developed and continuously evaluates its work procedures in line with the corporate governance rules of NASDAQ in the
United States of America regarding reporting, disclosure and other requirements applicable to NASDAQ listed companies. The Board received confirmation in early 2006 from the Stockholm Stock Exchange
that it is exempt from the Swedish Code of Corporate Governance so long as it adheres to NASDAQ corporate governance rules. The Board's work procedures also take into account the requirements of the
U.S. Sarbanes Oxley Act of 2002 to the extent it applies to foreign private issuers.

The
Board has adopted work procedures to establish a division of work between the Board and the President and Chief Executive Officer. The Chairman conducts discussions with each member
of the Board regarding the work procedures of the Board and performs a yearly evaluation of the Board's work. The members of the Board evaluate the performance of each other, each year. The Board also
evaluates annually the performance of the Chief Executive Officer.

In
2009, the Board had 6 meetings in person and 6 by telephone. On two occasions, Board decisions were also taken by circulating written resolutions for signature by all directors.

79

---



Table of Contents

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



The
main task of the Board committees is to work on behalf of the Board within their respective areas of responsibility. The Board also creates "ad hoc" committees or working groups from
time to time to work on specific projects when the need arises. Any "ad hoc" committee or working group reports back to the full Board.

Audit Committee.Millicom's directors have established an Audit Committee that convenes at least four times a year, comprising three
directors,
Mr. Massart (Chairman and financial expert), Mr. Atkinson and, from May 26, 2009, Mr. Donovan. On February 6, 2009, Mr. Pieters resigned from the Audit
Committee and was replaced by Mr. Johannesson who served on the Audit Committee until May 26, 2009. This committee has responsibility for planning and reviewing the financial reporting
process together with the preparation of the annual and quarterly financial reports and accounts and the involvement of external auditors in that process. The Audit Committee focuses particularly on
compliance with legal requirements (including compliance with Sarbanes Oxley Act) and accounting standards, independence of external auditors, audit fees, the internal audit function, the fraud risk
assessment, the risk management and ensuring that an effective system of internal financial controls exists. The ultimate responsibility for reviewing and approving Millicom's annual report and
accounts remains with the Board. The Audit Committee met 8 times during 2009 and Millicom's external auditors participated in each such meeting.

Compensation Committee.Millicom's Compensation Committee is chaired by Mr. Johannesson. Ms. Brunell and Mr. Atkinson
became
members of the Committee after the Annual Meeting of Shareholders on May 29, 2007. Ms. Brunell is a non-independent director and Mr. Atkinson is an independent
director. In this respect, Millicom has opted to follow home country (Luxembourg) corporate practice rather than NASDAQ Marketplace Rule 4350(c)(3). Allen & Overy, Millicom's Luxembourg
legal counsel, have sent a letter to this effect to NASDAQ on February 12, 2007.

The
Compensation Committee reviews and makes recommendations to the Board regarding the compensation of the Chief Executive Officer, 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. The 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 two times
a year,
comprising two directors, Ms. Brunell (Chairman) and Ms. Cordner. This committee has responsibility for overseeing and making recommendations to the Board regarding the management of
CSR.

Nominations Committee.Millicom's Nominations Committee is chaired by Mr. Johannesson. The two other members are Mr. Massart,
who
replaced Ms. Cordner on February 13, 2007, and Mr. Sangines-Krause. On February 6, 2009, Mr. Pieters resigned from the Nominations Committee and was replaced by
Mr. Sangines-Krause. The Nominations Committee's main task is to recommend directors for election to the Board by the shareholders at the AGM. At the AGM, shareholders may vote for or against
the directors proposed for election or may elect different directors.

80

---



Table of Contents

The Nominations
Committee also reviews and recommends the fees and the grants of shares to directors, which are presented to the Board and voted on by the shareholders at the AGM.

Corporate Policy Manual.The Board has adopted the Millicom Corporate Policy Manual, which is Millicom's central reference for all
matters relating
to its corporate governance policy and other policies in the areas of ethics, accounting, human resources, etc. Regional policies that are more stringent or detailed than those set out in the Millicom
Corporate Policy Manual are adopted as necessary. The Code of Ethics is a part of the Millicom Corporate Policy Manual. The Company's directors, senior executives and Group employees receive the Code
of Ethics upon their joining Millicom and must acknowledge that they have read, understood and will comply with the Code of Ethics.

Directors' Service Agreements.None of Millicom's directors have entered into service agreements with Millicom or any of its
subsidiaries providing
for benefits upon termination of their respective directorships.

Remuneration of Directors

The remuneration of the members of the board of directors of the Company (the "Board") is comprised of an annual fee and share based
compensation. Up until May 2006, the Directors were issued share options. Subsequent to May 2006, the Directors are issued restricted shares. The annual fee and the share based compensation grants are
proposed by the Board and approved by the shareholders at the Annual General Meeting of Shareholders (the "AGM").

The
remuneration charge for the Board for the years ended December 31, 2009, 2008 and 2007 was as follows:

Other members of
the BoardChairmanTotalNo. of shares
and share
options

US$ '000

No. of shares
and share
options

US$ '000US$ '0002009Fees





106





584


690Share based compensation:(i)Restricted shares(ii)


1,441


81


5,111


287


368Total





187





871


1,0582008Fees





100





410


510Share based compensation:(i)Restricted shares(ii)


1,446


165


4,927


562


727Total





265





972


1,2372007Fees





82





305


387Share based compensation:(i)Restricted shares(ii)


960


82


4,074


350


432Total





164





655


819


(i)See note 24.(ii)Restricted shares cannot be sold for one year from date of issue.


81

---



Table of Contents




The number of shares and share options beneficially owned by the Board as at December 31, 2009 and 2008 was as follows:

Chairman

Other
members of
the Board

Total2009Shares


29,969


76,292


106,261Share options


20,000


55,000


75,0002008Shares


28,528


71,619


100,147Share options


20,000


55,000


75,000


Senior Management and Employees

Senior Management

Name

PositionMikael Grahne

President and Chief Executive OfficerFrancois-Xavier Roger

Chief Financial OfficerMario Zanotti

Head of Latin AmericaRegis Romero

Head of AfricaCarel Maasland

Chief tigo People


Mikael Grahne,born 1953, President and Chief Executive Officer. Mikael Grahne was appointed Chief Executive
Officer in March 2009; he joined Millicom in February 2002 as the Chief Operating Officer, having previously been President of Seagram Latin America. Prior to joining Seagram, he was the regional
president of a division of the EMEA region at PepsiCo and held various senior management positions with Procter & Gamble. Mr. Grahne has an MBA from the Swedish School of Economics in
Helsinki, Finland.

Francois-Xavier Roger, born 1962, Chief Financial Officer. Francois-Xavier Roger joined Millicom in September 2008 from Groupe Danone
where he served as Vice-President Corporate Finance since 2006 and previously as Chief Financial Officer for Danone Asia from 2000 to 2005. Prior to this he worked at Sanofi Aventis and at
Hoechst Marion Roussel where he held finance positions for
Hoechst in Asia, Africa and Latin America. 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,born 1962, Chief of Latin America. Mario Zanotti was appointed Chief of Latin America in 2008 having previously been Head
of Central America since 2002 having joined Millicom in 1992 as a General Manager of Telecel in Paraguay. In 1998 he became Managing Director of Tele2 Italy and in 2000 he was appointed Chief
Executive Officer of YXK Systems. Before joining Millicom he worked as an electrical engineer at the 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 Pontificia Universidade Catolica in Porto Alegre, Brazil and an MBA from INCAE and the Universidad Catolica de Asuncion,
Paraguay.

Regis Romero,born 1971, Chief of Africa. Regis Romero was appointed Chief of Africa in 2008. He has been with Millicom since 1998,
previously as Commercial Manager in Bolivia, then as Chief Operating Officer in Paraguay and as Co-Head of Africa since 2006. Prior to joining Millicom, Mr. Romero worked as
investment consultant for Interamerican Development Bank in Paraguay. He has a Bachelors' degree in Business Administration from National University, California, United States

82

---



Table of Contents

of
America. He also holds a Master's degree in Business Management from EDAN in Asuncion, Paraguay.

Carel Maasland, born 1968, chief tigo People. Carel Maasland joined Millicom in March 2009 as Chief Tigo People/Global Head of Human
Resources. He started his career as a management consultant, working in The Netherlands and within Central and Eastern Europe. Since 2002 he was an HR director at IKEA, initially for the Dutch
operations. He then went on to hold a global HR role based at the Corporate Centre in Sweden. Prior to joining Millicom he was HR responsible for IKEA's emerging operations in Russia & the
C.I.S. region. He holds an HR Master's degree from the ErasmusRotterdam School of Management.

Remuneration of Officers

The remuneration of the Officers of the Company ("Officers") comprises an annual base salary, an annual bonus, share based
compensation, social security contributions, pension contributions and other benefits. The bonus and share based compensation plans are based on actual performance (including individual and Group
performance). Up until May 2006, the Officers were issued share options. Subsequent to May 2006, the Officers 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 benefits of the Chief Executive Officer ("CEO") was proposed by the
Compensation Committee and approved the Board and the annual base salary and other benefits of the previous Chief Operating Officer ("COO") and the Chief Financial Officer ("CFO") were 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.
Since this date the position of COO no longer exists.

83

---



Table of Contents

The
remuneration charge for the Officers for the year ended December 31, 2009, 2008 and 2007 was as follows:

Current
Chief
Executive
Officer

Former
Chief
Executive
Officer

Chief
Operating
Officer

Current
Chief
Financial
Officer

Former
Chief
Financial
OfficerUS$ '000

US$ '000

US$ '000

US$ '000

US$ '0002009Base salary


1,380


2,349





625


Bonus


1,988


1,388





503


Other benefits


142











Total


3,510


3,737





1,128


Share based compensation:(i)Shares issued/charge under long term incentive plans(ii)


1,598


(2,829
)(iv)




129


Charge for share options


16


10








2008Base salary





2,406


750


214


706Bonus





1,309


882


125


Pension














85Other benefits








231


7


Total





3,715


1,863


346


791Share based compensation:(i)Shares issued/charge under long term incentive plans(ii)





3,737


1,410


23


935Charge for share options





59


29





2402007Base salary





2,351


629





690Bonus(iii)





2,008


547





500Pension














83Other benefits








138





Total





4,359


1,314





1,273Share based compensation:(i)Shares issued/charge under long term incentive plans(ii)





2,076


850





539Charge for share options





104


54





171


(i)See note 24.(ii)Share awards of 33,131 and 12,606 were granted in 2009 under the 2009 LTIP to the CEO and CFO. Share awards of 45,074, 22,812 and 18,266 were granted in
2008 under the 2008 LTIP to the CEO, COO and CFO. Share awards of 62,381, 25,434 and 16,189 were granted in 2007 under the 2007 LTIP to the CEO, COO and CFO. Share awards at target performance of
42,634, 16,409 and 10,952 were granted in 2007 under the 2006 LTIP to the CEO, COO and CFO. The maximum shares to be issued under the 2006 LTIP was 132% of these awards.(iii)$1 million of the 2007 bonus was settled in Millicom shares, by issuing 6,878 shares to the CEO, 2,609 shares to the COO and 1,713 shares to the
CFO.(iv)Reversal for non-vested shares of the former CEO, Marc Beuls.


84

---





Table of Contents

The number of shares, share options and unvested share awards beneficially owned by the senior management as at December 31, 2009 and 2008 was as follows:

Chief
Executive
Officer

Chief
Operating
Officer

Chief
Financial
Officer

Total2009Shares


607,404








607,404Share options


15,040








15,040Share awards not vested


81,377





17,106


98,4832008Shares


1,695,175


592,308





2,287,483Share options


30,000


15,040





45,040Share awards not vested


146,678


63,342


4,500


214,520


Severance Payments

If the employment of the majority of Millicom's senior managers is terminated, severance of up to 12 months salary is
potentially payable.

The
senior executives have each entered into a Change of Control Agreement effective January 1, 2006, whereby if the executive's employment is terminated during the period
commencing on a change of control of Millicom and ending on the second anniversary of such event, either by the Millicom entity employing the executive without cause (other than by reason of
disability or death) or by the executive for "good reason", in lieu of any other severance benefits to which the executive would be entitled under any other plans or programs of his employer or
Millicom, the executive will be entitled to the following benefits:



85

---



Table of Contents



Each
employee of Millicom worldwide and each of the seven members of Millicom's Board of Directors who owns options to purchase Millicom shares has entered into an agreement effective as
of March 1, 2006 with Millicom which gives the employee/director the same benefits as those given to the senior executives in respect of immediate vesting of share options in the event of a
change of control, as outlined in the first bullet point above.

Employees

The average number of permanent employees during the years ended December 31, 2009, 2008 and 2007 was as follows:

2009

2008(i)

2007(i)Continuing operations


5,937


4,861


3,583Discontinued operations


1,852


1,812


1,185Total average number of permanent employees


7,789


6,673


4,768


(i)Figures for 2008 and 2007 have been adjusted, reclassifying Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka figures to discontinued
operations.


Long-Term Incentive Plans

In May 2006 at the Annual General Meeting a long term incentive plan ("2006 LTIP") was approved. This long term incentive plan was
based on a target share award granted to eligible Millicom employees, limited to Millicom senior level employees, key high potential employees and certain critical new recruits. The shares granted are
subject to a one-year holding period once the shares are vested.

The
shares awarded under the 2006 LTIP vest over a three year period, subject to specified market and performance conditions related to Millicom's share price growth compared to a peer
group index, revenue growth, EBITDA margin, and profit margin. The achievement of a certain level of each condition, measured at the end of the three years, yields a specific percentage of shares
awarded to each employee at the grant date.

For
the 2006 LTIP, the shares granted vest 20% on December 31, 2006, 20% on December 31, 2007 and 60% on December 31, 2008. In addition at the end of the
third-year performance period there were an additional 32% of shares that vested, because performance targets relating to Millicom's share price growth compared to a peer group index,
revenue growth, EBITDA margin, and profit margin were exceeded. In January 2009, 202,811 shares were issued as third and final tranche of the 2006 LTIP.

The
total charge for the above plan was $22 million which was recorded over the service period.

Long
term incentive awards for 2007 ("2007 LTIP") and 2008 ("2008 LTIP") were approved by the Board on March 15 and on December 4, 2007. These plans consist of two
elements: a performance share plan and a matching share award plan.

The
shares awarded under the performance share plan will vest at the end of a three year period, subject to a performance condition related to Millicom's "earnings per share". The
achievement of a

86

---



Table of Contents

certain
level of this condition, measured at the end of the three years, yields a specific percentage of shares awarded to each employee at the grant date.

The
matching share award plan requires employees to invest in shares of the Company in order to receive potential matching shares. The shares awarded under this plan vest at the end of a
three year period, subject to market conditions that are based on the "total shareholder return" ("TSR") of Millicom's shares compared to the TSR of six comparable mobile telephony companies during
the three-year period of the plan. A fair value per share has been determined and applied to the total potential number of matching shares and will be expensed over the vesting period.
Under the matching share award plan rules, Millicom issued 9,344 new shares on June 16, 2008 and 9,214 new shares on June 22, 2007 which were purchased by employees at fair market value.

The
total charge for the 2007 and 2008 LTIP, both for the performance shares and for the matching share awards, amounted and was estimated as at December 31, 2009 respectively at
$15 and $7 million, both to be recorded over the service periods.

Following
the sale of our operation in Sri Lanka, 1,310 shares were issued on October 16, 2009 under the 2007 performance share plan.

Long
term incentive awards for 2009 ("2009 LTIP") were approved by Millicom's Board of Directors on June 16, 2009. This new plan consists of two elements: a deferred share awards
plan and a performance shares plan.

The
deferred share awards, that will vest 16.5% on January 1, 2010 and 2011 and 67% on January 1, 2012, are based on past performance. The performance shares plan vest at
the end of a three year period, 50% subject to a market condition that is based on the "total shareholder return" ("TSR") of Millicom compared to the TSR of six comparable mobile telephony 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 a market condition has been determined and applied to
the total potential number of performance shares and will be expensed over the vesting period.

The
total charge for the above plans, both for the deferred share awards plan and the performance shares plan, was estimated as of December 31, 2009 at $12 million, to be
recorded over the service periods.

Following
the sale of our operation in Sri Lanka, 921 shares were issued on October 16, 2009 under the 2009 deferred share awards plan.

The
number of share awards expected to vest under the long term incentive plans is as follows:

Performance
shares 2009

Deferred
share awards
2009

Matching
share award
plan 2008

Performance
shares 2008

Matching
share award
plan 2007

Performance
shares 2007Maximum share awards


124,254


172,352


168,396


223,829


187,470


253,489Revision for expected forfeitures


(15,133
)

(20,288
)

(81,106
)

(66,511
)

(116,742
)

(97,666
)Revision for expectations in respect of performance conditions











(157,318
)




Shares issued





(921
)










(1,310
)Share awards expected to vest


109,121


151,143


87,290





70,728


154,513


87

---



Table of Contents



The following table summarizes information about share options outstanding at December 31, 2009. The market price of the
Company's shares as at December 31, 2009 was $73.77 (2008: $44.91).

Options outstanding

Options exercisableRange of exercise price $

Weighted
average
exercise price

Number
outstanding at
December 31, 2009

Weighted
average
exercise price

Number
exercisable at
December 31, 200920.56


20.56


150,485


20.56


64,64325.0529.75


27.02


79,307


27.02


79,30731.8835.91


34.06


99,996


34.06


99,99620.5635.91


26.21


329,788


28.20


243,946


Share options outstanding at the end of the year have the following expiry date and exercise prices:

Date issued

Number of options
outstanding as at
December 31, 2008

Exercise price $

Terms of optionMay 1996, May 1997, May 1998, May 2000 and May 2004


173,328


25.0535.91

Exercisable immediately. Options have an indefinite life.May 2005


35,000


20.56

Exercisable immediately. Options have a twenty year life.May 2004


5,975


25.05

Exercisable over a three-year period in equal installments. Options expire after six years from date of grant.May 2005


82,151


20.56

Exercisable over a five year period in equal installments. Options expire after six years from date of grant.July 2005 and May 2006


33,334


20.56

Exercisable over a three-year period in equal installments from the start of the fourth year. Options expire after six years from
date of grant.


ITEM 7.    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Principal Shareholders

The table below sets out certain information known to Millicom as at February 12, 2010, unless indicated otherwise, with respect
to beneficial ownership of Millicom common share, par value $1.50 each, by:



88

---



Table of Contents



Shareholder

Amount of Shares

PercentageInvestment AB Kinnevik


37,835,438


35
%The Bank of New York Mellon Corporation


8,730,428


8
%The Stenbeck Family(1)


958,424


1
%


(1)Includes 874,542 shares held by The 1980 Stenbeck Trust, an irrevocable trust that was created under the laws of the State of New York exclusively for the
benefit of the wife and children of Mr. Jan H. Stenbeck. The sole and exclusive voting control of the Millicom common stock held by the 1980 Stenbeck Trust is vested in the trustees. The
trustees of the 1980 Stenbeck Trust are Leonard Gubar and Henry Guy. Mr. Gubar is an attorney in New York State. Mr. Guy is the Chief Executive Officer of Modern Holdings. The trustees
have disclaimed beneficial ownership of the shares owned by the 1980 Stenbeck Trust.


Except
as otherwise indicated, the holders listed above have sole voting and investment power with respect to all shares beneficially owned by them. The holders listed above have the
same voting rights as all other holders of Millicom common stock. For purposes of this table, a person or group of persons is deemed to have "beneficial ownership" of any shares as of a given date
which such person or group of persons has the right to acquire within 60 days after such date. For purposes of computing the percentage of outstanding shares held by each person, or group of
persons, named above on a given date, any security which such person or persons has the right to acquire within 60 days after such date (including shares which may be acquired upon exercise of
vested portions of share options) is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

Related Party Transactions

Kinnevik

The Company's principal shareholder is Investment AB Kinnevik ("Kinnevik") and subsidiaries. Kinnevik is a Swedish holding company with
interests in the telecommunications, media, publishing, paper industries and financial services. As of December 31, 2009 and 2008, Kinnevik owned approximately 35% of Millicom.

During
2009 and 2008, Kinnevik did not purchase any Millicom shares.

Services purchased and sold to related companies

For the year ended December 31, 2009 the Group made purchases for an amount of $1 million (2008: $3 million; 2007:
$4 million) and had outstanding balances as at December 31, 2009 of $1 million (as at December 31, 2008: $1 million) with related parties. These related parties are
companies where Kinnevik is the principal shareholder. The services purchased and supplied covered fraud detection, network and IT support, acquisition of assets and customer care systems. These
purchases were made on an arm's length basis.

There
were no sales to related companies. As of December 31, 2009 and 2008, Millicom had no receivables from related parties.

ITEM 8.    FINANCIAL INFORMATION

Financial Statements and Other Information

We file our financial statements under Item 18.

89

---



Table of Contents

Legal Proceedings

We are a party to various litigation or arbitration matters in almost each jurisdiction in which we operate, but in management's
opinion these matters will not, either singly or taken together, have a material negative impact on our financial position or operations.

Dividend Policy

Holders of Millicom common share are entitled to receive dividends ratably when, as and if declared by the Company's Board of
Directors, subject to Luxembourg legal reserve requirements. Millicom paid its first cash dividend to its shareholders in 2008. In the past, Millicom retained any earnings for use in the operation and
expansion of its business.

On
November 30, 2009 Millicom announced that the Board of Millicom was proposing to commence payment of a regular annual dividend. Under the proposed policy, the Board recommended
a dividend of not less than 25% of annual net income (netted by any effect from any item outside the ordinary course of business), subject to a minimum annual dividend of $1.20 per share. The Board
approved a dividend distribution for 2008 of $1.24 per share, paid in January 2010 (see note 28).

On
February 10, 2010 Millicom announced that the Board will propose to the Annual General Meeting of the Shareholders a dividend distribution of $1.40 per share to be paid out of
Millicom's profits for the year ended December 31, 2009 subject to the Board's approval of the 2009 Consolidated Financial Statements of the Group.

Significant Changes

No significant adverse change has occurred since the date of the consolidated financial statements.

ITEM 9.    THE OFFER AND LISTING

The principal trading market of Millicom common stock is the NASDAQ National Market.

On
February 16, 2004, an Extraordinary General Meeting of Millicom passed a resolution approving a stock split of the issued shares of Millicom by exchanging one existing ordinary
share with a par value of $6.00 for four new ordinary shares with a par value of $1.50 each, which became effective on February 20, 2004.

90

---



Table of Contents

All
prices quoted below have been adjusted to reflect the reverse stock split effected in February 2003 and the one effected in February 2004. All figures presented are based upon a par
value of $1.50 each.

High

LowYear ended December 31, 2004

$
28.51

$
14.15Year ended December 31, 2005

$
27.09

$
15.60Year ended December 31, 2006

$
63.82

$
27.38Year ended December 31, 2007

$
127.40

$
60.21Year ended December 31, 2008

$
122.97

$
24.75First Quarter 2008

$
120.21

$
86.10Second Quarter 2008

$
122.97

$
87.00Third Quarter 2008

$
103.52

$
60.27October 2008

$
67.91

$
24.75November 2008

$
46.98

$
28.18December 2008

$
46.35

$
33.43Year ended December 31, 2009

$
79.19

$
31.50First Quarter 2009

$
51.50

$
31.50Second Quarter 2009

$
65.81

$
37.44Third Quarter 2009

$
78.71

$
55.20October 2009

$
79.19

$
61.98November 2009

$
78.51

$
63.48December 2009

$
77.97

$
71.37January 2010

$
83.15

$
71.08February 2010

$
84.92

$
68.06


On March 4, 2010, the closing market price for Millicom common stock on the NASDAQ National Market was $86.02.

Our
shares are also traded on theStockholmsbörsen(the Stockholm Stock Exchange) as SDR.

NASDAQ Corporate Governance Exemption

The NASDAQ Stock Market granted an exemption to Millicom with respect to the quorum requirement under Rule 4350(f), which
requires each issuer to provide for a quorum specified in its by-laws for any meeting of the holders of common stock, which may not be less than 331/3% of the outstanding
shares of the company's common voting stock. Our articles of association do not provide any quorum requirement that is generally applicable to general meetings of our shareholders. This absence of a
quorum requirement is in accordance with Luxembourg law and generally accepted business practice in Luxembourg.

ITEM 10.    ADDITIONAL INFORMATION

Articles of Association

Registration and Object

Millicom International Cellular S.A. is a public liability company
(société anonyme) governed by the Luxembourg law of August 10, 1915 on Commercial Companies (as amended),
incorporated on June 16, 1992, and registered with the Luxembourg Trade and Companies' Register (Registre du Commerce et des Sociétés de
Luxembourg) under number B 40.630.

The
articles of incorporation of Millicom define its purpose as follows: "[...] to engage in all transactions pertaining directly or indirectly to the acquisition
of participating interests in any business

91

---



Table of Contents

enterprise,
including but not limited to, the administration, management, control and development of any such enterprise, and to engage in all other transactions in which a company created under the
laws of Luxembourg may engage".

Directors

Restrictions on votingIn case a director has a personal material interest in a proposal, arrangement or contract to be decided by Millicom, the
articles of incorporation provide that the validity of the decision of Millicom is not affected by a conflict of interest existing with respect to a director. However, any such personal interest must
be disclosed to the board of directors ahead of the vote and the relevant director may not vote on the relevant issue. Such conflict of interest must be reported to the next general meeting of
shareholders.

Compensation and nominationThe decision on the annual remuneration of the directors
("tantièmes") is reserved by the articles of incorporation to the general meeting of shareholders. Directors are therefore prevented from
voting on their own compensation. However, the directors may vote on the number of shares they may be allotted under any share based compensation scheme.

The
Nominations Committee also makes recommendations for the election of directors to the AGM. At the AGM, shareholders may vote for or against the directors proposed or may elect
different directors. The Nominations Committee reviews and recommends the directors' fees which are approved by the shareholders at the AGM.

