SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 20-F

|ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
|------------------------------------------------------------------------------------
|For the fiscal year ended December 31, 2003                                         

Commission File Number: 000-22828

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MILLICOM INTERNATIONAL CELLULAR S.A.

(Exact name of Registrant as specified in its charter)

GRAND-DUCHY OF LUXEMBOURG(Jurisdiction of incorporation or organization)

75 Route de Longwy, L-8080 Bertrange, Grand-Duchy of Luxembourg(Address of principal executive offices)

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Securities registered pursuant to Section 12(b) of the Act:None

Securities registered pursuant to Section 12(g) of the Act:

Common Shares, par value $1.50 each, as of December 31, 2003(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None

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

Common Shares with a par value of $1.50 each: 66,319,940 as of December 31, 2003

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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 which financial statement item the Registrant has elected to follow:

Item 17 o    Item 18 ý



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TABLE OF CONTENTS

|                                                |           |     |                                                                              |  | Page
|----------------------------------------------- | --------- | --- | ---------------------------------------------------------------------------- |  | ----
|FORWARD-LOOKING STATEMENTS                      |           | 1  
|PRESENTATION OF FINANCIAL AND OTHER INFORMATION |           | 1  
|PART I                                          |           | 3  
|                                                | ITEM 1.   |     | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        |  | 3   
|                                                | ITEM 2.   |     | OFFER STATISTICS AND EXPECTED TIMETABLE                                      |  | 3   
|                                                | ITEM 3.   |     | KEY INFORMATION                                                              |  | 3   
|                                                | ITEM 4.   |     | INFORMATION ON THE COMPANY                                                   |  | 16  
|                                                | ITEM 5.   |     | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 |  | 53  
|                                                | ITEM 6.   |     | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   |  | 83  
|                                                | ITEM 7.   |     | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            |  | 87  
|                                                | ITEM 8.   |     | FINANCIAL INFORMATION                                                        |  | 90  
|                                                | ITEM 9.   |     | THE OFFER AND LISTING                                                        |  | 91  
|                                                | ITEM 10.  |     | ADDITIONAL INFORMATION                                                       |  | 93  
|                                                | ITEM 11.  |     | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                    |  | 101 
|                                                | ITEM 12.  |     | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  | 104 
|PART II                                         |           | 105
|                                                | ITEM 13.  |     | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  | 105 
|                                                | ITEM 14.  |     | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  | 105 
|                                                | ITEM 15.  |     | CONTROLS AND PROCEDURES                                                      |  | 105 
|                                                | ITEM 16A. |     | AUDIT COMMITTEE FINANCIAL EXPERT                                             |  | 105 
|                                                | ITEM 16B. |     | CODE OF ETHICS                                                               |  | 105 
|                                                | ITEM 16C. |     | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                       |  | 105 
|                                                | ITEM 16D. |     | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                   |  | 106 
|                                                | ITEM 16E. |     | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES        |  | 106 
|PART III                                        |           | 107
|                                                | ITEM 17.  |     | FINANCIAL STATEMENTS                                                         |  | 107 
|                                                | ITEM 18.  |     | FINANCIAL STATEMENTS                                                         |  | 107 
|                                                | ITEM 19.  |     | EXHIBITS                                                                     |  | 107 
|SIGNATURES                                      |           | i  

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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 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 hereof. 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.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Unless the context otherwise requires, the term "MIC" refers only to Millicom International Cellular S.A., a stock corporation organized under the laws of the
Grand-Duchy of Luxembourg, and the terms "Millicom", the "Company", "we", "us" or "our" refers to MIC and its subsidiaries, joint ventures and affiliates. The term "MIC Cellular" refers to the
operations of the Company, excluding those of Tele2 AB (formerly named NetCom AB). 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
Company's ownership interest in the

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licenses
for such licensed area. The term "Proportional Subscribers" refers to the Company's share of the total subscribers in an operation. Persons, population and pops data for 2003 and 2002 have
been extracted from the "CIAThe World Factbook" for 2003 for countries where the license area covers the entire country and have been estimated by management for countries where the
license area is less than the entire country. In addition, information on the countries in which MIC operates has been extracted from the "CIAThe World Factbook" for 2003 with updates,
where appropriate, from the U.S. Department of State's website. Market share data and penetration rates have been obtained from EMC, a cellular market research firm. EMC is aware of, and has consented
to being named in this report, which may be incorporated by reference into registration statements we file with the SEC. Unless otherwise indicated, subscriber figures represent the total number of
cellular subscribers of operations in which we have an ownership interest.

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 ("IFRS") and subscriber figures represent the total number of cellular subscribers of systems in which the Company has an ownership interest. In this report, references to
"dollars" or "$" are to U.S. dollars, references to "SEK" are to Swedish kroner 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.