Borrowing powersThe directors generally have unrestricted borrowing powers on behalf of and for the benefit of Millicom.

Age limitThere is no age limit for being a director of Millicom. Directors could be elected for a maximum period of six years, but Millicom decided
to elect them annually.

Share ownership requirementsDirectors need not be shareholders in Millicom.

Shares

Rights attached to the sharesMillicom has only one class of shares, common share, and each share entitles its holder to:



Redemption of sharesThe articles of incorporation provide for the possibility and set out the terms for the repurchase by Millicom of its own shares,
which repurchase is at Millicom's discretion.

Sinking fundsMillicom shares are not subject to any sinking fund.

Liability for further capital callsAll of the issued shares in Millicom's capital are required to be fully paid up. Accordingly, none of Millicom's
shareholders are liable for further capital calls.

Principal shareholder restrictionsThere are no provisions in the articles of incorporation that discriminate against any existing or prospective
holder of Millicom's shares as a result of such shareholder owning a substantial number of shares.

92

---



Table of Contents

Changes to Shareholder's Rights

In order to change the rights attached to the shares of Millicom, a general meeting of shareholders must be duly convened and held
before a Luxembourg notary, as under
Luxembourg law such change requires an amendment of the articles of incorporation. A quorum of presence of at least 50% of the shares present or represented is required at a meeting held after the
first convening notice and any decision must be taken by a majority of two thirds of the shares present or represented at the general meeting. Any change to the obligations attached to shares may be
adopted only with the unanimous consent of all shareholders.

Shareholders' Meetings

General meetings of shareholders are convened by convening notice published in the Luxembourg official Gazette and in a Luxembourg
newspaper, twice with an interval of eight days, at least eight days prior to the meeting. If all the shares are registered shares, a convening notice may, as an alternative to the publication, be
sent to each shareholder by registered mail at least eight days before the annual general meeting (AGM). According to article 17 of the articles of incorporation of Millicom, the board of
directors determines in the convening notice the formalities to be observed by each shareholder for admission to the AGM. An AGM must be convened every year on the date provided for in the articles of
incorporation, which is the last Tuesday in May each year. The 2010 AGM will take place in Luxembourg on May 25, 2010 at 12:00 a.m. Other meetings can be convened as necessary.

Limitation on Securities Ownership

There are no limitations imposed under Luxembourg law or the articles of incorporation on the rights of non-resident or
foreign entities to own shares of Millicom or to hold or exercise voting rights on shares of Millicom.

Change of Control

There are no provisions in the articles of incorporation of Millicom that would have the effect of delaying, deferring or preventing a
change in control of Millicom and that would operate only with respect to a merger, acquisition or corporate restructuring involving Millicom, or any of its subsidiaries. Luxembourg laws impose the
mandatory disclosure of an important participation in Millicom and any change in such participation.

Disclosure of Shareholder Ownership

There are no provisions in Millicom's articles of incorporation according to which Millicom shareholders must disclose to Millicom
their reaching of a certain ownership threshold. As Millicom common stock has its primary listing on NASDAQ, each time a shareholder acquires beneficial ownership of more than 5% of our common stock,
the shareholder must file within 10 days of acquisition a Schedule 13D with the U.S. Securities and Exchange Commission, who will notify Millicom and NASDAQ accordingly. Also, as
required by the Luxembourg law on transparency obligations of 11 January 2008 (the "Transparency Law"), any person who acquires or disposes of
shares in Millicom's capital must notify Millicom's board of directors of the proportion of shares held by the relevant person as a result of the acquisition or disposal, where that proportion
reaches, exceeds or falls below the thresholds referred to in the Transparency Law. As per the Transparency Law, the above also applies to the mere entitlement to acquire or to dispose of, or to
exercise, voting rights in any of the cases referred to in the Transparency Law.

93

---





Table of Contents

Material Contracts



On November 24, 2003, Millicom issued $550 million aggregate principal amount of 10% Senior Notes (the "10% Senior
Notes") due on December 1, 2013. The 10% Senior Notes bear interest at 10% per annum, payable semi-annually in arrears on June 1 and December 1. The effective interest
rate is 10.7%.

The
10% Senior Notes are general unsecured obligations of Millicom and rank equal in right of payment with all future unsecured and unsubordinated obligations of Millicom. The 10% Senior
Notes are not guaranteed by any of Millicom's subsidiaries, joint ventures or affiliates, and as a result are
structurally subordinated in right of payment to all indebtedness of such subsidiaries, joint ventures and affiliates.

If
Millicom experiences a Change of Control Triggering Event, defined as a credit risk rating decline resulting from a change in control, each holder will have the right to require
Millicom to repurchase its notes at 101% of their principal amount plus accrued and unpaid interest and all other amounts due, if any.

During
2007, Millicom repurchased $90 million of the 10% Senior Notes incurring in a charge of $5 million which is recorded under the caption "Other non operating income
(expenses), net".

In
October 2007, Millicom decided that it would redeem the balance of the Notes in December 2008 and pay the contractual redemption premium of 5%. As a result, Millicom reclassified the
10% Senior Notes from non-current to current and recorded an additional interest expense of $31 million for the year ended December 31, 2007, which represented the increase
in financial liabilities due to the recognition of the 5% pre-payment expense and an increase in the amortized cost of the Notes due to the earlier settlement date. Millicom reviewed its
position to repay the Notes in September 2008 and the Board of Directors decided not to early redeem the Notes. This decision impacted the future expected cash flows and, as a result, the 5% premium
accrued in 2007 was completely reversed and an interest income amounting to $29 million was recorded in 2008. In addition the 10% Notes were reclassified as non-current.



In January 2005, Millicom raised $200 million aggregate principal amount of 4% Convertible Notes due 2010 (the "4% Convertible
Notes"). The net proceeds of the offering were received on January 7, 2005 in the amount of $196 million.

The
4% Convertible Notes were general unsecured obligations of Millicom and rank equal in right of payment with all future unsecured and unsubordinated obligations of Millicom. The rate
of interest payable on the 4% Convertible Notes was 4% per annum. Interest is payable semi-annually in arrears on January 7 and July 7 of each year, beginning on
July 7, 2005. The effective interest rate was 9.6%.

The
4% Convertible Notes were constituted by a trust deed dated January 7, 2005 between Millicom and The Bank of New York, as Trustee for the holders of notes.

Millicom
apportioned part of the value of the 4% Convertible Notes to equity and part to debt. The value allocated to equity as of December 31, 2007 was $39 million (2006:
$39 million) and the value allocated to debt was $179 million (2006: $171 million).

As
of December 31, 2007, $1 million of the 4% Convertible Notes were converted into 28,686 SDRs.

On
January 22, 2008, Millicom converted a further $196 million of the outstanding bonds into 5,420,235 Ordinary Shares and 202,236 SDRs. On the same day Millicom repaid in
cash the remaining

94

---



Table of Contents

$3 million
of bonds that were not converted, including accrued interest. The conversion resulted in an increase of equity amounting to $175 million in January 2008.

Exchange Controls

There are no governmental laws, decrees, regulations or other legislation of Luxembourg that may affect:



Luxembourg Taxation

The following paragraphs describe very generally the tax laws of Luxembourg as they apply to shareholders in the Company, which is a
Luxembourg corporation. The following is intended merely as a general summary of the principal Luxembourg tax consequences of the holding and disposition of Millicom common stock and should be treated
with the appropriate caution. This summary does not purport to be a complete analysis of all material tax considerations that may be relevant to a holder or prospective holder of shares in the
Company. This summary also does not take into account the specific circumstances of particular shareholders. The following is not intended as a substitute for professional tax advice that takes into
account the particular circumstances relevant to a specific shareholder. Accordingly, shareholders should consult their own professional advisors on the possible tax consequences of holding or
disposing of Millicom common stock, under the laws of Luxembourg as well as their countries of citizenship, residence or domicile.

This
summary is based on the laws, regulations and applicable tax treaties as in effect in Luxembourg on the date hereof, all of which are subject to change, possibly with retroactive
effect.

As
used herein, a "Luxembourg Individual Holder" means an individual resident in Luxembourg who is subject to personal income tax ("impôt sur le revenu") on his or her
worldwide income from Luxembourg and foreign sources, and a "Luxembourg Corporate Holder" means a company resident in Luxembourg subject to corporate income tax ("impôt sur le revenu
des collectivités") on its worldwide income from Luxembourg and foreign sources. Companies whose registered office and/or principal place of management is in Luxembourg are considered
resident companies. Luxembourg Individual Holders and Luxembourg Corporate Holders are collectively referred to as "Luxembourg Holders". A "Non-Luxembourg Holder" means any shareholder in
the Company's shares other than a Luxembourg Holder. A "Non-Luxembourg Individual Holder" refers to an individual shareholder in the Company's shares that is not a Luxembourg Individual
Holder, while a "Non-Luxembourg Corporate Holder" refers to a corporation that is not a Luxembourg Corporate Holder holding shares in the Company.

Luxembourg withholding tax on distributions

Dividends distributed by the Company will in principle be subject to a withholding tax at a rate of 15% of the gross dividend.

Non-Luxembourg Holders

Under the Luxembourg domestic tax law (Article 147 of the Luxembourg Income Tax Law, hereafter: "ITL"), dividends
distributed by the Company to a qualifying Non-Luxembourg Holder should be exempt from withholding tax provided that, at the date the dividend is placed at the disposal of the
Non-Luxembourg Holder, the latter holds or commits itself to hold for an uninterrupted period of at least 12 months a direct participation of at least 10% in the Company's share
capital or of an

95

---



Table of Contents

acquisition
price of at least EUR 1,200,000. A qualifying Non-Luxembourg holder is (i) an entity covered by article 2 of the amended Council Directive (90/435/EEC) of
July 23, 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (the "EU Parent Subsidiary Directive") or its Luxembourg
permanent establishment, (ii) a fully taxable company resident in a State which concluded a double tax treaty with Luxembourg, under the condition that the company is subject to a tax
corresponding to Luxembourg corporate income tax ("CIT"), or its Luxembourg permanent establishment, (iii) a taxable share capital company resident in Switzerland without benefitting from an
exemption or (iv) a share capital or cooperative company resident in a State that is part of the European Economic Area other than a Member State of the European Union, provided that the
company is subject to a tax corresponding to Luxembourg CIT, or its Luxembourg permanent establishment.

The
participation through an entity which is transparent for Luxembourg income tax purposes is to be considered as direct participation in proportion to the fraction held in the equity
of such entity.

Furthermore,
if the conditions for the above exemption are not fulfilled, Non-Luxembourg Holders, provided they are resident in a country with which Luxembourg has concluded
a treaty for the avoidance of double taxation, may be entitled to claim treaty relief under the conditions and subject to the limitations set forth in the relevant treaty. For example, the United
States of America (hereafter "US") and Luxembourg are each a party to the convention between the United States of America US and the Grand Duchy of Luxembourg with respect to taxes on income and
capital (the "US Treaty") for the purpose of avoiding double taxation. Article 10 (2) of the US Treaty provides that dividends, as defined in the US Treaty, may also be taxed in the
contracting State of which the company paying the dividends is a resident (e.g. Luxembourg), but if the beneficial owner of the dividends is a company resident of the other contracting State
(e.g. US) and if certain other conditions of the US Treaty are met, the tax so charged shall not exceed 5 percent or the dividend shall not be taxable in Luxembourg. Otherwise, the tax
so charged shall not exceed 15 percent of the gross amount of the dividends. Please note that a resident of a contracting State shall in principle be entitled to the benefits of the US Treaty
only if it is a "qualified resident" as defined in Article 24 of the US Treaty.

Luxembourg Holders

Under the Luxembourg domestic tax law (Article 147 ITL), dividends distributed by the Company to a qualifying Luxembourg
Corporate Holder should be exempt from withholding tax provided that, at the date the dividend is placed at the disposal of the Luxembourg holder, the latter holds or commits itself to hold for an
uninterrupted period of at least 12 months a direct participation of at least 10% in the Company's share capital or of an acquisition price of at least EUR 1,200,000. A qualifying Luxembourg
Corporate Holder is, inter alia, (i) a Luxembourg entity covered by article 2 of the EU Parent Subsidiary Directive or (ii) a Luxembourg resident fully taxable share capital
company not listed in the appendix of paragraph (10) of article 166 ITL. If such exemption from Luxembourg withholding tax on dividends does not apply, a Luxembourg Corporate Holder
should be entitled either to a tax credit or to a tax refund.

Dividends
distributed by the Company to a Luxembourg Individual Holder are subject to a 15% withholding tax on gross dividends. However, a Luxembourg Individual Holder may be entitled
either to a tax credit or to a tax refund.

Luxembourg income tax on dividends and capital gains

Luxembourg Corporate Holders

For Luxembourg Corporate Holders, under Luxembourg domestic tax law, dividends distributed by the Company and gains realized on the
sale of shares in the Company are, in principle, subject to Luxembourg CIT and municipal business tax ("MBT"). In addition a surcharge of 4% on the CIT is

96

---



Table of Contents

payable
to the employment fund. The combined rate (including the contribution to the employment fund) will range between 27.84% and 33.84% depending on the municipality where the Luxembourg Corporate
Holder is established (28.59% for Luxembourg city as of January 1st, 2009; each of the percentages is based on the 2008 MBT rates). Dividends can, however, benefit either from a full exemption
if the conditions of Article 166 ITL are met or from a 50% exemption (Article 115 (15a)
ITL). Capital gains realized by Luxembourg Corporate Holders are exempt if the conditions of the Grand Ducal Decree of December 21, 2002 (as amended) are fulfilled.

According
to Article 166 ITL dividends distributed by the Company to a qualifying Luxembourg Corporate Holder should be exempt from CIT and MBT provided that, at the date the
dividend is placed at the disposal of the Luxembourg Corporate Holder, the latter holds or commits itself to hold for an uninterrupted period of at least 12 months a direct participation of at
least 10% in the Company's share capital or of an acquisition price of at least EUR 1,200,000. According to the Grand-Ducal Decree of December 21, 2001, capital gains realized by a qualifying
Luxembourg Corporate Holder should be exempt from CIT and MBT provided that, at the date the capital gain is realized, the Luxembourg corporate holder has been holding or commits itself to hold for an
uninterrupted period of at least 12 months a direct participation of at least 10% in the Company's share capital or of an acquisition price of at least EUR 6,000,000.

A
qualifying Luxembourg corporate holder is (i) a Luxembourg resident fully taxable entity that has one of the legal forms listed in the appendix to paragraph (10) of
article 166 ITL or (ii) a Luxembourg resident fully taxable share capital company not listed in the appendix of paragraph (10) of article 166 ITL.

The
participation through an entity which is transparent for Luxembourg income tax purposes is to be considered as direct participation in proportion to the fraction held in the equity
of such entity.

Expenses,
including interest expenses and in certain cases impairments, in direct economic relation with the shareholding held by the Luxembourg Corporate Holder should not be deductible
for income tax purposes up to the amount of any exempt dividend derived during the same financial year. Expenses exceeding the amount of the exempt dividend received from such shareholding during the
same financial year should remain deductible for income tax purposes.

Capital
gains realized upon the disposal of shares in the Company should remain taxable for an amount corresponding to the sum of the expenses related to the shareholding and impairments
recorded on the shareholding that reduced the taxable basis of the Luxembourg Corporate Holder in the year of disposal or in previous financial years.

Luxembourg Individual Holders

For Luxembourg Individual Holders, dividends distributed by the Company and gains realized on the sale of shares in the Company are, in
principle, subject to Luxembourg Income Tax at the applicable progressive income tax rates (marginal tax rate is 38.95%
including surcharge of 2.5% on income tax payable to the employment fund). In addition, a 1.4% dependence insurance contribution is due. Dividends should benefit from a 50% exemption
(Article 115 (15a) ITL). Capital gains on shares owned by Luxembourg Individual Holders in their private wealth will, in principle, only be taxable, if the shares are sold within six months
after their acquisition or if the holder together with his/her spouse, life partner or under age children holds a direct or indirect participation exceeding 10% of the Company's share capital at the
date of the sale or during the 5 years preceding the date of the sale.

Non-Luxembourg Corporate Holders

For Non-Luxembourg Corporate Holders, having a permanent establishment in Luxembourg to which the Company's shares are
allocated, dividends distributed by the Company and gains realized on

97

---



Table of Contents

the
sale of shares in the Company are subject to CIT and MBT. Under the domestic law (Article 166 ITL), dividends distributed by the Company to the Luxembourg permanent establishment of a
qualifying Non-Luxembourg Corporate Holder should be exempt from CIT and MBT provided that, at the date the dividend is placed at the disposal of the Non-Luxembourg Corporate
Holder, the latter holds or commits itself to hold for an uninterrupted period of at least 12 months a direct participation of at least 10% in the Company's share capital or of an acquisition
price of at least EUR 1,200,000. According to the conditions of the Grand Ducal Decree of December 21, 2001, as amended, capital gains realized by the Luxembourg permanent establishment of a
qualifying Non-Luxembourg Corporate Holder on the disposal of the shares in the Company should be exempt from CIT and MBT provided that, at the date the capital gain is realized by of the
shares, the Non-Luxembourg Corporate Holder, the latter has been holding or commits itself to hold for an uninterrupted period of at least 12 months a direct participation of at
least 10% in the Company's share capital or of an acquisition price of at least EUR 6,000,000. A qualifying Non-Luxembourg Corporate Holder is (i) an entity that is resident in
another European Union (EU) state and that is covered by Article 2 of the EU Parent Subsidiary Directive or (ii) a share capital or cooperative company that is resident in a State other
than a Member State of the European Union, which is part of the European Economic Area Agreement or (iii) a share capital company resident in a state with which Luxembourg has entered into a
double tax treaty. The participation through an entity that is transparent for Luxembourg income tax purposes is to be considered as direct participation in proportion to the fraction held in the
capital of such tax transparent entity.

Furthermore,
the permanent establishment of a Non-Luxembourg Corporate Holder may under certain conditions benefit from a 50% exemption on dividends received if the
conditions of Article 166 ITL are not met.

Expenses,
including interest expenses and in certain cases, impairments, in direct economic relation with the shareholding held by the permanent establishment of the
Non-Luxembourg Corporate Holder should not be deductible for income tax purposes up to the amount of any exempt dividends derived during the same financial year. Expenses exceeding the
amount of the exempt dividend received from such shareholding during the same financial year should remain deductible for income tax purposes.

Capital
gains realized upon the disposal of shares in the Company should remain taxable for an amount corresponding to the sum of the expenses related to the shareholding and impairments
recorded on the shareholding that reduced the taxable basis of the permanent establishment of the Non-Luxembourg Corporate Holder in the year of disposal or in previous financial years.

In
the case where no double tax treaty applies, dividends distributed by the Company to Non-Luxembourg Corporate Holders, who do not have a Luxembourg permanent establishment
to which the shares in the Company are attributed, are taxable in Luxembourg. The 15% withholding tax should in this case become a final Luxembourg tax. In case of a double tax treaty concluded by
Luxembourg with the country of residence of the Non-Luxembourg Corporate Holder, such treaty may contain specific rules as regards the taxation of the dividends and in many cases
Luxembourg has the right to levy a withholding tax on dividends (at different rates with a maximum rate of 15%).

Capital
gains realized by a Non-Luxembourg Corporate Holder on shares not attributed to a Luxembourg permanent establishment will only be taxable in Luxembourg if the
Non-Luxembourg Corporate Holder holds at the date of the sale or during the 5 years preceding the date of the sale a direct or indirect participation exceeding 10% of the Company's
share capital and either the disposal of the Company's shares happens within a period of six months from the acquisition of the shares or the Non-Luxembourg Corporate Holder has been a
Luxembourg taxpayer during more than 15 years and became a non-resident taxpayer less than five years before the realization of the capital gain. A double tax treaty (if any) may
allocate the taxation right regarding the capital gains to the country of residence of the Non-Luxembourg Corporate Holder.

98

---



Table of Contents

Non-Luxembourg Individual Holders

Capital gains on the shares owned by a Non-Luxembourg Individual Holder that does not have a permanent establishment in
Luxembourg will, in principle, only be taxable in Luxembourg if the Non-Luxembourg Individual Holder together with his/her spouse, life partner or under age children holds a direct or
indirect participation exceeding 10% of the Company's share capital at the date of the sale or during the 5 years preceding the date of the sale and either the disposal of the Company's shares
happens within a period of six months from the acquisition of the shares or the Non-Luxembourg Individual Holder has been a Luxembourg taxpayer during more than 15 years and became
a non-resident taxpayer less than five years before the realization of the capital gain. A double tax treaty (if any) may allocate the taxation right regarding the capital gains to the
country of residence of the Non-Luxembourg Individual Holder.

In
the case where no double tax treaty applies, dividends distributed by the Company to non Non-Luxembourg individual Holders are subject to Luxembourg income tax. The 15%
withholding tax should in this case become the final Luxembourg tax. The Non-Luxembourg Individual Holder may, under certain conditions, opt to be taxed as a Luxembourg resident. In case
of a double tax treaty concluded by Luxembourg with the country of residence of the Non-Luxembourg Individual Holder, such treaty may contain specific rules as regards the taxation of the
dividends and in many cases Luxembourg has the right to levy the 15% withholding tax on dividends.

For
Non-Luxembourg Individual Holders, having a permanent establishment in Luxembourg to which the Company's shares are allocated, dividends distributed by the Company and
gains realized on the sale of shares in the Company are normally subject to Luxembourg income tax at the applicable progressive rate. Dividends may, however, be exempt from Luxembourg income tax for a
50% exemption.

Luxembourg Net Wealth Tax

Luxembourg imposes an annual Net Wealth Tax (hereafter: "NWT") of 0.5% on the adjusted net asset value of corporate taxpayers as of
January 1.1st. The net asset value will be reduced by the value of substantial participations (as defined in § 60 of the NWT law). As from the year 2006 NWT has been
abolished for resident and non-resident individuals. In general Luxembourg resident companies subject to NWT are taxed on their worldwide net wealth (unless a double tax treaty provides
for an exemption). Luxembourg non-resident companies subject to NWT are only taxable on their Luxembourg wealth.

Luxembourg inheritance and gift tax

Luxembourg inheritance tax may be levied if shares in the Company will be transferred upon the death of an inhabitant of Luxembourg.

Luxembourg
gift tax may be levied in case of gifts of the Company's shares which are made in Luxembourg.

U.S. Federal Income Tax Considerations

The following is a discussion of certain U.S. federal income tax consequences of owning and disposing of Millicom shares by the U.S.
Holders described below, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a particular person's decision to hold Millicom shares. This
discussion does not address taxes other than income taxes, and does not address any state, local and non-U.S. tax consequences. The discussion applies only to U.S.

99

---



Table of Contents

Holders
who hold shares as capital assets for U.S. federal income tax purposes and it does not address special classes of holders, such as:



If
an entity that is classified as a partnership for U.S. federal income tax purposes holds shares, the U.S. federal income tax treatment of a partner will generally depend on the status
of the partner and the activities of the partnership. Partnerships holding shares and partners in such partnerships should consult their tax advisors as to the particular U.S. federal income tax
consequences of holding and disposing of the shares.

This
discussion is based on the Internal Revenue Code of 1986, as amended, administrative pronouncements, judicial decisions and final, temporary and proposed U.S. Treasury regulations,
as well
as the double taxation treaty between Luxembourg and the United States (the "Treaty"), all as of the date hereof. These laws are subject to change, possibly on a retroactive basis. Prospective
investors should consult their own tax advisors concerning the U.S. federal, state, local and non-U.S. tax consequences of purchasing, owning and disposing of shares in their particular
circumstances, including their eligibility for the benefits under the Treaty.

As
used herein, a "U.S. Holder" is a beneficial owner of shares that is, for U.S. federal income tax purposes: (i) a citizen or resident of the United States; (ii) a
corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any political subdivision thereof; or (iii) an estate or trust the
income of which is subject to U.S. federal income taxation regardless of its source.

This
discussion assumes that Millicom was not, and will not become, a passive foreign investment company ("PFIC"), as described below.

Taxation of Distributions

Distributions received by a U.S. Holder on shares, including the amount of any Luxembourg taxes withheld, other than certain pro rata
distributions of shares to all shareholders, will constitute foreign source dividend income to the extent paid out of the Company's current or accumulated earnings and profits (as determined for U.S.
federal income tax purposes). Because the Company does not maintain calculations of its earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will
be reported to U.S. Holders as dividends. The amount of the dividend a U.S. Holder will be required to include in income will equal the U.S. dollar value of the euro dividend, calculated by reference
to the exchange rate in effect on the date the payment is received by the

100

---



Table of Contents

holder,
regardless of whether the payment is converted into U.S. dollars on the date of receipt. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder generally should
not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the amount of the dividend is not converted into
U.S. dollars on the date of receipt. If a U.S. Holder realizes gain or loss on a sale or other disposition of Euros, it will be U.S. source ordinary income or loss. Corporate U.S. Holders will not be
entitled to claim the dividends received deduction with respect to dividends paid by the Company. Subject to applicable limitations, dividends paid by certain "qualified foreign corporations" to
certain non-corporate U.S. Holders in taxable years beginning before January 1, 2011 will be taxable at a maximum rate of 15%. Millicom expects to be considered a qualified foreign
corporation for this purpose. Non-corporate U.S. Holders should consult their own tax advisors to determine whether they are subject to any special rules that limit their ability to be
taxed at this favorable rate.

Luxembourg
taxes withheld from dividends on shares will be creditable against a U.S. Holder's U.S. federal income tax liability, subject to applicable restrictions and limitations that
may vary depending upon the holder's circumstances. Instead of claiming a credit, a U.S. Holder may elect to deduct such Luxembourg taxes in computing its taxable income, subject to generally
applicable limitations. The limitation of foreign taxes eligible for credit is calculated separately with respect to specific classes of income. The rules governing foreign tax credits are complex.
Therefore, U.S. Holders should consult their own tax advisors regarding the availability of foreign tax credits in their particular circumstances.

Sale and Other Disposition of Shares

A U.S. Holder will generally recognize capital gain or loss on the sale or other disposition of shares, which will be
long-term capital gain or loss if the holder has held such shares for more than one year. The amount of the U.S. Holder's gain or loss will be equal to the difference between the amount
realized on the sale or other disposition (as determined in U.S. dollars) and such holder's tax basis in the shares (as determined in U.S. dollars). Any gain or loss will generally be U.S. source gain
or loss for foreign tax credit purposes.

Passive Foreign Investment Company Considerations

Millicom believes that it was not a PFIC for U.S. federal income tax purposes for its 2009 taxable year. In general, a
non-U.S. company will be considered a PFIC for U.S. federal income tax purposes for any taxable year in which (i) 75% or more of its gross income consists of passive income (such as
dividends, interest, rents and royalties) or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. As
PFIC status depends upon the composition of our income and assets and the market value of our assets (including, among other things, any equity investments in less than 25%-owned entities) from time
to time, there can be no assurance that Millicom will not be considered a PFIC for any taxable year. In particular, the market value of our assets may be determined in large part by reference to the
market price of our shares, which is likely to fluctuate.

If
the Company were to be treated as a PFIC for any taxable year during which a U.S. Holder held shares, certain adverse U.S. federal income tax rules would apply on a sale or other
disposition (including certain pledges) of shares by the U.S. Holder. In general, under those rules, gain recognized by the U.S. Holder on a sale or other disposition of shares would be allocated
ratably over the U.S. Holder's holding period for the shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before Millicom became a PFIC would be taxed as
ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an
interest charge would be imposed on the amount allocated to each such taxable year. Further, the same rule would apply to any

101

---



Table of Contents

distribution
in respect of shares in excess of 125% of the average of the annual distributions on shares received by the U.S. Holder during the preceding three years or the U.S. Holder's holding
period, whichever is shorter. Certain elections may be available that would result in alternative treatments (such as a mark-to-market treatment) of the shares. U.S. Holders
should consult their tax advisors to determine whether any such elections are available and, if so, what the consequences of the alternative treatments would be in those holders' particular
circumstances.

In
addition, if Millicom were to be treated as a PFIC in a taxable year in which it pays a dividend, or the prior taxable year, the 15% dividend rate discussed above with respect to
dividends received by certain non-corporate U.S. Holders would not apply.

Information Reporting and Backup Withholding

Payment of dividends and sales proceeds that are made within the United States or through certain U.S. related financial intermediaries
generally are subject to information reporting, and may be subject to backup withholding, unless the U.S. Holder is a corporation or other exempt recipient or, in the case of backup
withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding. The amount of any backup withholding from a payment to
a U.S. Holder will be allowed as a credit against the holder's U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely
furnished to the Internal Revenue Service.

Documents on Display

It is possible to read and copy documents referred to in this annual report on Form 20-F that have been filed with
the Securities and Exchange Commission at the Securities and Exchange Commission's public reference room located at 450 Fifth Street, NW, Washington D.C. 20549. Please call the Securities and Exchange
Commission at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges.

ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Terms, conditions and risk management policies

Exposure to interest rate and foreign currency risk arises in the normal course of Millicom's business. The Group analyses each of
these risks individually as well as on an interconnected basis and defines strategies to manage the economic impact on the Group's performance in line with its financial risk management policy. Some
of Millicom's risk management strategies may include the usage of derivatives. Millicom's policy prohibits the use of such derivatives in the context of speculative trading.

The
principal market risks to which we are exposed are interest rate risk and foreign currency exchange risk.

Interest rate risk

The interest rate risk generally arises from borrowings. Borrowings issued at floating rates expose the Group to cash flow interest
rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group's exposure to the risk for 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 fixed and floating rate debt in which neither category of debt falls below 25% of the total debt with the objective to be close to
50% fixed rate and 50% floating rate, If needed the Group will use financial derivatives to manage this risk. The Group actively monitors its borrowings to ensure the compliance with this policy and
applies a dynamic interest rate hedging approach whereby the target mix between fixed and floating rate debt is reviewed periodically. The purpose of Millicom's policy is to achieve an optimal

102

---



Table of Contents

balance
between cost of funding and volatility of financial results, while taking into account market conditions as well as our overall business strategy. At December 31, 2009, approximately
24% of the Group's borrowings are at a fixed rate of interest (2008: 26%).

To
comply with internal policies, in January 2010 Millicom entered into a interest rate swap (see note 35) to hedge the interest rate risk of the floating rate debt in three
different countries (Tanzania, DRC and Ghana). The interest rate swap was issued in January 2010 for a nominal of $100 million, with maturity January 2013. If Millicom had entered into the swap
agreement on December 31, 2009, 28% of Group's borrowings would have been at a fixed rate of interest.

The
table below summarizes, as at December 31, 2009, our fixed rate debt and floating rate debt:

Amounts due within1 year

12 years

23 years

34 years

45 years

>5 years

Total(in thousands of U.S. Dollars, except percentages)Fixed rate


96,881


5,667


5,225


455,075


656


779


564,283Average nominal interest rate


8.4
%

6.7
%

6.2
%

10.0
%

6.5
%

6.5
%

9.6
%Floating rate


337,106


662,220


399,741


237,982


116,163


29,392


1,782,604Average nominal interest rate


5.6
%

5.7
%

5.8
%

6.3
%

5.0
%

3.6
%

5.7
%Total


433,987


667,887


404,966


693,057


116,819


30,171


2,346,887Average nominal interest rate


6.2
%

5.7
%

5.8
%

8.7
%

5.0
%

3.6
%

6.6
%


The table below summarizes, as at December 31, 2008, our fixed rate debt and floating rate debt:

Amounts due within1 year

12 years

23 years

34 years

45 years

>5 years

Total(in thousands of U.S. Dollars, except percentages)Fixed rate


108,815


5,209


754


774


454,246


1,398


571,196Average nominal interest rate


8.0
%

7.8
%

9.7
%

9.1
%

10.0
%

6.3
%

9.6
%Floating rate


387,729


200,841


334,352


313,519


263,749


86,640


1,586,830Average nominal interest rate


6.0
%

8.6
%

9.1
%

8.7
%

8.4
%

7.8
%

8.0
%Total


496,544


206,050


335,106


314,293


717,995


88,038


2,158,026Average nominal interest rate


6.4
%

8.6
%

9.1
%

8.7
%

9.4
%

7.8
%

8.4
%


A one hundred basis point fall or rise in market interest rates for all currencies in which the group had borrowings at December 31, 2009, would increase
or reduce profit before tax from continuing operations for the year by approximately $18 million (2008: $16 million).

We
have not historically used interest rate swaps, forward rate agreements or other futures contracts but instead have mainly managed our interest exposure by diversifying our debt
between fixed and floating-rate loans. In the future, we plan to use such instruments to manage our interest exposure. There can be no assurance, however, that the use of any such
instruments will be effective.

Foreign Currency Risk

The 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.

103

---





Table of Contents

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 because it is either advantageous for joint ventures and subsidiaries to incur debt obligations in US dollars or because US dollar denominated
borrowing is the only funding source available to a joint venture or subsidiary. In these circumstances, Millicom has currently decided to accept the remaining currency risk associated with the
financing of 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.

Millicom
had a net exchange loss of $32 million for the year ended December 31, 2009, compared to a loss of $52 million for the year ended December 31, 2008.

To
some extent, the broad mix of currencies in which we conduct our businesses and the geographic spread of our operations provide us with some measure of protection against specific
exchange rate movements and reduces the overall sensitivity of our results to specific exchange rate fluctuations. Millicom may use financial derivatives to hedge its exposure to exchange rates if
appropriate. If we have entered into such financial derivatives in 2009 for our exposure to exchange rate movements in the Tanzanian Schilling and the Colombian Peso.

The
following table summarizes our debt detailing the balances at December 31, 2009 and 2008, that were denominated in US$ and in other local currencies.

2009

2008US$ '000

US$ '000US$


1,570,525


1,466,493Colombia


508,904


456,356Senegal


121,766


58,309Tanzania


72,553


74,536Guatemala


31,819


Other


41,320


102,332Total local currency


776,362


691,533Total


2,346,887


2,158,026


ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

ITEM 12A.    DEBT SECURITIES

Not applicable.

ITEM 12B.    WARRANTS AND RIGHTS

Not applicable.

ITEM 12C.    OTHER SECURITIES

Not applicable.

ITEM 12D.    AMERICAN DEPOSITARY SHARES

General

Millicom does not have American Depositary Receipts or American Depositary Shares, but is voluntarily providing disclosure regarding
its Swedish Depositary Receipts ("SDRs"), which are described in more detail below.

104

---



Table of Contents

SDRs
are issuable by HQ Bank A.B. as Swedish depositary (the "Swedish Depositary") pursuant to the Swedish Deposit Agreement, dated as at March 5, 2004, entered into by and
between Millicom and the Swedish Depositary. Each SDR represents one share of Millicom common share ("Millicom Shares"). The SDRs are registered in the book-entry registration system of
Euroclear Sweden A.B. ("Euroclear Sweden"), in accordance with the Swedish Act on Account Keeping of Financial Instruments (Sw. lagen (1998: 1479) om kontoföring av
finansiella instrument). So long as the SDRs are eligible for book-entry registration with Euroclear Sweden, the SDRs will be represented by registration in accounts at Euroclear Sweden
("Euroclear Sweden Accounts") and no holder of SDRs shall be entitled to receive physical certificates representing the SDRs. The ownership of SDRs is shown on the register maintained by Euroclear
Sweden (the "Euroclear Sweden Register"). Holdings of SDRs are registered in the Euroclear Sweden Accounts of the beneficial owners of the SDRs (the "Owners") or their nominees. Ownership of SDRs
registered in the name of a nominee is shown in the records of the nominee. The SDRs are listed on the Large segment of the OMX Equities CCP list of Stockholmsbörsen in
Stockholm, Sweden.

Deposit and Withdrawal of Shares

The Swedish Depositary has agreed, subject to the terms and conditions of the Swedish Deposit Agreement, that upon delivery of Millicom
Shares to the Swedish Depositary or
its custodian , the Swedish Depositary will instruct Euroclear Sweden to credit the relevant Euroclear Sweden Account with the appropriate number and series of SDRs. Prior to any such deposit, the
person depositing shares shall deliver to the Swedish Depositary: (i) written instructions specifying the name, address and Euroclear Sweden Account number in which the SDRs are to be
registered; (ii) payment of fees of the Swedish Depositary, taxes and other governmental charges payable in connection with such deposit; and (iii) all such other information and
documents as may be required in order to comply with applicable laws.

Subject
to applicable provisions of law and decisions of governmental authorities, an owner of SDRs may surrender its interest in SDRs to the Swedish Depositary and withdraw the number
and class of Millicom Shares then represented by such SDRs from the SDR deposit facility. Upon payment of the Swedish Depositary's fees for the surrender of the SDRs, the owner of such SDRs will be
registered in the Company's share register for the number and class of Millicom Shares represented by such SDRs at the relevant time. Such registration in the Company's share register will take place
as soon as practicable following the registration of the surrender of SDRs in the Euroclear Sweden Register.

Maintenance of Records

Euroclear Sweden maintains records of all SDRs transferred, pledged, deposited, surrendered and cancelled pursuant to the Swedish
Deposit Agreement in accordance with the provisions of an agreement between the Swedish Depositary and Euroclear Sweden and of the Swedish Act on Account Keeping of Financial Instruments.

Record Date

The Swedish Depositary shall, in consultation with Millicom and the Swedish Depositary, fix a date ("record date") for determining
which holders of SDRs are to be entitled to receive dividends in cash or other property, participate in and vote at shareholders' meetings, receive shares in connection with bonus issues, subscribe
for shares or other securities in new issues and to exercise any other rights of shareholders in Millicom. It is the intention of Millicom and the Swedish Depositary that such record date will be the
same date as the record date applied by Millicom in relation to the holders of Millicom Shares.

105

---



Table of Contents

Dividends, Bonus Issues, New Issues of Shares and Other Distributions

Dividends

Any dividends paid on Millicom Shares will be paid to owners of SDRs, or to their respective nominees, in Euro or Swedish kronor.
Following consultation with Millicom and with Euroclear Sweden, the Swedish Depositary shall fix a date for the payment of the relevant dividend to the Owners ("payment date"). Before the dividend is
paid, the Swedish Depositary shall convert the dividend received from Millicom into Euro or Swedish kronor. Such conversion shall take place at the market exchange rate applicable not earlier than ten
business days and not later than five business days before the payment date by means of the Swedish Depositary entering into a future contract to expire on the payment date, or if earlier, the date on
which the dividend is paid to Euroclear Sweden for onward distribution to the owners of the SDRs.

Euroclear
Sweden shall pay dividends to the owners of SDRs, or to their respective nominees, entitled thereto in accordance with the rules and regulations applied by Euroclear Sweden
from time to time.

Payment
of dividends to the owners of SDRs, or to their respective nominees, shall be made without any deduction for expenses, fees, or equivalent items that are attributable to
Millicom, the Swedish Depositary or Euroclear Sweden, with the exception of such withholding tax levied in Luxembourg for dividend payments to other countries or of preliminary tax or other taxes that
may be levied in accordance with Swedish, Luxembourg or other applicable legislation.

If
the Swedish Depositary receives dividends in any form other than in cash, the Swedish Depositary shallafter consultation with the Companydecide how such
dividends are to be distributed to the owners of SDRs entitled thereto. This means that the Swedish Depositary is entitled to sell the received property. The net proceeds arising from such realisation
shall be distributed to the owners of SDRs entitled thereto. In the event that Millicom, the Swedish Depositary or Euroclear Sweden is required to withhold, and does withhold, any taxes from such
distribution, the amount distributed to the owners shall be reduced accordingly.

If
holders of Millicom Shares have the right to choose between cash dividends or other property and if it is not practically feasible for the owners of SDRs to be granted the same
choice, the Swedish
Depositary is entitled, on behalf of the owners of SDRs, to request that such dividend be paid in the form of cash.

Bonus Issues, Splits and Reverse Splits of Shares

The Swedish Depositary shall, as soon as possible, receive shares resulting from bonus issues and effect splits or reverse splits of
shares. Registrations in the owners' Euroclear Sweden Accounts corresponding to bonus issues, splits or reverse splits of shares shall be undertaken by Euroclear Sweden.

New Issue of Shares

If we decide to issue new shares, debt instruments or other rights, the Swedish Depositary shall, directly or through Euroclear Sweden,
inform the owners of SDRs thereof of the principal terms for the new issue. An application form shall be attached to the information under which form the owners of SDRs can instruct the Swedish
Depositary to subscribe for new shares, debt instruments or other rights (as the case may be) on his or her behalf. When the Swedish Depositary, pursuant to the instructions of an owner of SDRs, has
subscribed for and received new shares, debt instruments or other rights, the corresponding registrations in the owner's Euroclear Sweden Account will be made as soon as possible.

106

---



Table of Contents

If
the owner of SDRs does not instruct the Swedish Depositary to exercise any of the rights referred to above, the Swedish Depositary shall be authorized to dispose of such rights on
behalf of the owner, and pay the remuneration received, to him or her less any incurred costs and applicable taxes.

In
the event that an owner of SDRs beneficially holds an uneven number of rights which do not carry entitlement to a whole number of bonus shares or to participate in a new issue for
whole rights, the Swedish Depositary shall be authorized to sell such rights and pay the remuneration received, to the owner less any incurred costs and applicable taxes.

Shareholders' Meetings and Voting of Deposited Shares

Pursuant to the Swedish Deposit Agreement, owners of SDRs are entitled to vote for the Millicom Shares represented by such SDRs at
shareholders' meetings. The Swedish Depositary shall, in consultation with Millicom, make arrangements so that depository receipt holders receive notice for general meeting of shareholders. A notice
for a general meeting of shareholders shall be provided for dissemination to at least two established news agencies and at least three national daily newspapers. The notice shall contain:
(i) such information as is contained in such notice of meeting; and (ii) instructions as to what measures must be taken by an owner of SDRs to allow him or her to attend the
shareholders' meeting. The Swedish Depositary shall, in reasonable time before the meeting, ensure that it executes proxy forms in favor of each owner of SDRs who has indicated to the Swedish
Depository his or her intention to attend the shareholders' meeting. Such proxy forms shall be submitted to Millicom along with the names of the owners of SDRs for which proxies have
been issued.

Distribution of Information to SDR Owners

The Swedish Depositary shall, directly or through Euroclear Sweden and in the manner stipulated below, provide the owners of SDRs with
all the information which the Swedish Depositary receives from the Company in the Swedish Depositary's capacity as registered shareholder. However, the Swedish Depositary shall always send such
information by mail to owners of SDRs who request such information, at the address of each such owner included in the Euroclear Sweden Register.

The
Swedish Depositary shall ensure that notice to the owners of SDRs are distributed by mail. Except where a written notice must be mailed to the shareholders in accordance with the
rules applicable to Swedish Euroclear Sweden Companies (Sw. avstämningsbolag), the Swedish Depositary mayas an alternative to mailing the noticepublish the
notice in one of Stockholm's daily newspapers.

Amendment and Termination

The Swedish Depositary shall be entitled to amend the Swedish Deposit Agreement insofar as such amendments are required by Swedish or
any other applicable legislation, decisions by public authorities or changes in the rules and regulations of Euroclear Sweden. Any provisions of the Swedish Deposit Agreement may be amended by
agreement between Millicom and
the Swedish Depositary if such action is in any other respect appropriate or necessary for practical reasons and the owners' rights are in not adversely affected in any material respect.

If
(i) a decision is taken to de-list the SDRs from the O-list of Stockholmsbörsen or any other corresponding market place, (ii) a
decision is taken by Millicom to no longer maintain the SDR facility under the Swedish Deposit Agreement, or (iii) the Company has failed to fulfil payment of expenses and fees under the
Swedish Deposit Agreement for more than 30 days, the Swedish Depositary is entitled to terminate deposits made under the Swedish Deposit Agreement by mailing notice of such termination to the
owners of the SDRs. The Swedish Deposit Agreement will continue in full force and effect for a period of six months after the date such notices have been sent to the owners of SDRs.

107

---



Table of Contents

Charges of Swedish Depositary

Millicom have agreed to pay the fees and expenses of the Swedish Depositary and Euroclear Sweden in accordance with the terms of the
Swedish Deposit Agreement.

Fees and Expenses Payable by Owners of SDRs

Owners of SDRs must pay all applicable taxes and governmental charges and all fees and costs in connection with the deposit, withdrawal
and delivery of Millicom Shares in accordance with the Swedish Deposit Agreement. The current fee for the deposit of Millicom Shares for the issue of SDRs and withdrawal of Millicom Shares after
cancellation of SDRs is SEK2,000 per deposit/withdrawal and is payable by the person making such deposit or withdrawal. Such fees may be amended by the Swedish Depositary from time to time.

Fees and Expenses Payable by the Depositary

That there are no payments from the depositary to Millicom.

Limitation of Liability

Except as set forth below, the Swedish Depositary is liable for all damages incurred by the owner of SDRs resulting from the Swedish
Depositary's negligence in performing its obligations under the Swedish Deposit Agreement. The Swedish Depositary is not liable for any indirect losses or damage.

The
Swedish Depositary is not liable for any loss or damage resulting from changes in Swedish or non-Swedish laws, the intervention of a Swedish or a non-Swedish
public authority, acts of war, acts of terrorism, strikes, boycotts, lockouts, blockades or other similar circumstances. The reservation in respect of strikes, boycotts, lockouts or blockades applies
even if the Swedish Depositary itself takes such measures or is subject to such measures. Where the Swedish Depositary or Millicom is prevented from effecting payments or taking other measures due to
the circumstances outside its control, the measures in question may be postponed until the obstacle has been removed.

Governing Law

The Swedish Deposit Agreement is governed by Swedish law.

108

---





Table of Contents

PART II

ITEM 13.    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

ITEM 14.    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of December 31, 2009, the Group, under the supervision and with the participation of the Group's management, including the
Chief Executive Officer and the Chief Financial Officer, performed an evaluation of the effectiveness of the Group's disclosure controls and procedures. The Group's disclosure controls and procedures
are designed to ensure that information required to be disclosed under the Securities Exchange Act of 1934 is accumulated and communicated to the Group's management to allow timely decisions regarding
required disclosures. The Group's management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature can provide only reasonable
assurance regarding management's control objectives. Based on this evaluation, the Group's Chief Executive Officer and the Chief Financial Officer concluded that as at December 31, 2009 the
Group's disclosure controls and procedures are effective at the reasonable assurance level for recording, processing, summarizing and reporting the information the Group is required to disclose in the
reports it files under the Securities Exchange Act of 1934 within the time periods specified in the SEC's rules and forms.

Management's annual report on internal control over financial reporting

The Group's management has performed an assessment of the Group's internal control over financial reporting which can be found on
page F-2 of the financial statements filed with this annual report on Form 20-F.

Changes in internal control over financial reporting

There has been no change in the Group's internal controls over financial reporting that occurred during the period covered by this
annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

Attestation report of the registered public accounting firm

The registered public accounting firm that audited the Group's financial statements included in this annual report on
Form 20-F has issued an attestation report on the Group's internal control over financial reporting. The "Report of Independent Registered Public Accounting Firm" can be found on
pages F-3 and F-4 of the financial statements filed with this annual report on Form 20-F.

ITEM 16A.    AUDIT COMMITTEE FINANCIAL EXPERT

The Board of Directors has appointed Michel Massart as its Audit Committee financial expert. Mr. Massart is an "independent"
financial expert as such term is defined under the NASDAQ National Market listing requirements.

109

---



Table of Contents

ITEM 16B.    CODE OF ETHICS

Millicom has adopted a Code of Ethics applicable to all Millicom's employees and to Directors. The text of this code is available free
of charge upon written request addressed to: General Counsel, Millicom International Cellular S.A., 15 rue Leon Laval, L-3372 Leudelange, Grand-Duchy of Luxembourg,
fax: +352 27 759 353.

ITEM 16C.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table summarizes the aggregate amounts paid to Millicom's auditors for the years ended December 31, 2009
and 2008.

2009

2008US$ '000

US$ '000Audit Fees


4,179


4,276Audit Related Fees


115


15Tax Fees


61


52All Other Fees


71


5Total


4,426


4,348


Audit related services consist principally of consultations related to financial accounting and reporting standards, including making recommendations to
management regarding internal controls and the issuance of certifications of loan covenant compliance required by Millicom's debt agreements. Tax services consist principally of tax planning services
and tax compliance services. Other services are services not included in the other categories.

Audit Committee Pre-approval Policies

The policies and procedures provide that no non-audit services can be rendered by Millicom's auditors without the prior
consent of the Audit Committee.

ITEM 16D.    EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E.    PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES

Not applicable.

ITEM 16F.    CHANGES IN CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G.    SIGNIFICANT DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES

The Board has developed and continuously evaluates its work procedures in line with the corporate governance rules of NASDAQ in the
United States of America regarding reporting, disclosure and other requirements applicable to NASDAQ listed companies, with the following two exceptions:



The
Board received confirmation in early 2006 from the Stockholm Stock Exchange that it is exempt from the Swedish Code of Corporate Governance so long as it adheres to NASDAQ corporate
governance rules.

110

---





Table of Contents

PART III

ITEM 17.    FINANCIAL STATEMENTS

Not applicable.

ITEM 18.    FINANCIAL STATEMENTS

See pages F-1 through F-66.

ITEM 19.    EXHIBITS

1.1

Articles of Association of Millicom International Cellular S.A.2.1

Indenture, dated January 7, 2005 between Millicom International Cellular S.A. and The Bank of New York, as Trustee.*2.2

Indenture, dated as of November 24, 2003 between Millicom International Cellular S.A. and The Bank of New York, as Trustee, as amended (incorporated by reference to Exhibits 4.1 and 4.3
of the Company's registration statement on Form F-4 (File No. 333-112948) filed on February 19, 2004 and January 31, 2005, respectively).**12.1

Certification of Mikael Grahne required by Securities Exchange Act of 1934, as amended ("Exchange Act"), Rule 13a 14(a).12.2

Certification of Francois-Xavier Roger required by Exchange Act Rule 13a 14(a).13.1

Certification of Mikael Grahne required by Exchange Act Rule 13a 14(b).13.2

Certification of Francois-Xavier Roger required by Exchange Act Rule 13a 14(b).15.1

Consent of PricewaterhouseCoopers S.à r.l.


*Previously
filed with the Securities and Exchange Commission with the Company's Form 20 F filed on May 2, 2005 and incorporated herein by
reference.**Previously
filed with the Securities and Exchange Commission with the Company's Form 20 F filed on April 30, 2004 and herein
incorporated by reference.


111

---





Table of Contents

SIGNATURES

Under the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the
requirements for filing 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 5, 2010

MILLICOMINTERNATIONALCELLULARS.A.By:

/s/ MIKAEL GRAHNE Name:  Mikael Grahne
Title:Chief Executive OfficerBy:

/s/ FRANCOIS-XAVIER ROGER Name:  Francois-Xavier Roger
Title:Chief Financial Officer


112

---





Table of Contents

INDEX TO FINANCIAL STATEMENTS



Audited Consolidated Financial Statements of Millicom and its Subsidiaries for the Years Ended December 31, 2009, 2008 and
2007Management's Report on Internal Control Over Financial Reporting

F-2Report of Independent Registered Public Accounting Firm

F-3Consolidated Income Statements for the Years ended December 31, 2009, 2008 and 2007

F-5Consolidated Statements of Comprehensive Income for the Years ended December 31, 2009, 2008 and
2007

F-6Consolidated Balance Sheets as of December 31, 2009 and 2008

F-7Consolidated Statements of Cash Flows for the Years ended December 31, 2009, 2008 and 2007

F-9Consolidated Statements of Changes in Equity for the Years ended December 31, 2009, 2008 and
2007

F-10Notes to the Consolidated Financial Statements

F-12


F-1

---



Table of Contents

Management's Report on Internal Control Over Financial Reporting

The management of Millicom International Cellular S.A. is responsible for establishing and maintaining adequate internal control
over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external reporting purposes in conformity with International Financial Reporting Standards as adopted by the European Union as well as those issued by the International
Accounting Standards Board.