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PART I

ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.    KEY INFORMATION

Selected Financial Information

The Company reports under International Financial Reporting Standards ("IFRS"). The following tables present comparative information under IFRS and U.S. generally
accepted accounting principles ("U.S. GAAP"). For a reconciliation of our IFRS profit (loss) and balance sheet to U.S. GAAP and a discussion of the principal differences between the
accounting policies applied by us under IFRS and U.S. GAAP, please see Note 31 of the "Notes to the Consolidated Financial Statements".

The
following table sets forth summary financial data of the Company as of and for the years ended December 31, 2003, 2002, 2001, 2000 and 1999. The data are based upon the
Company's audited consolidated balance sheets as of December 31, 2003, 2002, 2001, 2000 and 1999 and audited consolidated statements of profit and loss 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 therein in this document are based upon financial statements prepared in accordance with IFRS.

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

|                                |                                                                            | Year Ended December 31, |  
|------------------------------- | -------------------------------------------------------------------------- | ----------------------- | -
|
|
|Amounts in accordance with IFRS |                                                                            |                         |  
|Profit and Loss Statement Data: |                                                                            |                         |  
|                                | Revenues                                                                   |                         |  
|                                | Operating profit/(loss)                                                    |                         |  
|                                | Gain (loss) from investment securities                                     |                         |  
|                                | Profit/(loss) for the period from continuing operations(1)                 |                         |  
|                                | Profit/(loss) for the period                                               |                         |  
|                                | Basic (loss) earnings from continuing operations per common share          |                         | $
|                                | Basic (loss) earnings per common share                                     |                         | $
|                                | Weighted average number of shares in basic computation (in thousands)(2)   |                         |  
|                                | Diluted (loss) earnings from continuing operations per common share        |                         | $
|                                | Diluted (loss) earnings per common share                                   |                         | $
|                                | Weighted average number of shares in diluted computation (in thousands)(2) |                         |  
|                                | Dividends per share                                                        |                         |  

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|                                |                                          | As of December 31,
|------------------------------- | ---------------------------------------- | ------------------
|
|
|Amounts in accordance with IFRS |                                          |                   
|Balance Sheet Data:             |                                          |                   
|                                | Property, plant and equipment, net       |                   
|                                | Licenses, net                            |                   
|                                | Investment in securities                 |                   
|                                | Investments in associated companies(3)   |                   
|                                | Cash, cash equivalents and time deposits |                   
|                                | Total assets                             |                   
|                                | Current liabilities                      |                   
|                                | Non-current liabilities                  |                   
|                                | Minority interest                        |                   
|                                | Shareholders' equity/(deficit)           |                   

|                                  |          | As of and for Year Ended December 31,
|--------------------------------- | -------- | -------------------------------------
|
|Operating Data (unaudited)(4):    |          |                                      
|Total Subscribers (in thousands): |          |                                      
|                                  | Prepaid  |                                      
|                                  | Postpaid |                                      
|Monthly churn (%)(5):             |          |                                      
|                                  | Prepaid  |                                      
|                                  | Postpaid |                                      

|                                         |                                                                                                                         | Year Ended December 31, |  
|---------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- | ----------------------- | -
|
|
|
|Amounts in accordance with U.S. GAAP(6): |                                                                                                                         |                         |  
|Profit and Loss Statement Data:          |                                                                                                                         |                         |  
|                                         | Revenues                                                                                                                |                         |  
|                                         | Cost of sales                                                                                                           |                         |  
|                                         | Operating expenses                                                                                                      |                         |  
|                                         | Operating profit (loss)                                                                                                 |                         |  
|                                         | Gain (loss) from investment in securities                                                                               |                         |  
|                                         | Profit (loss) for the period from continuing operations (before cumulative effect of change in accounting principle)(1) |                         |  
|                                         | Profit (loss) for the period                                                                                            |                         |  
|                                         | Basic (loss) earnings per common share                                                                                  |                         | $
|                                         | Weighted average number of shares in basic computation (in thousands)(2)                                                |                         |  
|                                         | Diluted (loss) earnings per common share                                                                                |                         | $
|                                         | Weighted average number of shares in diluted computation (in thousands)(2)                                              |                         |  

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|                                         |                                    | As of December 31,
|---------------------------------------- | ---------------------------------- | ------------------
|
|
|
|Amounts in accordance with U.S. GAAP(6): |                                    |                   
|Balance Sheet Data:                      |                                    |                   
|                                         | Property, plant and equipment, net |                   
|                                         | Licenses, net                      |                   
|                                         | Investment in securities           |                   
|                                         | Investments in associates          |                   
|                                         | Total assets                       |                   
|                                         | Current liabilities                |                   
|                                         | Non-current liabilities            |                   
|                                         | Minority interest                  |                   
|                                         | Shareholders' equity/(deficit)     |                   

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RISK FACTORS

Risks Relating to our Business

General Risks

This report contains "forward looking" statements that involve risks and uncertainties. Our actual results may differ significantly from
the results discussed in the forward looking statements. Factors that might cause such differences include those discussed below and elsewhere in this report. See "Forward Looking
Statements".