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

Management
has assessed the effectiveness of Millicom International Cellular S.A. internal control over financial reporting as of December 31, 2009. 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 financial reporting was effective as of December 31, 2009.

PricewaterhouseCoopers
S.à.r.l has issued an unqualified report on our 2009 financial statements as a result of the audit and also has issued an unqualified report on our
internal control over financial reporting which is attached hereto.

Dated: March 4, 2010

By:

/s/ MIKAEL GRAHNEName:

Mikael GrahneTitle:

Chief Executive OfficerBy:

/s/ FRANCOIS-XAVIER ROGERName:

Francois-Xavier RogerTitle:

Chief Financial Officer


F-2

---



Table of Contents



GRAPHIC

---

PricewaterhouseCoopers
Société à responsabilité limitée
Réviseur d'Entreprises400, route d'Esch
B.P. 1443
L-1014 Luxembourg
Telephone +352 494848-1
Facsimile +352 494848-2900
www.pwc.com/lu
info@lu.pwc.com


Report of Independent Registered Public Accounting Firm

To
the Shareholders of
Millicom International Cellular S.A.

In
our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, comprehensive income, cash flows and changes in equity present fairly, in
all material respects, the financial position of Millicom International Cellular S.A. (the "Company") and its subsidiaries (together the "MIC Group") at December 31, 2009 and 2008, and
the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 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, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal ControlIntegrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's Board of Directors is responsible for these financial statements, for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in "Management's Report on Internal Control Over Financial Reporting"
appearing on page F-2 of the accompanying financial statements. Our responsibility is to express opinions on these financial statements and on the MIC Group's internal control over
financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial
reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness 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.

A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (i) pertain to the

F-3

---



Table of Contents

maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial 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 effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness 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.

/s/ PricewaterhouseCoopers S.à r.l.
Réviseur d'entreprises

Luxembourg, March 4, 2010


F-4

---



Table of Contents



Millicom International Cellular S.A.

Consolidated income statements
for the years ended December 31, 2009, 2008 and 2007

Notes

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Revenues


9


3,372,727


3,150,559


2,429,082Cost of sales





(1,202,902
)

(1,114,822
)

(868,842
)Gross profit





2,169,825


2,035,737


1,560,240Sales and marketing





(647,009
)

(657,480
)

(464,343
)General and administrative expenses





(606,213
)

(498,597
)

(392,286
)Other operating expenses





(65,580
)

(61,438
)

(72,949
)Operating profit


9, 10


851,023


818,222


630,662Interest expense





(173,475
)

(135,932
)

(180,771
)Interest and other financial income





11,573


32,277


55,912Revaluation of previously held interests


4


32,319





Other non operating (expenses) income, net


12


(32,181
)

(52,265
)

9,984Profit from associates


17


2,329


8,706


4,400Profit before tax from continuing operations





691,588


671,008


520,187Charge for taxes


13


(187,998
)

(268,813
)

(83,710
)Profit for the year from continuing operations





503,590


402,195


436,477Profit for the year from discontinued operations, net of tax


6


300,342


2,246


274,507Net profit for the year





803,932


404,441


710,984Attributable to:Equity holders of the company





850,788


517,516


697,142Non-controlling interest





(46,856
)

(113,075
)

13,842Earnings per share for the year


14(expressed in US$ per common share)Basicprofit from continuing operations attributable to equity holders





5.09


4.79


4.18profit from discontinued operations attributable to equity holders





2.75


0.01


2.72profit for the year attributable to equity holders





7.84


4.80


6.90Dilutedprofit from continuing operations attributable to equity holders





5.08


4.76


4.07profit from discontinued operations attributable to equity holders





2.74


0.01


2.54profit for the year attributable to equity holders





7.82


4.77


6.61


(i)Comparative information reclassified as a result of the classification of Millicom's operations in Asia (Cambodia, Laos and Sri Lanka) and in Sierra Leone
as discontinued operations (see note 6).


The
accompanying notes are an integral part of these consolidated financial statements.

F-5

---



Table of Contents



Millicom International Cellular S.A.

Consolidated statements of comprehensive income
for the years ended December 31, 2009, 2008 and 2007

2009

2008

2007US$ '000

US$ '000

US$ '000Net profit of the year


803,932


404,441


710,984Other comprehensive income:Exchange differences on translating foreign operations


(14,529
)

(54,041
)

38,508Total comprehensive income for the year


789,403


350,400


749,492Attributable to:Equity holders of the company


837,124


456,670


728,291Non-controlling interests


(47,721
)

(106,270
)

21,201


The accompanying notes are an integral part of these consolidated financial statements.

F-6

---



Table of Contents



Millicom International Cellular S.A.

Consolidated balance sheets
as of December 31, 2009 and 2008

Notes

2009

2008US$ '000

US$ '000ASSETSNON-CURRENT ASSETSIntangible assets, net


15


1,044,837


990,350Property, plant and equipment, net


16


2,710,641


2,787,224Investments in associates


17


872


21,087Pledged deposits


18,26


53,333


6,172Deferred taxation


13


19,930


14,221Other non-current assets





7,965


17,023TOTAL NON-CURRENT ASSETS





3,837,578


3,836,077CURRENT ASSETSInventories





46,980


58,162Trade receivables, net


19


224,708


257,455Amounts due from joint venture partners





52,590


40,228Prepayments and accrued income





65,064


82,303Current income tax assets





17,275


21,597Supplier advances for capital expenditure





49,165


142,369Other current assets


20


58,159


87,859Time deposit


21


50,061


Cash and cash equivalents


22


1,511,162


674,195TOTAL CURRENT ASSETS





2,075,164


1,364,168Assets held for sale


6


78,276


20,563TOTAL ASSETS





5,991,018


5,220,808


The accompanying notes are an integral part of these consolidated financial statements.

F-7

---



Table of Contents

Millicom International Cellular S.A.

Consolidated balance sheets
as of December 31, 2009 and 2008 (Continued)

Notes

2009

2008US$ '000

US$ '000EQUITY AND LIABILITIESEQUITYShare capital and premium


23


660,547


642,544Other reserves


25


(64,930
)

(47,174
)Retained profits





937,398


565,032Profit for the year attributable to equity holders





850,788


517,5162,383,803


1,677,918Non-controlling interest





(73,673
)

(25,841
)TOTAL EQUITY





2,310,130


1,652,077LIABILITIESNon-current Liabilities10% Senior Notes


26


454,477


453,471Other debt and financing


26


1,458,423


1,208,011Provisions and other non-current liabilities


27


88,142


70,008Deferred taxation


13


66,492


81,063Total non-current liabilities





2,067,534


1,812,553Current LiabilitiesOther debt and financing


26


433,987


496,544Payables and accruals for the purchase of property, plant and equipment





276,809


501,978Other trade payables





194,691


240,576Amounts due to joint venture partners





52,180


49,921Accrued interest and other expenses





173,609


159,539Current income tax liabilities





93,364


93,416Dividend payable


28


134,747


Provisions and other current liabilities


27


210,385


207,106Total current liabilities





1,569,772


1,749,080Liabilities directly associated with assets held for sale


6


43,582


7,098TOTAL LIABILITIES





3,680,888


3,568,731TOTAL EQUITY AND LIABILITIES





5,991,018


5,220,808


The accompanying notes are an integral part of these consolidated financial statements.

F-8

---



Table of Contents



Millicom International Cellular S.A.

Consolidated statements of cash flows
for the years ended December 31, 2009, 2008 and 2007

Notes

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Operating profit





851,023


818,222


630,662Adjustments for non-cash items:Depreciation and amortization


9,10,15,16


611,435


463,720


313,574Loss on disposal and impairment of property, plant and equipment


9,10


7,246


9,166


3,150Reduction of goodwill


9,10,15








23,358Share-based compensation


24


10,175


13,619


19,228Other non cash items











1,0001,479,879


1,304,727


990,972Decrease (increase) in trade receivables, prepayments and other current assets





73,380


5,077


(18,246
)Decrease (increase) in inventories





8,812


24,700


(24,634
)(Decrease) increase in trade and other payables





(4,669
)

29,235


81,327Changes to working capital





77,523


59,012


38,447Interest expense paid





(148,038
)

(137,301
)

(148,337
)Interest received





11,316


32,535


55,476Taxes paid





(195,851
)

(201,235
)

(164,208
)Net cash provided by operating activities





1,224,829


1,057,738


772,350Cash flows from investing activities:Acquisition of subsidiaries and JV, net of cash acquired


4


(53,086
)

(532,181
)

Purchase of intangible assets and license renewals


15


(46,004
)

(112,716
)

(25,474
)Purchase of property, plant and equipment


16


(726,565
)

(1,161,088
)

(768,154
)Proceeds from sale of property, plant and equipment and intangibles





3,708


7,434


1,178(Purchase) disposal of pledged deposits





(45,652
)

4,027


35,848(Purchase) disposal of time deposits


21


(50,061
)




Cash (used) provided by other investing activities





(12,275
)

15,929


929Net cash used by investing activities





(929,935
)

(1,778,595
)

(755,673
)Cash flows from financing activities:Proceeds from issuance of shares





2,856


3,179


33,626Proceeds from issuance of debt and other financing


26


627,872


1,195,550


460,495Repayment of debt and financing


26


(506,588
)

(640,414
)

(269,077
)Payment of dividends








(259,704
)

(18,286
)Net cash provided by financing activities





124,140


298,611


206,758Cash provided (used) by discontinued operations


6


416,755


(69,074
)

286,403Exchange gains (losses) on cash and cash equivalents





1,178


(9,082
)

8,067Net increase (decrease) in cash and cash equivalents





836,967


(500,402
)

517,905Cash and cash equivalents at the beginning of the year





674,195


1,174,597


656,692Cash and cash equivalents at the end of the year





1,511,162


674,195


1,174,597


(i)Comparative information reclassified as a result of the classification of Millicom's operations in Asia (Cambodia, Laos and Sri Lanka) and in Sierra Leone
as discontinued operations (see note 6).


The accompanying notes are an integral part of these consolidated financial statements.

F-9

---



Table of Contents



Millicom International Cellular S.A.

Consolidated statements of changes in equity
for the years ended December 31, 2009, 2008 and 2007

Attributable to equity holdersNumber of
shares

Share
Capital(i)

Share
Premium(i)

Retained
profits(ii)

Other
reserves(iii)

Total

Non-controlling
interests (vi)

Total
equity'000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000Balance as of January 1, 2007


100,684


151,025


221,501

129,382


2,966


504,874


77,514


582,388Profit for the year










697,142





697,142


13,842


710,984Currency translation differences













31,149


31,149


7,359


38,508Total comprehensive income for the year










697,142


31,149


728,291


21,201


749,492Transfer to legal reserve










(1,526)


1,526








Dividends paid to non-controlling shareholders



















(18,286
)

(18,286
)Shares issued via the exercise of share options


1,626


2,440


34,186




(3,838
)

32,788





32,788Shares issued as payment of bonuses(vii)


13


20


980







1,000





1,000Share-based compensation(iii)


9


14


741




18,473


19,228





19,228Issuance of shares2006 LTIP(iii)


58


87


4,436




(4,523
)







Issuance of shares(v)


9


14


824







838





838Conversion of part of the 4% Convertible Notes(iv)


29


43


1,041




(196
)

888





888Balance as of December 31, 2007


102,428


153,643


263,709

824,998


45,557


1,287,907


80,429


1,368,336Profit for the year










517,516





517,516


(113,075
)

404,441Currency translation differences













(60,846
)

(60,846
)

6,805


(54,041
)Total comprehensive income for the year










517,516


(60,846
)

456,670


(106,270
)

350,400Transfer to legal reserve










(262)


262








Dividends paid to shareholders










(259,704)





(259,704
)




(259,704
)Shares issued via the exercise of share options


169


252


3,894




(937
)

3,209





3,209Shares issued as payment of bonuses(iii)


11


17


1,208







1,225





1,225Share-based compensation(iii)













11,666


11,666





11,666Issuance of shares2006 LTIP(iii)


52


76


3,887




(3,963
)







Issuance of shares(v)


9


14


1,025







1,039





1,039Directors' shares(iii)


6


10


717







727





727Conversion of the 4% Convertible Notes(iv)


5,622


8,434


205,658




(38,913
)

175,179





175,179Balance as of December 31, 2008


108,297


162,446


480,098

1,082,548


(47,174
)

1,677,918


(25,841
)

1,652,077


F-10

---



Table of Contents

Millicom International Cellular S.A.

Consolidated statements of changes in equity
for the years ended December 31, 2009, 2008 and 2007 (Continued)

Attributable to equity holdersNumber of
shares

Share
Capital(i)

Share
Premium(i)

Retained
profits(ii)

Other
reserves(iii)

Total

Non-controlling
interests(vi)

Total
equity'000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000Balance as of January 1, 2009


108,297


162,446


480,098

1,082,548


(47,174
)

1,677,918


(25,841
)

1,652,077Profit for the year










850,788





850,788


(46,856
)

803,932Currency translation differences













(13,664
)

(13,664
)

(865
)

(14,529
)Total comprehensive income for the year










850,788


(13,664
)

837,124


(47,721
)

789,403Transfer to legal reserve










(880)


880








Dividends declared(viii)










(134,747)





(134,747
)




(134,747
)Shares issued via the exercise of share options


139


208


3,536




(888
)

2,856





2,856Share-based compensation(iii)













9,807


9,807





9,807Directors' shares(iii)


7


10


358







368





368Issuance of shares2006, 2007 and 2009 LTIPs(iii)


205


307


13,584




(13,891
)







Acquisition of non-controlling interests in Chad(ix)










(9,523)





(9,523
)

(111
)

(9,634
)Balance as of December 31, 2009


108,648


162,971


497,576

1,788,186


(64,930
)

2,383,803


(73,673
)

2,310,130


(i)See note 23.(ii)Includes profit for the year attributable to equity holders, of which $46 million (2008: $31 million; 2007:
$20 million) are undistributable to equity holders.(iii)See note 24 and 25.(iv)See note 25 and 26.(v)Employees purchase of shares under the Matching share award Plans (see
note 24).(vi)As at December 31, 2008, non controlling interest was negative as the non-controlling shareholders of Colombia
Movil S.A. ESP have a binding obligation to cover their share of the losses of this entity.(vii)See note 29.(viii)See note 28.(ix)See note 4.


The accompanying notes are an integral part of these consolidated financial statements.

F-11

---



Table of Contents



Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007

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 telecommunications group with mobile telephony operations in the world's emerging markets. It also operates cable and broadband businesses in five countries in Central
America. The 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 joint ventures to form the Group.

As
at December 31, 2009, Millicom had 14 mobile operations in 14 countries focusing on emerging markets in Central America, South America, Africa and Asia. 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; and in Laos in Asia (see also note 6). African Millicom's operation in Sierra Leone was sold on November 25, 2009; Millicom's operations in Sri Lanka and
Cambodia were sold respectively on October 16 and November 26, 2009 (see note 5).

In
2008, Millicom acquired 100% of Amnet Telecommunications Holding Limited (see note 4), a provider of broadband and cable television services in Costa Rica, Honduras and El
Salvador, of fixed 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 (see note 15). Services in Rwanda were launched in early December 2009.

The
Company's shares are traded on the NASDAQ National Market under the symbol MICC and on the Stockholm stock exchange under the symbol MIC. The Company has its registered office 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.

The
Board of Directors approved these consolidated financial statements on March 4, 2010. The consolidated financial statements will be ratified by the Annual General Meeting.

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES

2.1   Basis of preparation

The consolidated financial statements of the Group are presented in US dollars and all values are rounded to the nearest thousand (US$ '000) except when
otherwise indicated. The consolidated financial statements have been prepared on a historical cost basis except for certain financial 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 financial statements for the year ended December 31, 2009 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union
("IFRS").

As
of December 31, 2009, International Financial Reporting Standards as adopted by the European Union are similar to those published by the International Accounting Standards
Board

F-12

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

("IASB"),
except for IAS 39Financial Instrumentsthat has been partially adopted by the European Union, for
IFRIC 12Service Concession Arrangementsthat has been endorsed by the European Union in 2009 and is applicable as from
March 31, 2009 and for new standards and interpretations not yet endorsed but effective in future periods. Since the provisions that have not been adopted by the European Union are not
applicable to the Group, the consolidated financial statements comply with both International Financial Reporting Standards as adopted by the European Union and International Financial Reporting
Standards as issued by the IASB.

The
preparation of financial 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 affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial 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 ultimately may differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated
financial statements, are disclosed in note 3.

2.2   Consolidation

The consolidated financial statements of the Group are comprised of the financial statements of the Company and its subsidiaries and joint ventures as at
31 December each year. The financial 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 profits and losses resulting from intra-group transactions are eliminated.

The
acquisition method of accounting is used to account for acquisitions where there is a change in control. The 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, plus costs directly attributable to the acquisition. Identifiable 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. The excess of
the cost of acquisition over the fair value of the Group's share of the identifiable 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 difference is recognized directly in the income statement (see accounting policy for Goodwill).

Subsidiaries

Subsidiaries are all entities (including Special Purpose Entities) over which the Group has the power to govern the financial and
operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect 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. They are
de-consolidated from the date that control ceases.

F-13

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

Non-controlling interests

The Group applies a policy of treating transactions with non-controlling interests as transactions with parties external to
the Group. Disposals to
non-controlling interests eventually result in gains and losses for the group and are recorded in the income statement. Purchases from non-controlling interests are recorded in
equity if there is no change in control and these transactions do not result in goodwill or gains and losses. Any goodwill emerging from an acquisition of non-controlling interests is
recorded within retained earnings.

Joint ventures

Millicom determines the existence of joint control by reference to the 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 using the proportionate method which only includes the Group's share of the assets, liabilities, income and expenses of the joint
ventures in which the Group has an interest in the consolidated financial statements.

The
Group recognizes the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other parties in the joint venture. The Group does
not recognize its share of profits or losses that results from the purchase of assets by the Group from the joint venture until it resells the assets to an independent party. However, if a loss on the
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 significant influence 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. The Group's investment in associates includes goodwill (net of any
accumulated impairment loss) identified on acquisition.

The
Group's share of the post-acquisition profits or losses of associates is recognized in the consolidated income statement, and its share of post-acquisition
movements in
reserves is recognized in reserves. The 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.

F-14

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

2.3   Foreign currency translation

Functional and presentation currencies

Items included in the financial 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"). The functional currency of each subsidiary, joint venture and associates reflects the economic substance of the underlying events
and circumstances of these entities. The Company is located in Luxembourg and its subsidiaries, joint ventures and associates operate in different currencies. The Group's consolidated financial
statements are presented in U.S. dollar (the "presentation currency"). The functional currency of the Company is the U.S. dollar because of the significant influence 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 the
exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end
exchange rates of monetary assets and liabilities denominated in currencies other than the functional currency are recognized in the consolidated income statement, except when deferred in equity as
qualifying cash flow hedges and qualifying net investment hedges.

Translation
differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss if applicable. Translation differences on
non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognized in the consolidated income statement as part of the fair value gain
or loss. Translation differences on non-monetary financial assets such as investments classified as available for sale are included in the fair value reserve in equity.

Translation into presentation currency

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are translated into the presentation currency as follows:



On
consolidation, exchange differences arising from the translation of net investments in foreign operations, and of borrowing and other currency instruments designated as hedges of such
investments,

F-15

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

are
taken to equity. When a foreign operation is sold, exchange differences that were recorded in equity are recognized in the consolidated income statement as part of the gain or loss on sale.

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

The
following is a table of the principal currency translation rates to the U.S. dollar as of December 31, 2009 and 2008 and the average rates for the year ended
December 31, 2009.

Country

Currency

2009
Average rate

2009
Year-end rate

2008
Year-end rateBolivia

Boliviano


7.02


7.02


7.03Chad and Senegal

CFA Franc


471.30


457.26


471.84Colombia

Peso


2,185.73


2,043.00


2,249.50Costa Rica

Colon Costa Rica


571.56


565.24


555.47Ghana

Cedi


1.43


1.43


1.27Guatemala

Quetzal


8.16


8.35


7.78Honduras

Lempira


18.89


18.90


18.90Luxembourg

Euro


0.72


0.70


0.72Mauritius

Rupee


31.87


30.01


31.62Nicaragua

Gold Cordoba


20.34


20.84


19.85Paraguay

Guarani


4,971.54


4,695.00


4,885.00Rwanda

Rwandese Franc


567.77


571.24


Sweden

Krona


7.64


7.16


7.86Tanzania

Shilling


1,323.92


1,339.50


1,317.50


The effect of exchange rate changes on cash and cash equivalents held or due in a foreign currency is reported in the cash flow statement in order to reconcile
cash and cash equivalents at the beginning and end of the year.

2.4   Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker ("CODM"). The CODM, who is
responsible for allocating resources and assessing performance of the operating segments, has been identified 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 in value. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.

F-16

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

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 and is expected without significant cost. Estimated useful lives are:

Buildings

40 years or lease period, if lowerNetworks (including civil works)

5 to 15 yearsOther

2 to 7 years


The 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. The assets' residual value and useful life is reviewed, and adjusted if appropriate, at each balance sheet 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.

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, only when it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the consolidated income statement during the financial 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. The 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 benefits 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. The cost of intangible assets acquired in a business combination is fair value
as 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 are
amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for
an intangible asset with finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates. The amortization expense on intangible
assets with finite lives is recognized in the consolidated income statement in the expense category consistent with the function of the intangible assets.

F-17

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

Goodwill

Goodwill represents the excess of cost of an acquisition over the Group's share in the fair value of the identifiable assets less the
liabilities and contingent liabilities of the acquired subsidiary, joint venture or associate at the date of transaction. If the fair value of the identifiable assets, liabilities or contingent
liabilities or the cost of the acquisition can be determined only provisionally, then Millicom initially accounts for the goodwill using these provisional values. Within twelve months of the
acquisition date, Millicom then recognizes any adjustments to these provisional values once the fair value of the identifiable assets, liabilities and contingent liabilities and the cost of the
acquisition have been finally determined. Adjustments to the 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 benefit 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 so allocated:



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 of the operation. Goodwill disposed of in this circumstance 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 historical cost unless acquired in a business combination where the cost is the fair value as at the date of
acquisition. Licenses have a finite 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.

F-18

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

The
terms of the 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 using the straight-line basis over the license period depending on the
term of the license. Licenses held, subject to certain conditions, are usually renewable and are generally non-exclusive. When determining the useful life of the licenses, management
usually does not consider renewal periods since there is no guarantee that the license will be renewed without significant cost (or at no cost).

Trademarks and customer bases

Trademarks and customer bases are recognized as intangible assets only when acquired in business combinations or ownership increase
transactions in joint ventures. Their cost corresponds to the fair value as at the date of acquisition. Trademarks and customer bases have a finite useful life 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. The estimated useful
life for trademarks and customer bases are based on the specifications of the market in which they exist. Trademarks and customer bases are recorded under the caption "Intangible assets, net".

2.7   Impairment of non-financial assets

The Group assesses at each reporting date 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. The Group determines the recoverable amount based on the higher of its fair value less cost to sell and
its value in use and is determined for an individual asset, unless the asset does not generate cash inflows 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 flows discounted to their present value using a discount rate that reflects current market conditions of the time value of
money and the risk specific to the asset. In addition to the 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.

An
assessment is made at each reporting date 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 that is the case, the carrying amount of the
asset is increased to its recoverable amount. The 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 profit 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.

F-19

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

2.8   Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are
included in the current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified within non-current assets. Loans and
receivables are carried at amortized cost using the effective 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 profit or loss

Financial instruments at fair value through profit or loss are financial instruments held for trading. Their fair value is determined by reference to quoted
market prices on the balance sheet 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 flow analysis and option pricing models. A financial instrument is classified 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 classified
as current assets.

2.10     Non-current assets (or disposal groups) held for sale and related liabilities

Non-current assets (or disposal groups) are classified 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. The liabilities of disposal groups are classified as "Liabilities directly associated with assets held for
sale".

2.11     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 first-in, first-out (FIFO) method. The net realizable value is the estimated selling price in the ordinary course of business, less applicable variable
selling expenses.

2.12     Trade receivables

Trade receivables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for
impairment. A provision for impairment of trade receivable is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of
receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered
indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at
the effective interest rate. The amount of the provision is recognized in the consolidated income statement within "Cost of sales".

F-20

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

2.13    Deposits

Time deposits

Cash deposits with banks with maturities of more than 3 months that generally earn interest at market rate are classified as
time deposits.

Pledged deposits

Pledged deposits represent contracted cash deposit with banks that are held as security for debts either 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.

2.14    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.

2.15    Impairment of financial assets

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets
is impaired. Impairment losses recognized in the consolidated income statement on equity instruments are not reversed through the consolidated income statement.

2.16    Share capital

Common shares are classified 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 equity share capital, the consideration paid including any directly attributable incremental costs is shown under the caption "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 effects, is included in equity attributable to the Company's equity holders.

2.17    Borrowings and transaction costs

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized
cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated income statement over the period of the borrowing using the effective
interest method.

The
fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non-convertible bond. This amount is recorded as a
liability on an amortized cost basis until extinguishment, conversion or maturity of the bonds. The remainder of the proceeds is allocated to the conversion option, which is recognized and included in
equity, net of income tax effects.

F-21

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

Borrowings
are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet
date.

Transaction
costs which are not capitalized are recognized as an expense when incurred.

2.18    Leases

The 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 fulfillment of the arrangement is dependent on the use of a specific 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 benefits 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 finance 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.

Capitalized
leased assets are depreciated over the shorter of the estimated useful life of the asset 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 an expense in the consolidated income statement on a straight-line basis over the lease term.

2.19    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 outflow of resources embodying economic benefits 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. The
expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current
pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as an
interest expense.

2.20    Trade payables

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

2.21    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 sales within the Group.

F-22

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

Revenue
is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition
criteria must also be met before revenue is recognized:

Revenues from provision of telecom services

These 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. The estimated life of the customer relationship is calculated based on the percentage of disconnections for the same type of customer which has
occurred historically.

Where
customers forward purchase a specified amount of airtime, revenues are recognized as credit is used. Unutilized airtime is carried in the balance sheet and is carried in the
balance sheet as deferred revenue within "other current liabilities".

Revenues
from value added services such as text messaging, video messaging, ringtones, games etc., are recognised net of payments to the providers of these services when the providers
are responsible for the contents and for determining the price paid by the customer and as such the Group is considered to be acting in substance as an agent only. 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 (if sold with other services, multiple element arrangements accounting would then apply) are recognized when the
significant risks and rewards of ownership of handsets and accessories have been passed to the buyer.

Revenue
arrangements with multiple deliverables ("Bundled Offers" such as equipments and services sold together) are divided into separate units of accounting if the deliverables in the
arrangement meet certain criteria. The 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.

2.22    Cost of sales

The 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. Costs of sales are recorded on an accrual basis.

Cost
of sales also includes the depreciation and impairment of network equipment.

F-23

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

2.23    Customer acquisition costs

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

2.24    Employee benefits

Pension obligations

Pension obligations can result from either a defined contribution plan or a defined benefit plan.

A
defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Millicom has no further payment obligations once the contributions
have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the
future payments is available.

A
defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit pension plans define an amount of pension benefit that an employee will
receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognized in the balance sheet in respect of the defined benefit pension
plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past
service costs. The defined benefit obligation is calculated annually by independent actuaries. The present value of the defined benefit
obligation is determined by discounting the estimated future cash outflows using an appropriate discount rate based on the maturities of the related pension liability.

Share based compensation

Up until May 2006, share options were granted to Directors, management and key employees. The fair value of the equity
instruments granted in exchange for the services received is recognized as an expense over the vesting period. The total amount to be expensed over the vesting period is determined by reference
to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example profitability and sales growth targets). Non market vesting conditions are
included in assumptions about the number of options that are expected to vest. At each balance sheet date, the Group revises its estimate of the number of options that are expected to vest.
It recognizes the impact of the revision of original estimates, if any, in the consolidated income statement, with a corresponding adjustment to equity. The dilutive effect of outstanding
options is reflected as additional share dilution in the computation of earnings per share.

Subsequent
to May 2006, restricted share awards are granted to the Directors, management and key employees.

The
cost of these equity-settled transactions is recognized, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are
fulfilled, ending on the date on which the relevant employee becomes fully entitled to the award (the vesting date). The cumulative expense recognized for equity-settled transactions at each reporting
date until the vesting

F-24

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

date
reflects the extent to which 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 vesting irrespective of
whether or not the market conditions are satisfied, provided that all other performance conditions are satisfied. Where the terms of an equity-settled award are modified, as a minimum an expense is
recognized as if the terms had not been modified. In addition, an expense is recognized for any modification, which increases the total fair value of the share based payment arrangement, or is
otherwise beneficial to the employee as measured at the date of modification.

2.25    Taxation

Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rate and tax laws used to compute the amount are those enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax base of
assets and liabilities and their carrying amount for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences, 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, affects neither the
accounting profit nor taxable profit or loss.

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

The
carrying amount of deferred income tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that
it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred
income tax assets and liabilities are measured at the tax rate expected to apply to the year when the assets is realized or the liability is settled, based on tax rates and tax
laws that have been enacted or substantively enacted at the balance sheet 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 offset, if legally enforceable rights exist to set off current tax

F-25

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

assets
against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

2.26    Discontinued operations

Revenues and expenses associated with discontinued operations are presented in a separate line on the consolidated income statement.
Comparative figures in the consolidated income statement representing the discontinued operations are also reclassified to a separate line. Discontinued operations are those with identifiable
operations and cash flows (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.

2.27    Changes in accounting policies

The consolidated financial statements as of December 31, 2009 are prepared in accordance with consolidation and accounting
policies consistent with those of the previous financial years, with the exception of the early adoption as of January 1, 2009 of IFRS 3R, 'Business combinations', and IAS 27R,
'Consolidated and separate financial statements'.

The
Group early adopted IFRS 3R, 'Business combinations', in 2009 for the step-up acquisition of Navega.com S.A. (see note 4). Millicom revalued its
previously held interests in Navega.com S.A. at fair value, recognising the resulting gain in the consolidated income statement.

The
revised standard, in general, continues to apply the acquisition method to business combinations but with some significant changes compared with IFRS 3. For example, all
payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the statement of
comprehensive income. There is a
choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling
interest's proportionate share of the acquiree's net assets. All acquisition-related costs should be expensed.

As
the Group has early adopted IFRS 3R, it is required to early adopt IAS 27R, 'Consolidated and separate financial statements', at the same time. IAS 27R requires
the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains
and losses. The standard also specifies the accounting treatment when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognized
in profit or loss.

IAS 38
(amendment), 'Intangible Assets' is applied by the Group from the date IFRS 3R was adopted. The amendment to the IAS 38 clarifies guidance in measuring the
fair value of an intangible asset acquired in a business combination and it permits the grouping of intangible assets as a single asset if each asset has similar useful economic lives. The amendment
did not result in a material impact on the Group's consolidated financial statements.

F-26

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

The
following new standards and amendments to standards, which affect the presentation of the consolidated financial statements, were mandatory for the first time for the financial year
beginning January 1, 2009.



In
addition, the following amendments to standards and interpretations, which could affect Millicom's financial position and accounting policies, are mandatory for the first time for the
financial year beginning January 1, 2009, but are not currently relevant nor have a material impact for the Group.



F-27

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)



Finally,
the following new standards and interpretations have been issued, but are not effective for the period of these financial statements and have not been early adopted.



F-28

---





Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)



3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

10% Senior Notes

In October 2007, Millicom decided that it would redeem the balance of the 10% Senior Notes in December 2008, and pay the contractual
redemption premium of 5% (see note 26). Millicom reviewed its estimates of future cash flows and, as a result, an additional interest expense of $31 million was recorded for the year
ended December 31, 2007. The 10% Senior Notes was also reclassified from non-current to current.

F-29

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (Continued)

Millicom
reviewed its position to early repay the Notes in September 2008 and the Board of Directors decided not to early redeem the Notes but to keep them until the contractual maturity
date (December 1, 2013). This decision impacted the future expected cash flows and, as a result, the 5% premium accrued in 2007 was completely reversed and an interest income amounting to
$29 million was recorded in 2008.

Contingent liabilities

Contingent liabilities are potential liabilities that arise from past events whose existence will be confirmed 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. The 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 the inherent uncertainties in this evaluation process, actual losses may be different from the originally estimated provision. In
addition, significant estimates are involved in the determination of impairments, provisions related to taxes and litigation risks. These estimates are subject to change as new information becomes
available and changes subsequent to these estimates may significantly affect future operating results.

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

Deferred
tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant
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 profits together with future tax
planning strategies (see note 13).

For
our critical accounting estimates reference is made to the relevant individual notes to these consolidated financial statements, more specifically
note 4Acquisition of subsidiaries, joint ventures and non-controlling interests; note 6Discontinued operations and assets held for sale;
note 13Taxes; note 15Intangible assets, note 16Property, plant and equipment, note 19Trade receivables,
note 24Share based compensation (relating to the long term incentive plan); note 31Commitments and contingencies; and note 34Financial
instruments.

F-30

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

4. ACQUISITIONS OF SUBSIDIARIES, JOINT VENTURES AND NON-CONTROLLING INTERESTS

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"). Millicom's share of the acquisition cost of the remaining 55% interest in Navega 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 identifiable assets and liabilities acquired was as follows:

Fair value

Previously
held interestsUS$ '000

US$ '000Intangible assets, net(i)


51,442


8,988Property, plant and equipment, net


34,205


18,995Other non-current assets


122


87Trade receivables


3,196


1,739Prepayments and accrued income


13


8Current income tax assets


16


7Other current assets(ii)


2,400


353Cash and cash equivalents


10,656


5,070102,050


35,247Other non-current liabilities(iii)


3,437


Current debt and other financing


10,953


5,546Trade payables


7,241


4,611Accrued interests and other expenses


557


286Current income tax liabilities


2,872


1,899Other current liabilities(ii)


16,589


5,96141,649


18,303Fair value of the net assets acquired and contingent liabilities


60,401Goodwill arising on acquisition


38,203Previously held interests in Navega and Metrored


(16,944
)Revaluation of the previously held interests in Navega and Metrored


(32,319
)Acquisition cost


49,341


(i)Intangible assets not previously recognized are trademarks for an amount of $2 million (Millicom's share: $1 million), with estimated useful
life of 8 years, and customers' list for an amount of $62 million (Millicom's share: $35 million), with estimated useful life of 9 years.


F-31

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

4. ACQUISITIONS OF SUBSIDIARIES, JOINT VENTURES AND NON-CONTROLLING INTERESTS (Continued)

(ii)Contingent liabilities relating to tax and other contingencies at the time of the acquisition and amounting to $6 million (Millicom's share:
$3 million) were booked within "Other current liabilities". The former shareholders of Navega.com and Metrored placed in escrow $3 million to partly cover these contingencies. Therefore
a corresponding financial asset of $3 million (Millicom's share: $2 million) has been recorded within "Other current assets".(iii)Deferred tax liabilities, related to the differences between the tax base and the fair value of the identifiable assets acquired amount to
$6 million (Millicom's share: $3 million).


The goodwill, which is not expected to be tax deductible, is attributable to the profitability potential of the acquired business and the synergies expected to
arise from the Group's acquisition of Navega. The 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.

The
acquired business contributed revenues of $21 million and net profit 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 profit from continuing operations for the same period would have been $507 million. These amounts have been calculated using the Group accounting policies.

Millicom
decided to early adopt IFRS 3R and has 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. The initial consideration amounted to $8 million and was paid in cash. If certain conditions are met, Millicom will have to pay further $2 million within the
14 months following the balance sheet date.

Millicom
decided to early adopt IAS 27R and applied it to this acquisition (see note 2). As a result, the purchase of the non-controlling interest in Chad was
treated as an equity transaction. The difference between the acquisition cost and the carrying value of the existing non-controlling interest at the date of the transaction resulted in a
decrease of Millicom shareholders' equity of $10 million.

Other minor investments

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

Year ended December 31, 2008

In 2008, Millicom acquired 100% interest in Amnet Telecommunications Holding Limited.

F-32

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

4. ACQUISITIONS OF SUBSIDIARIES, JOINT VENTURES AND NON-CONTROLLING INTERESTS (Continued)

Amnet Telecommunications Holding Limited

On October 1, 2008, the Group acquired 100% interest in Amnet Telecommunications Holding Limited (together with its subsidiaries
"Amnet" or "Amnet Group"). Amnet is a provider of broadband and cable television services in Costa Rica, Honduras and El Salvador, of fixed telephony in El Salvador and Honduras, and of corporate data
services in the above countries as well as Guatemala and Nicaragua. Acquisition cost amounted to $546 million and net cash acquired to $14 million; net cash used for the acquisition of
Amnet therefore amounted to $532 million.

Millicom
completed the allocation of the purchase price to the assets acquired, liabilities assumed and contingent liabilities during the year ended December 31, 2008. The final
determined fair value of the identifiable assets and liabilities acquired were as follows:

Recognized on
acquisition

Carrying valueUS$ '000

US$ '000Intangible assets, net(i)


162,383


26,631Property, plant and equipment, net


71,197


67,911Other non-current assets


3,093


3,093Financial assets


7,502


7,502Inventories


1,454


1,454Trade receivables


8,052


8,052Prepayments and accrued income


2,960


2,960Current income tax assets


3,728


3,728Other current assets(ii)


27,899


3,989Cash and cash equivalents


13,497


13,497301,765


138,817Non-current debt and other financing


116


116Other non-current liabilities(iii)


43,337


1,810Current debt and other financing


3,271


3,271Trade payables


9,992


9,992Accrued interest and other expenses


5,950


5,950Current income tax liabilities


7,057


7,057Other current liabilities(ii)


26,294


2,38496,017


30,580Fair value of net assets acquired and contingent liabilities (100%)


205,748Goodwill arising on acquisition


339,982Acquisition cost


545,730


(i)Intangible assets identified are trademarks for an amount of $5 million, with estimated useful life of 15 months; customer bases for an amount
of $123 million, with estimated useful life of 4 to 9 years; and non-compete agreements for $19 million, with estimated useful lives of 4 years.


F-33

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

4. ACQUISITIONS OF SUBSIDIARIES, JOINT VENTURES AND NON-CONTROLLING INTERESTS (Continued)

(ii)Contingent liabilities relate to existing tax and other contingencies at the time of the acquisition amounting to $24 million were booked within
"Other current liabilities". The former shareholders of Amnet placed in escrow $35 million to cover these contingencies. Therefore a corresponding financial asset of $24 million has been
recorded within "Other current assets".(iii)Deferred tax liabilities, related to the differences between the tax base and the fair values of the identifiable assets acquired at the time of
acquisition amounted to $42 million.


The goodwill is attributable to the profitability potential of the acquired business and the synergies expected to arise from the Group's acquisition of Amnet.
The 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. The fair
value of the non-compete agreements was ascertained using the incremental cash flow approach. Acquisition cost of Amnet was $546 million, including acquisition costs of
$4 million and was funded through a one-year bridge loan facility with two commercial banks and cash (see note 26).

The
acquired business contributed revenues of $43 million and net profit of $4 million for the period from acquisition to December 31, 2008. If the acquisition had
occurred on January 1, 2008, unaudited pro forma Group revenue from continuing operations would have been $3,534 million, and the unaudited pro forma profit for the year from continuing
operations would have been $437 million. These amounts have been calculated using the Group accounting policies.

Year ended December 31, 2007

Millicom did not acquire any subsidiaries, joint ventures or non-controlling interests during the year ended
December 31, 2007.

5. DISPOSALS OF SUBSIDIARIES AND JOINT VENTURES

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, $1 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.

Year ended December 31, 2008

In 2008, Millicom did not dispose of any subsidiary or joint venture.

Year ended December 31, 2007

In 2007, Millicom completed the sale of Paktel Limited, for total proceeds of $285 million realizing a net gain of
$258 million. Millicom incurred costs of $14 million on the transaction and of the net proceeds of $271 million, Millicom received $263 million in 2007 and the remaining
$8 million in January 2008 (see note 6).

F-34

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

6. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

Discontinued operations

The results of discontinued operations for the years ended December 31, 2009, 2008 and 2007 are presented below:

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Revenues


218,874


270,738


207,662Operating expenses(ii)


(193,038
)

(243,345
)

(174,446
)Gain from disposal, net


288,860





258,346Operating profit


314,696


27,393


291,562Non-operating expenses, net


(10,500
)

(16,591
)

(13,688
)Profit before tax


304,196


10,802


277,874Tax charge


(3,854
)

(8,556
)

(3,367
)Profit for the year attributable to equity holders


300,342


2,246


274,507


(i)Figures for 2008 and 2007 have been adjusted to include Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.(ii)In 2009, an impairment of $11 million (2008: $11 million; 2007: $1 million) was booked to align the carrying value of Millicom's
operation in Sierra Leone to its estimated fair value less cost to sell.


The cash (used) provided by discontinued operations for the years ended December 31, 2009, 2008 and 2007 is presented below:

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Net cash provided by operating activities


29,906


73,956


70,144Net cash used by investing activities


(62,795
)

(129,366
)

(85,056
)Net cash (used) provided by financing activities


(8,270
)

(22,323
)

38,154Exchange (loss) gain on cash and cash equivalents


(158
)

1,587


124Transfer of cash to assets held for sale


(19,099
)

(521
)

Proceeds from the sale of discontinued operations


477,171


7,593


263,037Cash provided (used) by discontinued operations


416,755


(69,074
)

286,403


(i)Figures for 2008 and 2007 have been adjusted to include Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.


F-35

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

6. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE (Continued)




The following table gives details of non cash investing and financing activities of discontinued operations for the years ended December 31, 2009, 2008 and
2007:

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Investing activitiesAcquisition of property, plant and equipment


(873
)

(6,563
)

Financing activitiesVendor financing and finance leases


873


6,563





(i)Figures for 2008 and 2007 have been adjusted to include Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.


Asia segment

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 have been classified as discontinued operations. Millicom's operations in Sri Lanka and Cambodia were sold respectively on October 16 and November 26,
2009. As a result, as at December 31, 2009, Laos's assets and liabilities only were disclosed under the caption "Assets held for sale" and "Liabilities directly associated with assets held for
sale". Millicom's businesses in Cambodia, Laos and Sri Lanka previously represented the whole of the operating segment "Asia".

Millicom Sierra Leone Limited

In December 2008, Millicom decided to dispose of its business in Sierra Leone, Millicom Sierra Leone Limited, and, as a
result, in accordance with IFRS 5, this operation has been classified as a discontinued operation. In addition as at December 31, 2008 the assets and liabilities of Millicom
Sierra Leone Limited are disclosed under the captions "Assets held for sale" and "Liabilities directly associated with assets held for sale". Millicom operation in Sierra Leone was previously
disclosed under the operating segment "Africa".

Assets held for sale

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. Completion of the transaction was subject to certain
conditions, which were not satisfied before the year-end. As a result, Millicom's operation in Laos was classified as a disposal group held for sale as of December 31, 2009. As of
that date, Millicom kept all assets and liabilities of its Laos operation at the carrying values as they were lower than the estimated fair value less cost to sell.

In
addition, 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 sites. As the criteria stated by IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations' are met as at December 31, 2009, assets and relevant
liabilities (asset retirement obligations) that are part

F-36

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

6. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE (Continued)

of
this sale and will not be leased back have been reclassified respectively as assets held for sale and liabilities directly associated with assets held for sale. Net amount reclassified, which
excludes the portion of these assets which will be leased back, amounted to $23 million as at December 31, 2009.

The
major classes of assets and liabilities classified as held for sale as at December 31, 2009 and 2008 are as follows:

2009

2008US$ '000

US$ '000AssetsProperty, plant and equipment, net


70,030


17,977Trade receivables, net


3,490


553Inventories


312


357Other assets


2,979


1,155Cash and cash equivalents


1,465


521Assets held for sale


78,276


20,563LiabilitiesNon-current debt and other financing


8,244


41Other non-current liabilities


7,982


691Current debt and other financing


5,124


57Trade payables


14,317


3,023Other current liabilities


7,915


3,286Liabilities directly associated with assets held for sale


43,582


7,098Net assets directly associated with the disposal group


34,694


13,465


F-37

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

7. SUBSIDIARIES

The Group has the following significant subsidiaries, which are consolidated:

Name of the company

Country

Holding
December 31,
2009

Holding
December 31,
2008% of ownership
interest

% of ownership
interestCentral AmericaTelemovil El Salvador S.A.

El Salvador


100.0


100.0South AmericaTelefonica Celular de Bolivia S.A.

Bolivia


100.0


100.0Telefonica Celular del Paraguay S.A.

Paraguay


100.0


100.0Colombia Movil S.A. E.S.P.

Colombia


50.0 + 1 share


50.0 + 1 shareAfricaMillicom Ghana Company Limited

Ghana


100.0


100.0Sentel GSM S.A.

Senegal


100.0


100.0Millicom (S.L.) Limited (see note 5)

Sierra Leone





100.0MIC Tanzania Limited

Tanzania


100.0


100.0Oasis S.P.R.L.

Democratic Republic of Congo


100.0


100.0Millicom Tchad S.A. (see note 4)

Chad


100.0


87.5Millicom Rwanda Limited

Rwanda


87.5


87.5AsiaMillicom Lao Co. Limited (see note 6)

Lao People's Democratic Republic


74.1


74.1Tigo (Pvt) Limited (see note 5)

Sri Lanka





99.9AmnetAmnet Telecommunications Holding Limited (see note 4)

Bermuda


100.0


100.0UnallocatedMillicom International Operations S.A.

Luxembourg


100.0


100.0Millicom International Operations B.V.

Netherlands


100.0


100.0MIC Latin America B.V.

Netherlands


100.0


100.0Millicom Africa B.V.

Netherlands


100.0


100.0Millicom Holding B.V.

Netherlands


100.0


100.0Millicom Ireland Limited

Ireland


100.0


100.0


8. INTERESTS IN JOINT VENTURES

The Group has the following significant joint venture companies, which are proportionally consolidated:

Name of the company

Country

Holding
December 31,
2009

Holding
December 31,
2008% of ownership
interest

% of ownership
interestCentral AmericaComunicaciones Celulares S.A.

Guatemala


55.0


55.0Telefonica Celular S.A.

Honduras


66.7


66.7Navega.com S.A. (see notes 4 and 17)

Guatemala


55.0


Metrored S.A. (see notes 4 and 17)

Honduras


60.7


AfricaEmtel Limited

Mauritius


50.0


50.0AsiaCam GSM Campany Limited

Cambodia





58.4


F-38

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

8. INTERESTS IN JOINT VENTURES (Continued)

Millicom's joint ventures in Cambodia were sold on November 26, 2009 (see note 5).

The
share of assets and liabilities of the jointly controlled entities at December 31, 2009 and 2008, which are included in the consolidated financial statements, are as follows:

2009

2008US$ '000

US$ '000Current assets


177,878


194,994Non-current assets


644,553


644,550Total assets


822,431


839,544Current liabilities


250,552


282,492Non-current liabilities


166,698


112,116Total liabilities


417,250


394,608


The share of revenues and operating expenses of the jointly controlled entities for the years ended December 31, 2009, 2008 and 2007, which are included in
the consolidated income statements from continuing operations, are as follows:

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Revenues


947,600


968,317


776,652Total operating expenses


(503,298
)

(488,632
)

(385,467
)Operating profit


444,302


479,685


391,185


(i)Comparative information reclassified as a result of the classification of Millicom's operations in Cambodia as discontinued operations.


9. SEGMENT INFORMATION

Management has determined the operating and reportable segments based on the reports that are used to make strategic and operational decisions.

Management
considers the Group from both a business and geographic perspective. The Group operates in the mobile telephony business as well as in the cable business (including broadband,
television and fixed telephony). The Group's risks and rates of return for its mobile operations are affected predominantly by the fact that it operates in different geographical regions. The mobile
operating businesses are organized and managed according to these selected geographical regions, which represent the basis for evaluation of past performance and for making decisions about the future
allocation of resources.

F-39

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

9. SEGMENT INFORMATION (Continued)

The
Group has mobile businesses in three regions: Central America, South America and Africa. Its Cable business, which includes Amnet and Navega, operates in Central America. Millicom's
operation in Sierra Leone and the Asia region have been classified as discontinued operations (see note 6). Millicom's operations in Sri Lanka, Sierra Leone and Cambodia have been sold
in 2009 (see note 5).

The
following tables present revenues, operating profit/(loss) and other segment information for the years ended December 31, 2009, 2008 and 2007:

December 31, 2009

Central
America

South
America

Africa

Cable

Unallocated
items

Total
continuing
operations

Discontinued
operations
(note 6)

Inter-
company
elimination

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000Revenues


1,314,760


1,075,914


782,150


199,903





3,372,727


218,874




3,591,601Operating profit (loss)


584,341


227,904


84,582


31,295


(77,099
)

851,023


314,696




1,165,719Add back:Depreciation and amortization


145,741


208,469


196,832


59,311


1,082


611,435


34,842




646,277Loss (gain) of disposal and impairment


725


2,222


3,401


636


262


7,246


(277,665
)



(270,419
)Share based compensation














10,175


10,175







10,175Corporate costs














65,580


65,580







65,580Adjusted operating profit (loss)(i)


730,807


438,595


284,815


91,242





1,545,459


71,873




1,617,332Total Assets(ii)


1,256,219


1,370,202


1,586,488


876,112


732,667


5,821,688


411,939

(242,609)


5,991,018Total Liabilities


645,879


1,141,956


1,594,662


612,078


470,781


4,465,356


242,625

(1,027,093)


3,680,888Additions to:Property, plant and equipment


102,295


143,556


395,352


49,297


246


691,376


79,072




770,448Intangible assets


7,813


19,489


2,892


15,272


646


46,112







46,112Capital expenditure


110,738


163,045


398,244


64,569


892


737,488


79,072




816,560




December 31, 2008

Central
America

South
America

Africa

Cable

Unallocated
items

Total
continuing
operations

Discontinued
operations
(note 6)

Inter-
company
elimination

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000Revenues


1,376,848


1,019,332


711,364


43,015





3,150,559


270,738




3,421,297Operating profit (loss)


642,851


149,848


95,935


6,537


(76,949
)

818,222


27,393




845,615Add back:Depreciation and amortization


112,296


198,861


140,094


11,518


951


463,720


57,257




520,977Loss (gain) of disposal and impairment


3,865


2,816


1,551


(7
)

941


9,166


11,049




20,215Share based compensation














13,619


13,619







13,619Corporate costs














61,438


61,438







61,438Adjusted operating profit (loss)(i)


759,012


351,525


237,580


18,048





1,366,165


95,699




1,461,864Total Assets(ii)


1,242,421


1,260,230


1,484,841


738,554


389,669


5,115,715


409,114

(304,021)


5,220,808Total Liabilities


556,799


1,071,739


1,396,189


174,959


927,215


4,126,901


369,790

(927,960)


3,568,731Additions to:Property, plant and equipment


283,255


351,134


510,836


11,164


1,298


1,157,687


163,629




1,321,316Intangible assets


10,756


18,033


90,244


384


135


119,552


1,823




121,375Capital expenditure


294,011


369,167


601,080


11,548


1,433


1,277,239


165,452




1,442,691




F-40

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

9. SEGMENT INFORMATION (Continued)

December 31, 2007

Central
America

South
America

Africa

Cable

Unallocated
items

Total
continuing
operations

Discontinued
operations
(note 6)

Inter-
company
elimination

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000Revenues


1,149,368


809,881


469,833








2,429,082


207,662




2,636,744Operating profit (loss)


526,369


106,591


66,716





(69,014
)

630,662


291,562




922,224Add back:Depreciation and amortization


80,695


144,704


87,935





239


313,573


41,367




354,940Loss (gain) of disposal and impairment


1,083


1,937


173





(44
)

3,149


(257,680
)



(254,531
)Reduction of goodwill





23,358











23,358







23,358Share based compensation














19,228


19,228







19,228Corporate costs














49,591


49,591







49,591Adjusted operating profit (loss)(i)


608,147


276,590


154,824








1,039,561


75,249




1,114,810Total Assets


1,086,366


1,143,305


1,046,669





1,087,774


4,364,114


299,976

(250,264)


4,413,826Total Liabilities


521,285


859,455


947,234





875,084


3,203,058


227,936

(385,504)


3,045,490Additions to:Property, plant and equipment


282,312


319,861


333,976





926


937,075


99,085




1,036,160Intangible assets


9,366


5,216


3,323





943


18,848


594




19,442Capital expenditure


291,678


325,077


337,299





1,869


955,923


99,679




1,055,602


(i)Adjusted operating profit is the measure used by the management to monitor the segmental performance and for the capital management also (see
note 33).(ii)Segment assets include goodwill and other intangibles and tangibles emerged from the acquisition of Navega and
Amnet.