We have a history of losses and may incur losses in the future, and we may be unable to achieve profitability.

We
experienced losses in the year ended December 31, 2003 and in each of the years from 1998 to 2002. The figures hereafter exclude gains (losses) and valuation movement on
investment in securities, fair value result on financial instruments and gain realized on debt exchange. For the year ended December 31, 2003, we made a net loss of $80,107,000. For the year
ended December 31, 2002, we made net losses of $77,322,000. For the year ended December 31, 2001, we made net losses of $112,208,000. For the year ended December 31, 2000, we made
net losses of $309,874,000. For the year ended December 31, 1999, we made net losses of $186,599,000. See "Operating and Financial Review and Prospects."

We
are not assured of achieving or maintaining profitability in the future, nor are we sure that we will always have sufficient resources to make payments on our indebtedness. Future
performance will
depend, in particular, on our ability to generate demand and revenue for our services, to maintain existing subscribers and customers and to attract new subscribers and customers. Costs in connection
with the acquisition and renewal of licenses and the costs incurred in order to commence and develop operations of cellular and related telecommunications systems will also affect revenues and
profitability.

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

We
have a substantial amount of debt and significant debt service obligations. As of December 31, 2003, the consolidated debt and other financing of Millicom $1,276,865,000
(including the embedded derivative on the 5% Mandatory Exchangeable Notes for an amount of $103,457,000). Of this amount, $1,018,051,000 represented MIC and Millicom Telecommunications S.A.
indebtedness and $258,814,000 represented our consolidated share of the indebtedness of our subsidiaries and joint ventures. Corporate guarantees, cash deposits and standby letters of credit (issued
at our request and guaranteed by us) secured $90,951,000 of the indebtedness of our ventures at December 31, 2003. Of our indebtedness, $327,635,000 relates to Millicom Telecommunications
S.A.'s 5% Mandatory Exchangeable Notes, which are mandatorily exchangeable into Tele2 AB B shares and $103,457,000 to the embedded derivative on the 5% Mandatory Exchangeable Notes and in respect of
which no repayment in cash of principal is required. See "Operating and Financial Review and ProspectsDescription of Certain Indebtedness Millicom Telecommunications S.A.'s 5% Mandatory
Exchangeable Notes".

In
2002, we experienced liquidity concerns resulting from our substantial indebtedness. Although we have implemented a restructuring program that has improved our liquidity by reducing
our overall indebtedness and debt service obligations, there can be no assurance that we will not incur additional indebtedness that could result in liquidity concerns or other negative consequences
in the future.

Our
level of indebtedness could have important negative consequences for us. For example, it could:



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Our ability to generate cash depends on many factors beyond our control, and we may not be able to generate cash required to service our
debt.

Our
ability to meet our debt service obligations or to refinance our debt depends on our future operating and financial performance and ability to generate cash. This will be affected 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 cannot generate
sufficient cash to meet our debt service obligations or fund our other business needs, we may, among other things, need to refinance all or a portion of our debt, obtain additional financing, delay
capital expenditures or sell assets. We cannot assure you that we will be able to generate sufficient cash through any of the foregoing. If we are not able to refinance any of our debt, obtain
additional financing or sell assets on commercially favorable terms or at all, we may not be able to satisfy our obligations with respect to our debt. If this were to occur, holders of the relevant
debt would be able to declare the full amount of such debt due and payable. Our assets may not be sufficient to pay such amounts.

Restrictions imposed by the indentures governing our outstanding debt contain various covenants that limit our ability to take certain
actions.

The
indentures governing certain of our outstanding debt contain various covenants that limit our flexibility in operating our business. For example, these agreements restrict the
ability of MIC and certain of its subsidiaries to, among other things:



We
cannot assure you that the operating and financial restrictions and covenants in these agreements will not adversely affect our ability to finance our future operations or capital
needs, engage in other business activities that may be in our interest or react to adverse market developments.

The agreement pursuant to which we conduct our operations in Vietnam, which is our largest contributor to revenue, expires in 2005, unless extended. We do not
exercise management control over Mobifone.