Revenues from continuing operations for the years ended December 31, 2009, 2008 and 2007 analyzed by country are as follows:

2009

2008

2007US$ '000

US$ '000

US$ '000Guatemala


517,555


515,531


426,207El Salvador


493,298


461,878


401,023Honduras


436,435


426,689


322,138Colombia


444,899


448,374


447,557Paraguay


387,964


392,626


255,403Other


1,092,576


905,461


576,754Total


3,372,727


3,150,559


2,429,082


F-41

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

9. SEGMENT INFORMATION (Continued)

Non-current assets as at December 31, 2009 and 2008 analyzed by country are as follows:

2009

2008US$ '000

US$ '000Guatemala


308,580


215,284El Salvador


441,521


487,197Honduras


329,791


287,345Colombia


585,184


593,912Paraguay


231,917


239,692Other(i)


1,858,485


1,954,144Total


3,755,478


3,777,574


(i)Includes Amnet goodwill of $340 million (December 31, 2008: $340 million), which has been allocated to the Amnet business as a
whole.


10. ANALYSIS OF OPERATING PROFIT

The Group's operating income and expenses from continuing operations analyzed by nature of expense is as follows:

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Revenues


3,372,727


3,150,559


2,429,082Cost of rendering telecommunication services


(716,269
)

(737,407
)

(615,645
)Depreciation and amortization (notes 9, 15 and 16)


(611,435
)

(463,720
)

(313,573
)Dealer commissions


(300,487
)

(286,007
)

(203,776
)Employee related costs (note 11)


(249,757
)

(210,545
)

(169,024
)Sites and network maintenance


(151,816
)

(123,176
)

(83,855
)Advertising and promotion


(122,986
)

(132,351
)

(103,669
)Phone subsidies


(108,714
)

(143,634
)

(112,111
)External services


(81,537
)

(74,080
)

(66,257
)Operating lease expense (note 31)


(72,749
)

(59,486
)

(42,174
)Billing and payments


(21,005
)

(16,853
)

(12,638
)Reduction of goodwill (notes 9 and 15)








(23,358
)Loss on disposal and impairment of assets, net (note 9 and 16)


(7,246
)

(9,166
)

(3,149
)Other expenses


(77,703
)

(75,912
)

(49,191
)Operating profit


851,023


818,222


630,662


(i)Figures for 2008 and 2007 have been adjusted, excluding Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka, and reclassified to improve the
presentation of the operating profit.


F-42

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

10. ANALYSIS OF OPERATING PROFIT (Continued)

The
following table summarizes the aggregate amounts paid to Millicom's auditors for the years ended December 31, 2009, 2008 and 2007.

2009

2008

2007US$ '000

US$ '000

US$ '000Audit Fees


4,179


4,276


3,801Audit Related Fees


115


15


14Tax Fees


61


52


54All Other Fees


71


5


12Total


4,426


4,348


3,881


Audit related services consist principally of consultations related to financial accounting and reporting standards, including making recommendations to
management regarding internal controls and the issuance of certifications of loan covenant compliance required by Millicom's debt agreements.
Tax services consist principally of tax planning services and tax compliance services. Other services are services not included in the other categories.

11. EMPLOYEE RELATED COSTS

Employee related costs are comprised of the following:

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Wages and salaries


(183,220
)

(141,931
)

(108,759
)Social security


(20,105
)

(17,863
)

(12,891
)Share based compensation (see note 24)


(10,175
)

(13,619
)

(19,228
)Other employee related costs(ii)


(36,257
)

(37,132
)

(28,146
)Total


(249,757
)

(210,545
)

(169,024
)


(i)Figures for 2008 and 2007 have been adjusted, excluding Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.(ii)Includes pension costs and other benefits.


The
average number of permanent employees during the years ended December 31, 2009, 2008 and 2007 was as follows:

2009

2008(i)

2007(i)Continuing operations


5,937


4,861


3,583Discontinued operations


1,852


1,812


1,185Total average number of permanent employees


7,789


6,673


4,768


(i)Figures for 2008 and 2007 have been adjusted, excluding Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.


F-43

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)




12. OTHER NON-OPERATING INCOME (EXPENSES), NET

The Group's other non-operating (expenses) income, net is comprised of the following:

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Loss on repurchase of the 10% Senior Notes (see note 26)








(4,961
)Other exchange (losses) gains, net


(32,181
)

(52,265
)

14,945Other non operating (expenses) income, net


(32,181
)

(52,265
)

9,984


(i)Figures for 2008 and 2007 have been adjusted, excluding Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.


13. TAXES

Group taxes are mainly comprised of 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 2009, 2008 or 2007.

The
effective tax rate on continuing operations is approximately 27% (2008: 40%, 2007: 16%). Currently Millicom operations are in jurisdictions with income tax rates of 10% to 40% (2008
and 2007: 10% to 40%).

The
reconciliation between the weighted average statutory tax rate and the effective average tax rate is as follows:

2009

2008(i)

2007(i)%

%

%Weighted average statutory tax rate(ii)


23


22


23Derecognition (recognition) of previously unrecorded tax losses





10


(11
)Unrecognized current year tax losses(iii)


9


10


10Non taxable income and non deductible expenses, net


(1
)

(1
)

(2
)Taxes based on revenue


(8
)

(8
)

(10
)Income taxes at other than statutory tax rates


3


4


2Withholding taxes on transfers between operating and non operating entities


3


3


4Non taxable gain arising from revaluation of previously held interests


(2
)




Effective tax rate(iv)


27


40


16


(i)Figures for 2008 and 2007 have been adjusted, excluding Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.(ii)The 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 profit or loss before tax, by the aggregate profit before tax.(iii)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 Colombia (2008: Colombia and the Democratic Republic of Congo; 2007: Democratic Republic of Congo).(iv)The variation in the effective tax rate is mainly due to the recognition of deferred tax assets for tax loss carry forwards in Colombia in 2007 and its
impairment in 2008 (see below).


F-44

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

13. TAXES (Continued)

In October 2006, the Group acquired Colombia Móvil. At the time of acquisition, Colombia Móvil had tax loss carry forwards. When
completing the purchase price allocation, Millicom assessed that it was not probable that these tax loss carry-forwards would be used. Thus no deferred tax asset was recognized on acquisition. Given
the 2007 actual results of Colombia Móvil and its forecasted performance, Colombia Móvil was expected to be profitable in a foreseeable future. Accordingly, an amount of
$86 million was recorded in deferred tax assets corresponding to $39 million related to tax losses after the acquisition and $47 million related to tax losses prior to the
acquisition. Management estimated that these tax losses were to be used against future taxable profit. As part of these losses existed at the time of acquisition some of the goodwill recorded at
acquisition was reversed resulting in an expense of $23 million in 2007 recorded under the caption "other operating expenses".

As
the business conditions have been negatively impacted by the change in the interconnect rates, Colombia performance deteriorated since the first recognition of deferred tax assets.
Therefore, it was no longer considered probable that Millicom could utilize these fiscal loss carryforwards in the near future. Therefore the previously recognized deferred tax asset was impaired
through the income statement.

The
charge for income taxes from continuing operations is shown in the following table and recognizes that revenue and expense items may affect the financial statements and tax returns
in different periods (temporary differences):

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Current income tax charge


(201,230
)

(192,427
)

(169,325
)Net deferred income tax benefit (expense)


13,232


(76,386
)

85,615Charge for taxes


(187,998
)

(268,813
)

(83,710
)


(i)Figures for 2008 and 2007 have been adjusted, excluding Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.


F-45

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

13. TAXES (Continued)




The
tax effects of significant items comprising the Group's net deferred income tax asset and liability as of December 31, 2009 and 2008 are as follows:

Consolidated balance
sheets

Consolidated income
statements2009

2008

2009

2008(i)US$ '000

US$ '000

US$ '000

US$ '000Loss carryforwards


5,877


7,822


(1,945
)

(77,990
)Provision for doubtful debtors


3,604


3,402


408


1,277Temporary differences between book and tax basis of intangible assets and property, plant and equipment


(36,631
)

(45,271
)

(2,411
)

(1,851
)Deferred tax liabilities recognized as part of the acquisition of Amnet (see note 4)


(32,042
)

(41,527
)

9,485


Deferred tax liabilities recognized as part of the acquisition of Navega (see note 4)


(2,962
)




540


Temporary differences between book and tax basis of other assets and liabilities


15,592


8,732


7,155


2,178Deferred tax benefit (expense)








13,232


(76,386
)Deferred tax liabilities, net


(46,562
)

(66,842
)Reflected in the balance sheets as follows:Deferred tax assets


19,930


14,221Deferred tax liabilities


(66,492
)

(81,063
)


(i)Figures for 2008 have been adjusted, excluding Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.


Deferred
income tax assets and liabilities reflect temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes.

No
deferred tax liability was recognized in respect of $1,955 million (2008: $2,022 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 differences and it was unlikely that such differences 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.

Unrecognized
net operating losses and other tax loss carryforwards relating to continuing operations amounted to $885 million as at December 31, 2009 (2008:
$610 million, 2007: $120 million) with expiry periods of between 1 and 6 years except for $326 million where the losses do not expire. In addition the Company has
unrecognized net operating losses of $1,971 million (2008: $1,823 million) which do not expire.

14. EARNINGS PER SHARE

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to equity holders of the Company by the weighted average number of ordinary shares
outstanding during the year.

F-46

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

14. EARNINGS PER SHARE (Continued)

Diluted
earnings per share amounts are calculated by dividing the net profit for the year attributable to equity holders of the Company (after deducting interest on the convertible notes
if the conversion of these notes would be dilutive) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of dilutive potential shares.

The
following reflects the net profit and share data used in the basic and diluted earnings per share computations:

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000BasicNet profit attributable to equity holders from continuing operations


551,390


516,316


422,763Net profit attributable to equity holders from discontinued operations


298,858


1,200


274,379Net profit attributable to equity holders used to determine the basic earnings per share


850,788


517,516


697,142DilutedNet profit attributable to equity holders from continuing operations


551,390


516,316


422,763Interest expense on convertible debt (note 26)





760


16,640Net profit attributable to equity holders from continuing operations used to determine the diluted earnings per share


551,390


517,076


439,403Net profit attributable to equity holders from discontinued operations


298,858


1,200


274,379Net profit attributable to equity holders used to determine the diluted earnings per share


850,788


518,276


713,782




2009

2008

2007'000

'000

'000Weighted average number of ordinary shares (excluding treasury shares) for basic earnings per share


108,527


107,869


101,088Effect of dilution:Potential incremental shares as a result of share options


223


434


1,250Assumed conversion of convertible debt





343


5,709Weighted average number of ordinary shares (excluding treasury shares) adjusted for the effect of dilution


108,750


108,646


108,047


(i)Figures for 2008 and 2007 have been adjusted, excluding Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.


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.

F-47

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

15. INTANGIBLE ASSETS

The movements in intangible assets in 2009 were as follows:

Goodwill

Licenses

Other(iii)

TotalUS$ '000

US$ '000

US$ '000

US$ '000Opening balance, net


507,295


223,678


259,377


990,350Change in the composition of the Group (see note 4)(i)


38,203


7,566


51,442


97,211Transfer to assets held for sale (see note 6)


(298
)

(8,453
)

(73
)

(8,824
)Additions (see note 9)





18,382


27,730


46,112Amortization charge(ii)





(30,142
)

(57,798
)

(87,940
)Transfers





7,603


(7,603
)

Other movements





(107
)

452


345Exchange rate movements


2,786


(17
)

4,814


7,583Closing balance, net


547,986


218,510


278,341


1,044,837As at December 31, 2009Cost or valuation


547,986


338,008


413,617


1,299,611Accumulated amortization





(119,498
)

(135,276
)

(254,774
)Net


547,986


218,510


278,341


1,044,837


(i)The change in the composition of the Group corresponded to the acquisition of Navega and other minor investments.(ii)The amortization charge for Licenses and Other is recorded under the caption "General and administrative expenses".(iii)The caption "Other" includes mainly those intangible assets identified in business combination (i.e. customers' lists and
trademarks).


F-48

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

15. INTANGIBLE ASSETS (Continued)




The
movements in intangible assets in 2008 were as follows:

Goodwill

Licenses

Other(v)

TotalUS$ '000

US$ '000

US$ '000

US$ '000Opening balance, net


183,857


154,854


128,791


467,502Change in the composition of the Group (see note 4)(i)


339,982


252


162,131


502,365Additions(iv)





107,377


13,998


121,375Amortization charge(ii)





(34,158
)

(32,033
)

(66,191
)Impairment(iii)


(2,892
)







(2,892
)Other movements





5,011


(5,819
)

(808
)Exchange rate movements


(13,652
)

(9,658
)

(7,691
)

(31,001
)Closing balance, net


507,295


223,678


259,377


990,350As at December 31, 2008Cost or valuation


507,295


309,480


328,865


1,145,640Accumulated amortization





(85,802
)

(69,488
)

(155,290
)Net


507,295


223,678


259,377


990,350


(i)The change in the composition of the Group corresponded to the acquisition of Navega and other minor investments.(ii)The amortization charge for Licenses and Other is recorded under the caption "General and administrative expenses".(iii)Millicom operation in Sierra Leone (see note 6).(iv)Acquisitions of License refer for $67 million to the license for the Millicom operation in Rwanda (see note 1).(v)The caption "Other" includes mainly those intangible assets identified in business combination (i.e. customers' lists and trademarks).


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

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Additions


46,112


121,375


19,442Additions from Discontinued Operations





(1,823
)

(594
)Subtotal


46,112


119,552


18,848License installments





323


6,626License acquisition costs, paid in shares in Millicom Rwanda Limited





(7,159
)

Other


(108
)




Cash used from continuing operations for additions from intangible assets


46,004


112,716


25,474


(i)Figures for 2008 and 2007 have been adjusted, excluding Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.


F-49

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

15. INTANGIBLE ASSETS (Continued)




Impairment test of goodwill

For the year ended December 31, 2009, management tested at year-end all goodwill for impairment. The Group
determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating unit to which the goodwill is allocated.

The
recoverable amount of a cash-generating unit ("CGU") or group of CGUs is determined based on discounted cash flow calculation. The cash flow projections used (adjusted
operating profit margins, income tax, working capital, capital expenditure and license renewal cost) are extracted from financial budgets approved by the management and the Board covering a period of
3 years. The planning horizon reflects industry practice in the countries where the Group operates. Cash flows beyond this period are extrapolated using a perpetual growth rate of 1% (2008:
1.5%). Apart from Millicom's operation in Sierra Leone (see note 6), no impairment losses were recorded on goodwill for the years ended December 31, 2009 and 2008.

The
recoverable amounts have been determined for the cash generating units based on the following discount rates for the years ended December 31, 2009 and 2008:

Discount rate after tax2009

2008Central America, including Amnet and Navega

10.7%15.7%

9.6%12.8%South America

10.6%16.3%

10.2%16.5%Africa

9.7%14.8%

10.7%15.4%


As part of the impairment tests, a sensitivity analysis was carried out on the key assumptions. It was noted sufficient headroom to conclude that it was unlikely
that realistic changes to the assumptions would have resulted in an impairment.

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

2009

2008US$ '000

US$ '000Millicom's operations in:Amnet Group (see note 4)


339,982


339,982Colombia


49,103


44,595El Salvador


42,053


42,053Navega (see note 4)


38,203


Senegal


37,706


36,541Tanzania


13,985


14,219Ghana


12,695


14,281Other


14,259


15,624Total goodwill


547,986


507,295


F-50

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

16. PROPERTY, PLANT AND EQUIPMENT

The movements in tangible assets in 2009 were as follows:

Network
equipment

Land and
Buildings

Construction
in Progress

Other(i)

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000Opening balance, net


2,294,605


63,805


310,475


118,339


2,787,224Change in the composition of the Group (note 4)(iii)


31,132


5


10,087


11,600


52,824Additions


21,002


1,009


654,325


15,040


691,376Impairments and net disposals


(497
)

(331
)

(9,021
)

(1,105
)

(10,954
)Depreciation charge(ii)


(479,825
)

(4,959
)




(38,711
)

(523,495
)Asset retirement obligations


24,209











24,209Transfers


720,003


22,190


(774,430
)

32,237


Transfer to assets held for sale (see note 6)


(277,218
)

(1,547
)

(36,110
)

(12,912
)

(327,787
)Exchange rate movements


19,543


1,043


(3,092
)

(250
)

17,244Closing Balance


2,352,954


81,215


152,234


124,238


2,710,641As at December 31, 2009Cost or valuation


3,601,325


100,211


152,234


254,971


4,108,741Accumulated depreciation


(1,248,371
)

(18,996
)




(130,733
)

(1,398,100
)Net


2,352,954


81,215


152,234


124,238


2,710,641


(i)The caption "Other" mainly includes office equipment and motor vehicles.(ii)The 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)The change in the composition of the Group corresponded to the acquisition of Navega and other minor investments.


F-51

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

16. PROPERTY, PLANT AND EQUIPMENT (Continued)




The
movements in 2008 were as follows:

Network
equipment

Land and
Buildings

Construction
in Progress

Other(i)

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000Opening balance, net


1,557,003


51,979


381,984


75,156


2,066,122Change in the composition of the Group (note 4)(iv)


55,040


2,751


8,167


5,239


71,197Additions


52,071


1,536


1,204,621


63,088


1,321,316Disposals, net


(25,486
)

(646
)

(1,153
)

(1,190
)

(28,475
)Impairments(ii)


(8,544
)










(8,544
)Depreciation charge(iii)


(418,221
)

(4,804
)




(31,761
)

(454,786
)Asset retirement obligations


12,505











12,505Transfers


1,204,341


15,490


(1,235,501
)

15,670


Transfer to assets held for sale


(14,747
)

(132
)

(636
)

(2,462
)

(17,977
)Exchange rate movements


(119,357
)

(2,369
)

(47,007
)

(5,401
)

(174,134
)Closing Balance


2,294,605


63,805


310,475


118,339


2,787,224As at December 31, 2008Cost or valuation


3,443,381


78,602


310,475


222,662


4,055,120Accumulated depreciation


(1,148,776
)

(14,797
)




(104,323
)

(1,267,896
)Net


2,294,605


63,805


310,475


118,339


2,787,224


(i)The caption "Other" mainly includes office equipment and motor vehicles.(ii)For the year ended December 31, 2008, Millicom recorded an impairment charge of $9 million, mainly related to its operation in Sierra Leone
(see note 6).(iii)The 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".(iv)The change in the composition of the Group corresponds to the acquisition of Amnet.


The
amount of borrowing costs capitalized for the year ended December 31, 2009 was $4 million (2008: $9 million).

F-52

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

16. PROPERTY, PLANT AND EQUIPMENT (Continued)

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

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Additions


770,448


1,321,316


1,036,160Additions from discontinued Operations


(79,072
)

(163,629
)

(99,085
)Subtotal


691,376


1,157,687


937,075Suppliers advances


(77,539
)

72,881


15,844Change in capex payable


162,421


(19,013
)

(157,179
)Vendor financing and finance leases (see note 30)


(45,399
)

(42,069
)

(23,041
)Capitalized interests


(4,294
)

(8,398
)

(4,545
)Cash used from continuing operations for purchase of property, plant and equipment


726,565


1,161,088


768,154


(i)Figures for 2008 and 2007 have been adjusted, excluding Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.


17. INVESTMENTS IN ASSOCIATES

As at December 31, 2008 Millicom's associates, amounting to $ 21 million, were Navega, which was 45% held through Millicom's joint venture in Guatemala, and
Metrored S.A. ("Metrored"), which is a subsidiary of Navega. On March 13, 2009, Millicom's joint venture in Guatemala completed the acquisition of the remaining 55% interest in Navega
(see note 4) and, as a result, both Navega and Metrored were reclassified from associates to joint ventures (see note 8).

18. NON-CURRENT PLEDGED DEPOSITS

As at December 31, 2009, non-current pledged deposits amounted to $53 million (2008: $6 million) and mainly related to a borrowing in Millicom's
operation in Chad (see note 26).

19. TRADE RECEIVABLES

2009

2008US$ '000

US$ '000Gross trade receivables


262,884


290,580Less: provisions for impairment of receivables


(38,176
)

(33,125
)Trade receivables, net


224,708


257,455


The nominal value less impairment of trade receivables is assumed to approximate their fair values (see note 34).

F-53

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

19. TRADE RECEIVABLES (Continued)

As
at December 31, 2009 and 2008, the ageing analysis of trade receivables is as follows:

Neither past
due nor

Past due but not impaired

Totalimpaired

<30 days

3090 days

>90 days

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '0002009Telecom operators


64,043


34,690


40,850


789


140,372Own customers


29,088


11,990


6,823


1,141


49,042Others


25,642


4,775


4,877





35,294Total


118,773


51,455


52,550


1,930


224,7082008Telecom operators


68,052


27,498


91,572


1,873


188,995Own customers


28,155


9,286


2,789





40,230Others


19,902


5,210


2,990


128


28,230Total


116,109


41,994


97,351


2,001


257,455


20. OTHER CURRENT ASSETS

Other current assets are comprised as follows:

2009

2008US$ '000

US$ '000VAT tax sales receivables


15,152


30,083Pledged deposits


9,396


11,031Escrow accounts (see note 27)


18,039


23,911Other


15,572


22,834Total other current assets


58,159


87,859


21. TIME DEPOSIT

As at December 31, 2009, time deposit amounted to $50 million (2008: nil). Maturity date of the deposit will be April 22, 2010 and relevant yearly interest rate is
0.65%.

22. CASH AND CASH EQUIVALENTS

Cash and cash equivalents are comprised as follows:

2009

2008US$ '000

US$ '000Cash and cash equivalents in U.S. dollars


1,247,345


439,515Cash and cash equivalents in other currencies


263,817


234,680Total cash and cash equivalents


1,511,162


674,195


Our cash is diversified among leading international and domestic banks within the countries where we operate.

F-54

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

23. SHARE CAPITAL

Share capital and share premium

The authorized share capital of the Company totals 133,333,200 registered shares (2008: 133,333,200). As at December 31, 2009,
the total subscribed and fully paid-in share capital and premium was $661 million (2008: $643 million) consisting of 108,648,325 (2008: 108,297,507) registered common shares
at a par value of $1.50 (2008: $1.50) each.

In
2009, the Company issued a total of 350,818 new shares (2008: 5,869,247 new shares), resulting from:



5,622,471
new shares following the conversion of the 4% Convertible Notes were issued in 2008.

24. SHARE BASED COMPENSATION

Share options

Up until May 30, 2006, share options were granted to directors, senior executives, officers and selected employees. The exercise
price of the granted options was equal to or higher than the market price of the shares on the date of grant. The options were conditional on the employee or Director completing one to five years
service (the vesting period). The options were exercisable starting from one year to five years from the grant date. The 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 indefinite life. Shares issued when share options are exercised have the same
rights as common shares.

The
following table summarizes information about share options outstanding at December 31, 2009. The market price of the Company's shares as at December 31, 2009 was $73.77
(2008: $44.91).

Options outstanding

Options exercisableRange of exercise price $

Weighted
average
exercise price

Number
outstanding at
December 31, 2009

Weighted
average
exercise price

Number
exercisable at
December 31, 200920.56


20.56


150,485


20.56


64,64325.0529.75


27.02


79,307


27.02


79,30731.8835.91


34.06


99,996


34.06


99,99620.5635.91


26.21


329,788


28.20


243,946


F-55

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

24. SHARE BASED COMPENSATION (Continued)

Share options outstanding at the end of the year have the following expiry date and exercise prices:

Date issued

Number of options
outstanding as at
December 31, 2009

Exercise price $

Terms of optionMay 1996, May 1997, May 1998, May 2000 and May 2004


173,328


25.0535.91

Exercisable immediately. Options have an indefinite life.May 2005


35,000


20.56

Exercisable immediately. Options have a twenty year life.May 2004


5,975


25.05

Exercisable over a three-year period in equal installments. Options expire after six years from date of grant.May 2005


82,151


20.56

Exercisable over a five year period in equal installments. Options expire after six years from date of grant.July 2005 and May 2006


33,334


20.56

Exercisable over a three-year period in equal installments from the start of the fourth year. Options expire after six years from date of grant.


The following table summarizes the Company's share options as of December 31, 2009, 2008 and 2007, and changes during the years then ended:

2009

2008

2007Average
exercise
price in $
per share

Number of
options

Average
exercise
price in $
per share

Number of
options

Average
exercise
price in $
per share

Number of
optionsOutstanding at beginning of year


24.23


494,120


22.60


708,003


21.04


2,380,305Expired/forfeited


18.73


(25,108
)

19.02


(44,827
)

20.83


(46,430
)Exercised


20.53


(139,224
)

18.79


(169,056
)

20.37


(1,625,872
)Outstanding at end of year


26.21


329,788


24.23


494,120


22.60


708,003Exercisable at end of year


28.20


243,946


27.73


252,624


24.59


358,574


The range of fair value of options granted determined using option pricing models was $6.30 to $8.31 for 2006. The significant inputs into the model were share
price of $19.21 for 2006 at the grant date, exercise price as disclosed above, expected exercise date based on previous exercise behavior for employees and for directors between 1 and 20 years,
option contractual term as previously disclosed, annual risk-free interest rate of 3.74% for 2006 and expected share price volatility of 46.5% for 2006 based on statistical analysis of
daily share prices over the last 2 years amended for the change in the debt levels of the Company over the same period of time. No new options were granted since 2006.

F-56

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

24. SHARE BASED COMPENSATION (Continued)

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 office. 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.

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. Grants to directors in 2009 were as follows:

Number of
shares

Share price at
date of grant

2009
Expense(US$ '000)Directors


6,552


56.17


368Total


6,552





368


Grants to directors in 2008 were as follows:

Number of
shares

Share price at
date of grant

2008
Expense(US$ '000)Directors


6,373


114.07


727Total


6,373





727


Compensation expense for the total number of shares awarded in 2009 and 2008 to directors was measured on the grant dates, the date of the Annual General Meeting
of Shareholders on May 26, 2009 and on May 27, 2008, using Millicom's closing share price as quoted on the NASDAQ National Market on that dates.

Long-term incentive plans

In May 2006 at the Annual General Meeting a long term incentive plan ("2006 LTIP") was approved. This long term incentive plan was
based on a target share award granted to eligible Millicom employees, limited to Millicom senior level employees, key high potential employees and certain critical new recruits. The shares granted are
subject to a one-year holding period once the shares are vested.

The
shares awarded under the 2006 LTIP vest over a three year period, subject to specified market and performance conditions related to Millicom's share price growth compared to a peer
group index, revenue growth, EBITDA margin, and profit margin. The achievement of a certain level of each
condition, measured at the end of the three years, yields a specific percentage of shares awarded to each employee at the grant date.

For
the 2006 LTIP, the shares granted vest 20% on December 31, 2006, 20% on December 31, 2007 and 60% on December 31, 2008. In addition at the end of the
third-year performance period

F-57

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

24. SHARE BASED COMPENSATION (Continued)

there
were an additional 32% of shares that vested, because performance targets relating to Millicom's share price growth compared to a peer group index, revenue growth, EBITDA margin, and profit
margin were exceeded. In January 2009, 202,811 shares were issued as third and final tranche of the 2006 LTIP.

The
total charge for the above plan was $22 million which was recorded over the service period.

Long
term incentive awards for 2007 ("2007 LTIP") and 2008 ("2008 LTIP") were approved by the Board on March 15 and on December 4, 2007. These plans consist of two
elements: a performance share plan and a matching share award plan.

The
shares awarded under the performance share plan will vest at the end of a three year period, subject to a performance condition related to Millicom's "earnings per share". The
achievement of a certain level of this condition, measured at the end of the three years, yields a specific percentage of shares awarded to each employee at the grant date.

The
matching share award plan requires employees to invest in shares of the Company in order to receive potential matching shares. The shares awarded under this plan vest at the end of a
three year period, subject to market conditions that are based on the "total shareholder return" ("TSR") of Millicom's shares compared to the TSR of six comparable mobile telephony companies during
the three-year period of the plan. A fair value per share has been determined and applied to the total potential number of matching shares and will be expensed over the vesting period.
Under the matching share award plan rules, Millicom issued 9,344 new shares on June 16, 2008 and 9,214 new shares on June 22, 2007 which were purchased by employees at fair market value.

The
total charge for the 2007 and 2008 LTIP, both for the performance shares and for the matching share awards, amounted and was estimated as at December 31, 2009 respectively at
$15 and $7 million, both to be recorded over the service periods.

Following
the sale of our operation in Sri Lanka, 1,310 shares were issued on October 16, 2009 under the 2007 performance share plan.

Long
term incentive awards for 2009 ("2009 LTIP") were approved by Millicom's Board of Directors on June 16, 2009. This new plan consists of two elements: a deferred share awards
plan and a performance shares plan.

The
deferred share awards, that will vest 16.5% on January 1, 2010 and 2011 and 67% on January 1, 2012, are based on past performance. The performance shares plan vest at
the end of a three year period, 50% subject to a market condition that is based on the "total shareholder return" ("TSR") of Millicom compared to the TSR of six comparable mobile telephony 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 a market condition has been determined and applied to
the total potential number of performance shares and will be expensed over the vesting period.

The
total charge for the above plans, both for the deferred share awards plan and the performance shares plan, was estimated as of December 31, 2009 at $12 million, to be
recorded over the service periods.

F-58

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

24. SHARE BASED COMPENSATION (Continued)

Following
the sale of our operation in Sri Lanka, 921 unrestricted shares were issued on October 16, 2009 under the 2009 deferred share awards plan.

The
number of share awards expected to vest under the long term incentive plans is as follows:

Performance
shares 2009

Deferred
share awards
2009

Matching
share award
plan 2008

Performance
shares 2008

Matching
share award
plan 2007

Performance
shares 2007Maximum share awards


124,254


172,352


168,396


223,829


187,470


253,489Revision for expected forfeitures


(15,133
)

(20,288
)

(81,106
)

(66,511
)

(116,742
)

(97,666
)Revision for expectations in respect of performance conditions











(157,318
)




Shares issued





(921
)










(1,310
)Share awards expected to vest


109,121


151,143


87,290





70,728


154,513


Bonus shares

No bonus shares were issued in 2009. A charge of $1 million was recorded in 2008 as bonus shares.

Total share based compensation expense

Total share-based compensation for years ended December 31, 2009, 2008 and 2007 was as follows:

2009

2008

2007US$ '000

US$ '000

US$ '000Share options


(46
)

364


627Restricted share grants


368


727


7552006 LTIP


(530
)

4,087


10,9712007 LTIP


5,142


2,979


6,8752008 LTIP


167


4,237


2009 LTIP


5,074





Bonus shares





1,225


Total share-based compensation expense


10,175


13,619


19,228


F-59

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

25. OTHER RESERVES

Legal
reserve

Equity settled
transaction
reserve

Equity
component
convertible
notes

Currency
translation
reserve

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000As at January 1, 2007


13,577


13,848


39,109


(63,568
)

2,966Transfer from retained profits


1,526











1,526Shares issued via the exercise of share options





(3,838
)







(3,838
)Share based compensation





18,473








18,473Issuance of shares2006 LTIP





(4,523
)







(4,523
)Conversion of part of the 4% Convertible Notes








(196
)




(196
)Currency translation movement











31,149


31,149As at December 31, 2007


15,103


23,960


38,913


(32,419
)

45,557Transfer from retained profits


262











262Shares issued via the exercise of share options





(937
)







(937
)Share based compensation





11,666








11,666Issuance of shares2006 LTIP





(3,963
)







(3,963
)Conversion of part of the 4% Convertible Notes








(38,913
)




(38,913
)Currency translation movement











(60,846
)

(60,846
)As at December 31, 2008


15,365


30,726





(93,265
)

(47,174
)Transfer from retained profits


880











880Shares issued via the exercise of share options





(888
)







(888
)Share based compensation





9,807








9,807Issuance of shares2006, 2007 and 2009 LTIPs





(13,891
)







(13,891
)Currency translation movement











(13,664
)

(13,664
)As at December 31, 2009


16,245


25,754





(106,929
)

(64,930
)


Legal reserve

On an annual basis, if the Company reports a net profit for the year on a non-consolidated basis, Luxembourg law requires
appropriation of an amount equal to at least 5% of the annual net profit to a legal reserve until such reserve equals 10% of the issued share capital. This reserve is not available for dividend
distribution.

At
the Company's Annual General Meeting in May 2009, the shareholders voted to transfer $1 million from retained profits to the legal reserve.

Equity settled transaction reserve

The 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. If the options are subsequently exercised then the cost attributed to these options is transferred from the Equity settled transaction reserve to
the share premium. The reserve will be transferred to the share capital and share premium account when the shares under the different LTIPs vest.

F-60

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

25. OTHER RESERVES (Continued)

Equity component convertible notes

The portion of the convertible bond representing the fair value of the conversion option at the time of issue is included in equity
reserve.

In
October 2007, $1 million of the 4% Convertible Notes were converted into 28,686 SDRs. The equity component of the 4% Convertible Notes was then reduced by $0.2 million
and reclassified to share premium.

On
January 22, 2008, Millicom converted a further $196 million of the outstanding bonds into 5,420,235 Ordinary Shares and 202,236 SDRs. On the same day Millicom repaid in
cash the remaining $3 million of bonds that were not converted, including accrued interest. The conversion resulted in an increase of equity amounting to $175 million in January 2008.
The equity component of the 4% Convertible Notes was then fully reversed and, for that part referred to the converted bonds, reclassified to share premium.

Currency translation reserve

For the purposes of consolidating joint ventures, associates and subsidiaries with functional currencies other than U.S. dollars, their
balance sheets are translated to U.S. dollars using the closing exchange rate. Income statements accounts are translated to U.S. dollars at the average exchange rates during the year. The currency
translation reserve includes foreign exchange gains and losses arising from the translation of financial statements.

26. BORROWINGS

Borrowings comprised the following:

2009

2008US$ '000

US$ '000Corporate debt:10% Senior Notes


454,477


453,471Other debt and financing


1,892,410


1,704,555Total borrowings


2,346,887


2,158,026


F-61

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

26. BORROWINGS (Continued)

Borrowings due after more than one year:

2009

2008US$ '000

US$ '000Corporate debt:10% Senior Notes


454,477


453,471Other debt and financing:Bank financing


1,487,863


1,111,989Non-controlling shareholders


274,066


229,624Vendor financing


25,889


28,667Finance leases


4,146


6,479Total non-current other debt and financing


2,246,441


1,830,230Less: portion payable within one year


(333,541
)

(168,748
)Total other debt and financing due after more than one year


1,912,900


1,661,482


Borrowings due within one year:

2009

2008US$ '000

US$ '000Other debt and financing:Bank financing


71,896


306,243Vendor financing


28,376


21,484Finance leases


174


69Total current other debt and financing


100,446


327,796Portion of non-current debt payable within one year


333,541


168,748Total other debt and financing due within one year


433,987


496,544


F-62

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

26. BORROWINGS (Continued)

The following table provides details of net debt change for the years 2009, 2008 and 2007:

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Net debt at the beginning of the year


1,483,831


659,694


836,964Cash itemsProceeds from issuance of debt and other financing


627,872


1,206,607


545,351Repayment of debt and other financing


(506,588
)

(664,294
)

(315,955
)Net (increase) decrease in cash and cash equivalents


(836,967
)

500,402


(517,905
)Purchase of time deposits


(50,061
)




Purchase (disposal) of pledged deposits


(45,652
)

4,027


35,848Non-cash itemsVendor financing and finance leases (see note 30)


45,399


48,632


23,041Interest accretion


20,908


30,532


8,41910% Senior Notes adjustment





(28,545
)

31,035Conversion of the 4% Convertible Notes





(176,247
)

Debt acquired in acquisition of subsidiaries


25,962


3,387


Other


(95,637
)

(19,469
)

(33,987
)Exchange movement on debt and other financing


53,868


(80,895
)

46,883Net debt at the end of the year


722,935


1,483,831


659,694


(i)Figures for 2008 and 2007 have not been restated.


10% Senior Notes

On November 24, 2003, Millicom issued $550 million aggregate principal amount of 10% Senior Notes (the "10% Senior
Notes") due on December 1, 2013. The 10% Senior Notes bear interest at 10% per annum, payable semi-annually in arrears on June 1 and December 1. The effective interest
rate is 10.7%.

The
10% Senior Notes are general unsecured obligations of Millicom and rank equal in right of payment with all future unsecured and unsubordinated obligations of Millicom. The 10% Senior
Notes are not guaranteed by any of Millicom's subsidiaries, joint ventures or affiliates, and as a result are structurally subordinated in right of payment to all indebtedness of such subsidiaries,
joint ventures and affiliates.

If
Millicom experiences a Change of Control Triggering Event, defined as a credit risk rating decline resulting from a change in control, each holder will have the right to require
Millicom to repurchase its notes at 101% of their principal amount plus accrued and unpaid interest and all other amounts due, if any.

During
2007, Millicom repurchased $90 million of the 10% Senior Notes incurring in a charge of $5 million which is recorded under the caption "Other non operating income
(expenses), net".

F-63

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

26. BORROWINGS (Continued)

In
October 2007, Millicom decided that it would redeem the balance of the Notes in December 2008 and pay the contractual redemption premium of 5%. As a result, Millicom reclassified the
10% Senior Notes from non-current to current and recorded an additional interest expense of $31 million for the year ended December 31, 2007, which represented the increase
in financial liabilities due to the recognition of the 5% pre-payment expense and an increase in the amortized cost of the Notes due to the earlier settlement date. Millicom reviewed its
position to early repay the Notes in September 2008 and the Board of Directors decided not to early redeem the Notes. This decision impacted the future expected cash flows and, as a result, the 5%
premium accrued in 2007 was completely reversed and an interest income amounting to $29 million was recorded in 2008. In addition the 10% Notes were reclassified as non-current.

4% convertible Notes

In January 2005, Millicom raised $200 million aggregate principal amount of 4% Convertible Notes due 2010 (the "4% Convertible
Notes"). The net proceeds of the offering were received on January 7, 2005 in the amount of $196 million.

The
4% Convertible Notes were general unsecured obligations of Millicom and rank equal in right of payment with all future unsecured and unsubordinated obligations of Millicom. The rate
of interest payable on the 4% Convertible Notes was 4% per annum. Interest is payable semi-annually in arrears on January 7 and July 7 of each year, beginning on
July 7, 2005. The effective interest rate was 9.6%.

The
4% Convertible Notes were constituted by a trust deed dated January 7, 2005 between Millicom and The Bank of New York, as Trustee for the holders of notes.

Millicom
apportioned part of the value of the 4% Convertible Notes to equity and part to debt. The value allocated to equity as of December 31, 2007 was $39 million (2006:
$39 million) and the value allocated to debt was $179 million (2006: $171 million).

As
of December 31, 2007, $1 million of the 4% Convertible Notes were converted into 28,686 SDRs.

On
January 22, 2008, Millicom converted a further $196 million of the outstanding bonds into 5,420,235 Ordinary Shares and 202,236 SDRs. On the same day Millicom repaid in
cash the remaining $3 million of bonds that were not converted, including accrued interest. The conversion resulted in an increase of equity amounting to $175 million in January 2008.

F-64

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

26. BORROWINGS (Continued)

Other Debt and Financing

Millicom's share of total other debt and financing analyzed by operation is as follows:

2009

2008US$ '000

US$ '000Colombia(i)


508,904


456,356Amnet(ii)


247,334


231,523Tanzania(iii)


212,405


168,793El Salvador(iv)


159,332


192,045Ghana(v)


137,650


138,999Guatemala(vi)


100,351


11,000Honduras(vii)


100,339


90,817Bolivia(viii)


99,075


103,111Chad(ix)


94,157


45,777DRC(x)


78,865


63,256Senegal(xi)


63,469


58,309Paraguay(xii)


59,931


64,147Other


30,598


80,422Total other debt and financing


1,892,410


1,704,555Of which:Due after more than 1 year


1,458,423


1,208,011Due within 1 year


433,987


496,544


Significant individual financing facilities are described below:

(i)    Colombia

In March 2008, Colombia Movil S.A. E.S.P ("Colombia Movil"), Millicom's operation in Colombia, entered into a
COP391 billion ($191 million as at December 31, 2009), 5 year facility with a club of Colombian banks. This facility bears interest at Deposits to Fixed Terms ("DTF") plus
4.5% and is 50% guaranteed by the Company. As at December 31, 2009 $191 million (2008: $173 million) was outstanding on this facility.

In
October 2006, the Company acquired a majority ownership 50% plus 1 share in Colombia Movil. At the time of the acquisition the Company had a COP169 billion ($83 million)
Hermes guaranteed export credit facility with Citigroup maturing in January 2012. This facility was bearing interest at Indice de Precios al Consumidor ("IPC") plus 6.30% and was 100% guaranteed by
the non-controlling shareholders. This facility was settled in 2009. As at December 31, 2008 $37 million was outstanding under this facility.

Colombia
Movil S.A. E.S.P. also had local currency loans from the non-controlling shareholders outstanding as at December 31, 2009 of $274 million (2008:
$230 million). These loans bear interest at DTF plus 4.15% and mature between 2011 and 2013.

In
addition, as at December 31, 2009 Colombia Movil S.A. E.S.P. had $44 million (2008: $16 million) of other debt and financing, in US$ and local currency.

F-65

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

26. BORROWINGS (Continued)

(ii)    Amnet

In October 2008 Millicom Cable N.V. signed a 1 year financing agreement with RBS and Standard Bank for
$200 million to partly finance the acquisition of Amnet. The loan was bearing interest for the first six months at $ LIBOR plus 2.5%, for months seven to nine at $ LIBOR plus
2.875% and months ten to twelve at $ LIBOR plus 3.125%. The loan was increased by $30 million in December 2008 through a financing agreement with Nordea. The total loan, amounting to
$230 million, was fully guaranteed by the Company. The facility was settled in 2009. $230 million was outstanding as at December 31, 2008.

In
September 2009, Millicom Cable N.V., a subsidiary of the Company, refinanced the above agreement with a 2 years, $250 million senior term loan facility fully
guaranteed by the Company with Standard Bank, RBS, Nordea, DnB Nor, and Morgan Stanley. This loan agreement is allocated to the 3 main Amnet operating entities in Costa Rica, El Salvador, and
Honduras. The loan is bearing interest for the first 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, up to 5.75% for the last quarter in 2011. $247 million was outstanding as at December 31, 2009.

As
at December 31, 2009 Amnet had no other debt and financing (2008: $2 million).

(iii)    Tanzania

In December 2008, Millicom Tanzania Limited, Millicom's operation in Tanzania entered into facilities totaling $228 million
comprising of a five year local currency syndicated tranche for TZS95 billion at the 180 days treasury Bill rate plus 3%, a seven year $116 million EKN guaranteed financing with
45% of the facility fixed 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, 2009, the amount outstanding under these facilities was $200 million (2008: $152 million).

In
March 2007 Millicom Tanzania Limited entered into a new 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 $5 million. The outstanding US$ amount under these facilities as at December 31, 2009 amounted to
$12 million (2008: $17 million).

Millicom
Tanzania Limited had no other debt and financing outstanding as at December 31, 2009 and 2008.

(iv)    El Salvador

In September 2006, Telemovil El Salvador S.A., Millicom's operation in El Salvador, entered into a $200 million
5 year loan. The loan was syndicated amongst a group of local and international banks and was arranged by ABN AMRO, Citigroup and Standard Bank. The loan bears interest at $ LIBOR plus
1.75%. As of December 31, 2009, $130 million of this facility was outstanding (2008: $180 million).

In
December 2008, Telemovil El Salvador S.A., entered into a $12 million 2 year loan with Banco Agrícola Comercial S.A. The loan bears interest
at $ LIBOR plus 6%. As of December 31, 2009, $6 million of this facility was outstanding (2008: $12 million).

F-66

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

26. BORROWINGS (Continued)

In
December 2009, El Salvador entered into a 2 year loan with Scotiabank, bearing interest at $ LIBOR plus 5.0%. As at December 31, 2009, $23 million was
outstanding.

As
at December 31, 2009 and 2008, there was no other debt or financing outstanding.

(v)    Ghana

In December 2007 Millicom (Ghana) Limited, Millicom's operation in Ghana, entered into a $60 million local 5 year
Facility. The loan bears interest at $ LIBOR plus 2%. In parallel a $80 million offshore 7 year DFI (Development Finance Institution) financing which bears interest at
$ LIBOR plus 2.25% was arranged. As at December 31, 2009, $132 million (2008: $139 million) was outstanding under these facilities.

In
December 2009 the company entered into a 3.5 year $22 million Ericsson arranged financing with EKN and Nordea priced at $ LIBOR + 0.85% fully
guaranteed by the Company. As at 31 December 31, 2009, $6 million outstanding under this facility.

(vi)    Guatemala

In March 2009, Millicom's operation in Guatemala and its sister company Asesoria en Telecomunicaciones SA ("Asertel") entered
into four facilities with 3 year maturities for a total of $122 million with Banco de Desarollo Rural S.A., Banco Industrial S.A., Banco G&T Continental S.A., and
Blue Tower Ventures Inc. Millicom's share of these facilities amount to $67 million, out of which $50 million is guaranteed by the Company.

Comcel
also signed another 6 year facility with IFC for $100 million. As at December 31 2009, Millicom's share of the outstanding debt amounted to
$19 million, bearing interest at $ LIBOR plus 4.50%.

In
addition as at December 31, 2009, Comcel had other short term financing of $14 million (2008: $11 million).

(vii)    Honduras

Telefonica Celular S.A., Millicom's operation in Honduras, has facilities with several local banks maturing between 2010 and
2015. These facilities are in dollars and in Lempiras and are unsecured. Interest rates are either fixed or variable, ranging as of December 31, 2009 between 7.75% and 11% (2008: between 7.4%
and 16%). As at December 31, 2009, Millicom's share of the outstanding debt under these facilities was $100 million (2008: $91 million).

(viii)    Bolivia

In December 2007, Telefonica Celular de Bolivia SA ("Telecel Bolivia"), Millicom's operation in Bolivia, signed a financing
agreement for $40 million with the Nederlandse Financieringsmaatschappij Voor Ontwikkelingslanden, N.V. (FMO), also known as the Netherlands Development Finance Company. The A tranche of
$20 million was provided directly by the FMO. This tranche is repayable over 7 years and bears an interest at $ LIBOR rate plus 2.25%. The B tranche of $20 million is
provided equally by Nordea and Standard bank. This tranche is repayable over 5 years and bears

F-67

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

26. BORROWINGS (Continued)

interest
at $ LIBOR plus 2%. Both tranches are guaranteed by the Company. As of December 31, 2009, $35 million of this financing agreement was outstanding (2008:
$40 million).

In
March 2008, Telecel Bolivia signed a 4 year and 9 months financing agreement for $30 million with the International Finance Corporation. The loan bears interest
at $ LIBOR plus 2% and is fully guaranteed by the Company. As of December 31, 2009, $25 million of this financing agreement was outstanding (2008: $30 million).

In
addition to the above, Telecel Bolivia also had supplier financings with Huawei (at interest rates of $ LIBOR plus 2%) and FPLT totaling $26 million (2008:
$32 million) and $13 million of other debt and financing outstanding as at December 31, 2009 (2008: $1 million).

(ix)    Chad

In May and August 2007, Millicom's operation in Chad signed respectively a $31 million 5 year Facility with China
Development Bank at $ LIBOR +2% and a Euro15 million 5 year Facility with Proparco at Euribor +2%. As at December 31, 2009 $23 and $12 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 fixed 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 priced TIAO +1.85% and guaranteed by
Nordea. This guarantee is secured by a pledged deposit of $53 million by the Company (see note 18). As at December 31, 2009 $13 and $46 million respectively were
outstanding under these facilities.

(x)    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 finance equipment purchases from Huawei. The loan bears interest at $ LIBOR plus 2% and is repayable over 17 equal
quarterly installments commencing in 2009. This financing is 100% guaranteed by the Company. As of December 31, 2009, $75 million was outstanding under this facility (2008:
$59 million).

In
addition Oasis had other debt and financing of $4 million (2008: $4 million).

(xi)    Senegal

In December 2005, Sentel GSM, Millicom's operation in Senegal entered into a XAF12,500 million loan agreement with
Crédit Lyonnais Sénégal ("CLS"). This loan bears a fixed interest rate of 8% and is fully repayable at maturity, in December 2010. The outstanding amount
in US$ as at December 31, 2009 was $27 million (2008: $26 million). Sentel GSM also entered into a 5 year additional Tranche of XAF7,500 million with CLS in July
2007. This tranche bears an 8.5% fixed
interest rate. The outstanding amount under this additional Tranche in US$ as at December 31, 2009 was $10 million (2008: $14 million).

In
addition as at December 31, 2009, Senegal had $13 million (2008: nil) of vendor financing with Nokia Siemens.

F-68

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

26. BORROWINGS (Continued)

(xii)    Paraguay

In July 2008, Telefonica Cellular Del Paraguay, Millicom's operation in Paraguay entered into a $107 million, 8 year loan
with the European Investment Bank ("EIB"). The loan is bearing interest at $ LIBOR plus 0.125%. The outstanding amount as at December 31, 2009 and 2008 was $50 million. The EIB is
guaranteed for commercial risks by a group of banks.

In
addition as at December 31, 2009, Telefonica Cellular Del Paraguay had $10 million (2008: $14 million) of other debt and financing outstanding.

Fair value of financial liabilities

Borrowings are recorded at amortized cost. The fair value of borrowings as at December 31, 2009 and 2008 is as follows:

2009

2008US$ '000

US$ '00010% Senior Notes


474,523


418,223Other debt and financing


1,878,112


1,706,988Fair value of total debt


2,352,635


2,125,211


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 flows at market interest rates.

The
nominal value of the other financial liabilities is assumed to approximate their fair values (see note 34).

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 financing agreements. The tables below describe the outstanding amount under the guarantees and the remaining terms of the guarantees as of December 31, 2009 and 2008. Amounts
covered by bank guarantees are recorded in the consolidated balance sheets under the caption "Other debt and financing" and amounts covered by supplier guarantees are recorded under the caption "Trade
payables" or "Other debt and financing" depending on the underlying terms and conditions.

F-69

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

26. BORROWINGS (Continued)

As of December 31, 2009

Bank and other financing
guarantees(i)Terms

Outstanding
exposure

Maximum
exposureUS$ '000

US$ '00001 year





13 years


377,109


393,89935 years


293,542


352,603More than 5 years


130,152


155,401Total(ii)


800,803


901,903


As of December 31, 2008

Bank and other financing
guarantees(i)Terms

Outstanding
exposure

Maximum
exposureUS$ '000

US$ '00001 year


233,077


240,00013 years


22,830


32,99835 years


353,012


415,558More than 5 years


102,902


194,022Total(ii)


711,821


882,578


(i)The guarantee ensures payment by the Group's Company guarantor of outstanding amounts of the underlying loans in the case of non-payment by the
obligor.(ii)Including discontinued operations.


The Group's share of total debt and financing secured by either pledged assets, pledged deposits issued to cover letters of credit or guarantees issued by the
Company as at December 31, 2009 is $1,172 million (2008: $1,313 million). The assets pledged by the Group for these debts and financings at the same date amount to
$610 million (2008: $610 million).

F-70

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

27. OTHER NON-CURRENT AND CURRENT PROVISIONS AND LIABILITIES

Provisions and other non-current liabilities are comprised as follows:

2009

2008US$ '000

US$ '000Non-current legal provisions (note 31)


6,461


6,957Long-term portion of asset retirement obligations


76,217


55,167Other


5,464


7,884Total


88,142


70,008


Included in non-current legal provisions are litigation contingencies of $2 million (2008: $3 million) that were assumed as part of the
Colombia Móvil S.A. acquisition. The founding shareholders of Colombia Móvil S.A. committed to reimburse Millicom for any payments relating to these
litigation contingencies. As a consequence, Millicom has booked a corresponding receivable.

Provisions
and other current liabilities are comprised as follows:

2009

2008US$ '000

US$ '000Deferred revenues


91,365


79,670Revenue sharing in Cambodia





21,449Customer deposits


9,134


6,709Current legal provisions (note 31)


3,053


3,006Asset retirement obligations





209Unpaid portion of license fees





1,584Other tax payables


64,806


50,703Current provisions(i)


28,785


26,727Other


13,242


17,049Total


210,385


207,106


(i)Includes tax and other contingencies for $19 million (2008: $24 million) that were assumed as part of the Amnet and Navega acquisitions. The
former shareholders of Amnet and Navega placed in escrow $35 and $3 million respectively to cover these contingencies. Therefore a corresponding financial asset of $18 million (2008:
$24 million) has been recorded within "Other current assets".


28. DIVIDEND PAYABLE

In December 2009, the shareholders of the Company in an extraordinary general meeting approved the distribution of a gross dividend of $1.24 per share, to be paid out of Millicom's
profits for the year ended December 31, 2008. Dividend payable as at December 31, 2009 amounted to $135 million (2008: nil). The dividend was paid on January 5, 2010.

F-71

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

29. DIRECTORS' AND OFFICERS' REMUNERATION

Directors

The remuneration of the members of the board of directors of the Company (the "Board") is comprised of an annual fee and share based
compensation. Up until May 2006, the Directors were issued share options. Subsequent to May 2006, the Directors are issued restricted shares. The annual fee and the share based compensation grants are
proposed by the Board and approved by the shareholders at the Annual General Meeting of Shareholders (the "AGM").

The
remuneration charge for the Board for the years ended December 31, 2009, 2008 and 2007 was as follows:

Other members of
the boardChairmanTotalNo. of shares
and share
options

US$ '000

No. of shares
and share
options

US$ '000US$ '0002009Fees





106





584


690Share based compensation:(i)Restricted shares(ii)


1,441


81


5,111


287


368Total





187





871


1,0582008Fees





100





410


510Share based compensation:(i)Restricted shares(ii)


1,446


165


4,927


562


727Total





265





972


1,2372007Fees





82





305


387Share based compensation:(i)Restricted shares(ii)


960


82


4,074


350


432Total





164





655


819


(i)See note 24.(ii)Restricted shares cannot be sold for one year from date of issue.


F-72

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

29. DIRECTORS' AND OFFICERS' REMUNERATION (Continued)




The number of shares and share options beneficially owned by the Board as at December 31, 2009 and 2008 was as follows:

Chairman

Other
members of
the Board

Total2009Shares


29,969


76,292


106,261Share options


20,000


55,000


75,0002008Shares


28,528


71,619


100,147Share options


20,000


55,000


75,000


Officers

The remuneration of the Officers of the Company ("Officers") comprises an annual base salary, an annual bonus, share based
compensation, social security contributions, pension contributions and other benefits. The bonus and share based compensation plans are based on actual performance (including individual and Group
performance). Up until May 2006, the Officers were issued share options. Subsequent to May 2006, the Officers 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 benefits of the Chief Executive Officer ("CEO") was proposed by the Compensation Committee and approved the Board and the annual base salary and other benefits of the
previous Chief Operating Officer ("COO") and the Chief Financial Officer ("CFO") were 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.
Since this date the position of COO no longer existed.

F-73

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

29. DIRECTORS' AND OFFICERS' REMUNERATION (Continued)

The
remuneration charge for the Officers for the year ended December 31, 2009, 2008 and 2007 was as follows:

Current
Chief
Executive
Officer

Former
Chief
Executive
Officer

Chief
Operating
Officer

Current
Chief
Financial
Officer

Former
Chief
Financial
OfficerUS$ '000

US$ '000

US$ '000

US$ '000

US$ '0002009Base salary


1,380


2,349





625


Bonus


1,988


1,388





503


Other benefits


142











Total


3,510


3,737





1,128


Share based compensation:(i)Shares issued/charge under long term incentive plans(ii)


1,598


(2,829
)(iv)




129


Charge for share options


16


10








2008Base salary





2,406


750


214


706Bonus





1,309


882


125


Pension














85Other benefits








231


7


Total





3,715


1,863


346


791Share based compensation:(i)Shares issued/charge under long term incentive plans(ii)





3,737


1,410


23


935Charge for share options





59


29





2402007Base salary





2,351


629





690Bonus(iii)





2,008


547





500Pension














83Other benefits








138





Total





4,359


1,314





1,273Share based compensation:(i)Shares issued/charge under long term incentive plans(ii)





2,076


850





539Charge for share options





104


54





171


(i)See note 24.(ii)Share awards of 33,131 and 12,606 were granted in 2009 under the 2009 LTIP to the CEO and CFO. Share awards of 45,074, 22,812 and 18,266 were granted in
2008 under the 2008 LTIP to the CEO, COO and CFO. Share awards of 62,381, 25,434 and 16,189 were granted in 2007 under the 2007 LTIP to the CEO, COO and CFO. Share awards at target performance of
42,634, 16,409 and 10,952


F-74

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

29. DIRECTORS' AND OFFICERS' REMUNERATION (Continued)

were granted in 2007 under the 2006 LTIP to the CEO, COO and CFO. The maximum shares to be issued under the 2006 LTIP was 132% of these awards. (iii)$1 million of the 2007 bonus was settled in Millicom shares, by issuing 6,878 shares to the CEO, 2,609 shares to the COO and 1,713 shares to the
CFO.(iv)Reversal for non-vested shares of the former CEO, Marc Beuls.


The number of shares, share options and unvested share awards beneficially owned by the senior management as at December 31, 2009 and 2008 was as follows:

Chief
Executive
Officer

Chief
Operating
Officer

Chief
Financial
Officer

Total2009Shares


607,404








607,404Share options


15,040








15,040Share awards not vested


81,377





17,106


98,4832008Shares


1,695,175


592,308





2,287,483Share options


30,000


15,040





45,040Share awards not vested


146,678


63,342


4,500


214,520


Severance payments

If employment of the executives is terminated by Millicom, severance payment of up to 12 months salary is payable.

30. NON-CASH INVESTING AND FINANCING ACTIVITIES

The following table gives details of non-cash investing and financing activities for continuing operations for the years ended December 31, 2009, 2008 and 2007.

2009

2008(i)

2007(i)US$ '000

US$ '000

US$ '000Investing activitiesAcquisition of property, plant and equipment (see note 16)


(45,399
)

(42,069
)

(23,041
)Asset retirement obligations (see note 16)


(24,209
)

(11,987
)

(14,763
)Financing activitiesVendor financing and finance leases (see note 16)


45,399


42,069


23,041Shares issued as payment of bonuses (see note 29)








1,000Share based compensation (see note 24)


10,175


13,619


19,228


(i)Figures for 2008 and 2007 have been adjusted, excluding Millicom operations in Sierra Leone, Cambodia, Laos and Sri Lanka.


F-75

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)




31. 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 affect 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 is involved in discussions regarding taxation, interconnect, license renewals and tariffing arrangements,
which can have a significant impact on the long-term economic viability of its operations.

Litigation

The 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, 2009, the total amount of claims against Millicom's operations was $48 million (December 31, 2008: $70 million) of which $11 million
(December 31, 2008: $3 million) relate to joint ventures. As at December 31, 2009, $10 million (December 31, 2008: $10 million) has been provided for these
claims in the consolidated balance sheet. Management is of the opinion that while it is impossible to ascertain the ultimate legal and financial liability with respect to these claims, the ultimate
outcome of these contingencies is not anticipated to have a material effect on the Group's financial position and operations.

Sentel GSM S.A. ("Sentel") license

The Sentel license to provide mobile telephony services in Senegal has been challenged by the Senegalese authorities. As of today,
Sentel continues to provide telephony services to its customers and effectively 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 instituted 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 instituted court proceedings in Senegal against Millicom and Sentel and has sought court approval for the revocation of Sentel's license and
sought damages against Sentel and Millicom. Millicom believes that the action filed by the Republic of Senegal is baseless and also ignores the agreement between Sentel and the Republic of Senegal to
submit any dispute concerning the license to an international arbitration forum.

F-76

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

31. COMMITMENTS AND CONTINGENCIES (Continued)

Lease commitments



The Group has the following annual operating lease commitments as of December 31, 2009 and 2008.

2009

2008US$ '000

US$ '000Operating lease commitmentsWithin: one year


66,223


43,113Between: one to five years


226,289


140,581After: five years


139,894


143,644Total


432,406


327,338


The operating leases comprised mainly of lease agreements relating to land and buildings. The operating lease terms and conditions reflect normal market
conditions. Total operating lease expense from continuing operations was $73 million in 2009 (2008: $59 million, 2007: $42 millionsee note 10).



The Group's future minimum payments on the finance leases were not material. These financial leases are comprised mainly of lease
agreements relating to vehicles used by the Group.

Capital commitments

As of December 31, 2009 the Company and its subsidiaries and joint ventures have fixed commitments to purchase network
equipment, land and buildings and other fixed assets for a value of $186 million (2008: $539 million), of which $35 million (2008: $57 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. The maximum commitment is
$274 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 the late delivery by suppliers of network equipment in various operations, Millicom is entitled to compensation. This
compensation is in the form of discount vouchers on future purchases of network equipment. The amount of vouchers received but not recognized as they had not yet been used as at December 31,
2009 was $5 million (2008: $26 million).

Dividends

The 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.

F-77

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

31. COMMITMENTS AND CONTINGENCIES (Continued)

Foreign currency forward contracts

As of December 31, 2009, the Group held foreign currency forward contracts to sell Colombian Pesos in exchange for United States
Dollars for nominal of $40 million. These contracts were signed close to the year end and, as a result, their impact on Millicom's consolidated financial statements were immaterial.

32. RELATED PARTY TRANSACTIONS

Kinnevik

The Company's principal shareholder is Investment AB Kinnevik ("Kinnevik") and subsidiaries. Kinnevik is a Swedish holding company with
interests in the telecommunications, media, publishing, paper industries and financial services. As of December 31, 2009 and 2008, Kinnevik owned approximately 35% of Millicom.

During
2009 and 2008, Kinnevik did not purchase any Millicom shares.

Services purchased and sold to related companies

For the year ended December 31, 2009 the Group made purchases for an amount of $1 million (2008: $3 million; 2007:
$4 million) and had outstanding balances as at December 31, 2009 of $1 million (as at December 31, 2008: $1 million) with related parties. These related parties are
companies where Kinnevik is the principal shareholder. The services purchased and supplied covered fraud detection, network and IT support, acquisition of assets and customer care systems. These
purchases were made on an arm's length basis.

There
were no sales to related companies. As of December 31, 2009 and 2008, Millicom had no receivables from related parties.

33. FINANCIAL RISK MANAGEMENT

Terms, conditions and risk management policies

Exposure to interest rate, foreign currency, liquidity and credit risks arises in the normal course of Millicom's business. The Group
analyses each of these risks individually as well as on an interconnected basis and defines strategies to manage the economic impact on the Group's performance in line with its financial risk
management policy. Some of 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

The interest rate risk generally arises from borrowings. Borrowings issued at floating rates expose the Group to cash flow interest
rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group's exposure to the risk for 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 fixed and floating rate debt in which neither category of debt falls below 25% of the total debt. The Group actively monitors its
borrowings to ensure the compliance with this policy and applies a dynamic

F-78

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

33. FINANCIAL RISK MANAGEMENT (Continued)

interest
rate hedging approach whereby the target mix between fixed and floating rate debt is reviewed periodically. The purpose of Millicom's policy is to achieve an optimal balance between cost of
funding and volatility of financial results, while taking into account market conditions as well as our overall business strategy. At December 31, 2009, approximately 24% of the Group's
borrowings are at a fixed rate of interest (2008: 26%).

To
comply with internal policies, in January 2010 Millicom entered into a interest rate swap (see note 35) to hedge the interest rate risk of the floating rate debt in three
different countries (Tanzania, DRC and Ghana). The interest rate swap was issued in January 2010 for a nominal of $100 million, with maturity January 2013. If Millicom had entered into the swap
agreement on December 31, 2009, 28% of Group's borrowings would have been at a fixed rate of interest.

The
table below summarizes, as at December 31, 2009, our fixed rate debt and floating rate debt:

Amounts due within1 year

12 years

23 years

34 years

45 years

>5 years

Total(in thousands of U.S. Dollars, except percentages)Fixed rate


96,881


5,667


5,225


455,075


656


779


564,283Average nominal interest rate


8.4
%

6.7
%

6.2
%

10.0
%

6.5
%

6.5
%

9.6
%Floating rate


337,106


662,220


399,741


237,982


116,163


29,392


1,782,604Average nominal interest rate


5.6
%

5.7
%

5.8
%

6.3
%

5.0
%

3.6
%

5.7
%Total


433,987


667,887


404,966


693,057


116,819


30,171


2,346,887Average nominal interest rate


6.2
%

5.7
%

5.8
%

8.7
%

5.0
%

3.6
%

6.6
%


The table below summarizes, as at December 31, 2008, our fixed rate debt and floating rate debt:

Amounts due within1 year

12 years

23 years

34 years

45 years

>5 years

Total(in thousands of U.S. Dollars, except percentages)Fixed rate


108,815


5,209


754


774


454,246


1,398


571,196Average nominal interest rate


8.0
%

7.8
%

9.7
%

9.1
%

10.0
%

6.3
%

9.6
%Floating rate


387,729


200,841


334,352


313,519


263,749


86,640


1,586,830Average nominal interest rate


6.0
%

8.6
%

9.1
%

8.7
%

8.4
%

7.8
%

8.0
%Total


496,544


206,050


335,106


314,293


717,995


88,038


2,158,026Average nominal interest rate


6.4
%

8.6
%

9.1
%

8.7
%

9.4
%

7.8
%

8.4
%


A one hundred basis point fall or rise in market interest rates for all currencies in which the group had borrowings at December 31, 2009, would increase
or reduce profit before tax from continuing operations for the year by approximately $18 million (2008: $16 million).

F-79

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

33. FINANCIAL RISK MANAGEMENT (Continued)

Foreign currency risk

The 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 because it is either advantageous for joint ventures and subsidiaries to incur debt obligations in US dollars or because US dollar denominated borrowing is the only funding
source available to a joint venture or subsidiary. In these circumstances, Millicom has currently decided to accept the remaining currency risk associated with the financing of 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.

The
following table summarizes our debt detailing the balances at December 31, 2009 and 2008, that were denominated in US$ and in other local currencies.

2009

2008US$ '000

US$ '000US$


1,570,525


1,466,493Colombia


508,904


456,356Senegal


121,766


58,309Tanzania


72,553


74,536Guatemala


31,819


Other


41,320


102,332Total local currency


776,362


691,533Total


2,346,887


2,158,026


At December 31, 2009, if the US$ had weakened/strengthened by 10% against the other functional currencies of our operations and all other variables held
constant, then profit before tax from continuing operations would have increased/decreased by $82 and $90 million respectively (2008: $41
and $45 million respectively). This increase/decrease in profit before tax would have mainly been as a result of the conversion of the results of our operations with functional currencies other
than US dollar. The increase in the effect of a change in the rate of the US$ between 2009 and 2008 is mainly as a result of the increase in the size of the Group and the increase in debt denominated
in other than local currencies.

The
change of the US$ against the functional currencies of Millicom's operation in Honduras has not been considered as these currencies have been closely linked to US$ in the recent
years.

Credit risk

Financial instruments that potentially subject the Group to credit risk are primarily cash and cash equivalents, pledged deposits,
letters of credit, trade receivables, amount due from joint venture partners, supplier advances and other current assets. The counter parties to the agreements relating to the Group's cash and cash
equivalents, pledged deposits and letters of credit are significant financial

F-80

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

33. FINANCIAL RISK MANAGEMENT (Continued)

institutions
with investment grade ratings. Management does not believe there is a significant risk of non-performance by these counter parties.

A
large portion of the turnover is made of prepaid airtime. For customers for which telecom services are not prepaid, the Group follows risk control procedures to assess the credit
quality of the customer, taking into account its financial position, past experience and other factors.

Accounts
receivables are mainly derived from the balances towards other telecom operators. The credit risk towards the 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. The Group maintains a provision for impairment of trade receivables based upon the expected collectability
of all trade receivables.

There
is no significant concentration of credit risk with respect to trade receivables, as the Group has a large number of customers, internationally dispersed.

Liquidity risk

Liquidity risk is defined as the risk that an entity will encounter difficulty in meeting obligations associated with financial
liabilities. The Group has incurred significant indebtedness but also has significant cash balances. Millicom evaluates its ability to meet its obligations on an ongoing basis using a recurring
liquidity planning tool. This tool considers the operating net cash flows generated from its operations and the future cash needs for borrowing and interest payments and the capital and operating
expenditures required to maintain and develop local businesses.

The
Group manages its liquidity risk through the use of bank overdrafts, bank loans (onshore and offshore), vendor financing, Export Credit Agencies and Direct Financial Institutions
("DFI") and finance leases. Millicom believes that there is sufficient liquidity available in our markets to meet our ongoing liquidity needs. As the Group operates in the emerging markets, it is able
to take advantage of local liquidity. Additionally, Millicom is able to arrange offshore funding through the use of Export Credit Agency guarantees and DFI (IFC, PROPARCO, DEG and FMO), who have been
established specifically to finance development in our markets.

F-81

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

33. FINANCIAL RISK MANAGEMENT (Continued)

The
tables below summarize the maturity profile of the Group's net financial liability at December 31, 2009 and 2008.

Year ended 31 December 2009

Less than
1 year

1 to 5 years

>5 years

TotalUS$ '000

US$ '000

US$ '000

US$ '000Total borrowings (see note 26)


(433,987
)

(1,882,729
)

(30,171
)

(2,346,887
)Cash and cash equivalent


1,511,162








1,511,162Time deposit


50,061








50,061Pledged deposit


9,396


53,333





62,729Net cash (debt)


1,136,632


(1,829,396
)

(30,171
)

(722,935
)Future interest commitments(i)


(142,709
)

(230,392
)

(1,263
)

(374,364
)Trade payables (excluding accruals)


(341,707
)







(341,707
)Other financial liabilities (including accruals)


(565,967
)







(565,967
)Trade receivables


224,708








224,708Other financial assets


150,518


7,965





158,483Net financial asset (liability)


461,475


(2,051,823
)

(31,434
)

(1,621,782
)




Year ended 31 December 2008

Less than
1 year

1 to 5 years

> 5 years

TotalUS$ '000

US$ '000

US$ '000

US$ '000Total borrowings (see note 26)


(496,544
)

(1,573,444
)

(88,038
)

(2,158,026
)Cash and cash equivalent


674,195








674,195Net cash (debt)


177,651


(1,573,444
)

(88,038
)

(1,483,831
)Future interest commitments(i)


(169,116
)

(408,065
)

(10,980
)

(588,161
)Trade payables (excluding accruals)


(524,557
)







(524,557
)Other financial liabilities (including accruals)


(634,563
)







(634,563
)Trade receivables


257,455








257,455Other financial assets


270,456


23,195





293,651Net financial liability


(622,674
)

(1,958,314
)

(99,018
)

(2,680,006
)




Capital management

The 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.

The
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. No changes were made in the objectives, policies or processes during the years ended December 31, 2009
and 2008.

F-82

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

33. FINANCIAL RISK MANAGEMENT (Continued)

The
Group monitors capital using primarily a net debt to adjusted operating profit ratio.

2009

2008US$ '000

US$ '000Net debt


722,935


1,483,831Adjusted operating profit (see note 9)


1,545,459


1,366,165Ratio

RatioNet debt to adjusted operating profit ratio


0.5


1.1


The Group also reviews its gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, interest bearing loans and
borrowings, less cash and cash equivalents, excluding discontinued operations. Capital represents equity attributable to the equity holders of the parent.

2009

2008US$ '000

US$ '000Net debt


722,935


1,483,831Equity


2,383,803


1,677,918Net debt and equity


3,106,738


3,161,749Gearing ratio


23
%

47
%


F-83

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

34. FINANCIAL INSTRUMENTS

The following table shows the carrying and fair values of Millicom's financial instruments, split by category, as of December 31, 2009 and 2008:

Carrying value

Fair value2009

2008

2009

2008US$ '000

US$ '000

US$ '000

US$ '000FINANCIAL ASSETSLoans and receivablesPledged deposits


53,333


6,172


53,333


6,172Other non-current assets


7,965


17,023


7,965


17,023Trade receivables, net


224,708


257,455


224,708


257,455Amounts due from joint venture partners


52,590


40,228


52,590


40,228Prepayments and accrued income


65,064


82,303


65,064


82,303Other current assets


58,159


87,859


58,159


87,859At fair value through profit and lossTime deposit


50,061





50,061


Cash and cash equivalents


1,511,162


674,195


1,511,162


674,195Total


2,023,042


1,165,235


2,023,042


1,165,235Current


1,961,744


1,142,040


1,961,744


1,142,040Non-current


61,298


23,195


61,298


23,195FINANCIAL LIABILITIESFinancial liabilities at amortized costDebt and financing (see note 26)


2,346,887


2,158,026


2,352,635


2,125,211Other trade payables


194,691


240,576


194,691


240,576Amounts due to joint venture partners


52,180


49,921


52,180


49,921Accrued interest and other expenses


173,609


159,539


173,609


159,539Dividend payable


134,747





134,747


Other liabilities


13,806


16,177


13,806


16,177Total


2,915,920


2,624,239


2,921,668


2,591,424Current


998,348


954,872


998,348


954,872Non-current


1,917,572


1,669,367


1,923,320


1,636,552


The fair value of Millicom's financial 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. The following methods and assumptions were used to estimate the fair values: the fair value of all financial assets and all financial liabilities
except debt and financing approximate their carrying value largely due to the short-term maturities of these instruments; the fair value of the 10% Senior Notes has been valued by a
primary financial institution; the fair values of all other debt and financing has been valued by the Group based on future cash flows.

Effective
January 1, 2009, Millicom adopted the amendment to IFRS 7 for financial instruments that are measured in the balance sheet at fair value, which requires
disclosure of fair value measurements by level of the following fair value measurement hierarchy:



F-84

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2009, 2008 and 2007 (Continued)

34. FINANCIAL INSTRUMENTS (Continued)



Millicom's
financial instruments at fair value through the profit and loss are measured with reference to the level 1 of above.

35. SUBSEQUENT EVENTS

Interest rate swap agreement

In January 2010 Millicom entered into a interest rate swap to hedge the interest rate risk of the floating rate debt in three different
countries (Tanzania, DRC and Ghana). The interest rate swap was issued in January 2010 for a nominal of $100 million, with maturity January 2013.

Sale and lease back agreement

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 sites. The agreement marks Millicom's first outsourcing of passive infrastructure and is consistent with Millicom's strategy of improving both our
capital and operating efficiency by focusing on our core activities.

Revenue sharing agreement in Cambodia

In February 2010, Millicom gave notice to the government of Cambodia that it is evaluating the possibility of making a claim against
the government in an international arbitration forum. The primary basis of any such claim would involve the discriminatory and inequitable revenue share charged by the government contrary to relevant
contractual, national and international law obligations during the period of our ownership of the Cambodian operations.

Dividend

On February 10, 2010 Millicom announced that the Board will propose to the Annual General Meeting of the Shareholders a dividend
distribution of $1.40 per share to be paid out of Millicom's profits for the year ended December 31, 2009 subject to the Board's approval of the 2009 Consolidated Financial Statements of
the Group.

F-85

---



Table of Contents

Shareholder information

Corporate and registered officeMillicom 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

Head of External CommunicationsPeregrine Riviere
Tel: +352 27 759 101

Investor RelationsEmily Hunt Tel: +44 7879 426358

Visit MIC's homepage athttp://www.millicom.com

Financial CalendarApril 20, 2010
First quarter results

July 20,
2010
Second quarter results

October 19,
2010
Third quarter results

February
2011
Full year results 2010

F-86

---