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In
1994, Comvik International Vietnam AB ("CIV"), in which we currently have an 80% interest, Industriförvaltnings AB Kinnevik ("Kinnevik"), our largest shareholder and
Vietnam Mobile Services Co. ("VMS"), a Vietnamese government owned company, entered into a Business Cooperation Contract ("BCC") to operate a nationwide cellular GSM system in Vietnam known as
Mobifone. The BCC provides for, among other things, 50/50 revenue sharing between CIV and VMS. Our operation in Vietnam, which derives all of its revenue from the BCC, is our largest contributor to
revenue. The BCC has a 10-year term from July 1, 1995. Upon its expiration on June 30, 2005, legal title to all equipment of the Vietnam operation contributed by ourselves
will be transferred to VMS at a price of $1. Although we are currently in negotiations to extend the life of the BCC, we cannot assure you that the BCC will be extended on equivalent or satisfactory
terms, or at all. If the BCC is not extended on equivalent or satisfactory terms, or at all, our results of operations and financial condition would be adversely affected. If the revenue sharing
agreement is not extended or CIV is unable to maintain its operations in Vietnam through another agreement, its telecommunications services would cease on June 30, 2005. In such event, CIV
would no longer generate any revenues from cellular operations in Vietnam. CIV's revenues for the year ended December 31, 2003 were $129,936,000 (20% of Millicom's total revenues) and operating
profit was $51,292,000 (32% of Millicom's total operating profit). At present, all equipment recorded in CIV's financial statements will be fully amortized by July 1, 2005, at which date legal
title to all equipment will be transferred to VMS at a price of $1.

In
addition, under the terms of the BCC, MIC does not exercise management control over Mobifone. Certain management decisions, such as the decision to make certain capital expenditures
and other business policy decisions, are made by an advisory committee comprised of eight members (four of which are appointed by CIV and four of which are appointed by VMS). Although the advisory
committee has in the past made decisions based on our recommendations, we cannot assure you that the advisory committee will make decisions based on our recommendations in the future or that it will
act in a manner consistent with our interests. In addition, CIV and VMS must agree in writing to amend the BCC, sell all or substantially all of the business assets or terminate any business license.
If a dispute occurs between us and VMS and we are unable to resolve it satisfactory, our results of operations and financial condition would be adversely affected.

Our ability to receive funds from, and to exercise management control over our ventures is often dependent upon the consent of other participants who are not
under our control. Disagreements or unfavorable terms in the agreements governing our joint ventures could adversely affect our operations.

We
currently participate in 16 cellular ventures in 15 countries. Our participation in each venture differs from market to market, and we do not have a controlling interest in some
operations. Sometimes, our ability to withdraw funds, including dividends, from our participation in, and to exercise management control over, ventures and investments therein depends on receiving the
consent of the other participants. While the precise terms of the arrangements vary, our operations may be affected if disagreements develop with venture partners, as have occurred in the past. For
example, in 2001, a dispute arose with local shareholders in our operation in El Salvador which resulted in our management determining that we could no longer exercise significant influence in the
operation and thus that it was not appropriate to consolidate the operation during the period of the dispute. Although this dispute was resolved in September 2003 and El Salvador is now
consolidated with our operations, there can be no assurance that other disagreements will not occur in the future that could adversely affect our operations. See "Notes to the Consolidated Financial
StatementsSummary of Consolidation and Accounting Policies".

We
rely upon dividends and other payments from our ventures to generate the funds necessary to meet our obligations, including our obligations under the notes. The ventures are legally
distinct from us and have no obligation to pay amounts due with respect to our obligations, or to make funds available for such payments. Our ventures do not guarantee our obligations. The ability of
our ventures to make such payments to us will be subject to, among other things, the availability of funds, the

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agreement
of the venture partner(s), the terms of each venture's indebtedness and applicable local laws. The majority of our operations have entered into financing facilities, some of which are
guaranteed by us, many of which restrict and some of which prohibit the payment of dividends by those ventures to us. Claims of creditors of our ventures, including trade creditors, will generally
have priority over our claims and the holders of our indebtedness. At December 31, 2003, the consolidated debt and other financing of our ventures was $371,578,000 (including trade creditors).

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

Kinnevik
and Invik & Co AB, together with our management, the Stenbeck estate, a former chairman who died in August 2002, and both the 1980 and 1985 Stenbeck Trusts,
beneficially own 46% of the outstanding shares of our common stock as of December 31, 2003. The Stenbeck estate is currently in probate in both Luxembourg and Sweden. Currently, four members of
our seven person Board of Directors are independent. Kinnevik and its affiliates, having a significant ownership in Millicom, can exercise control over our management and affairs, including:



We
cannot assure you that we will agree with the decisions of Kinnevik and the other insiders or that their decisions will be consistent with your interests.

A substantial number of our directors and executive officers hold positions with Kinnevik or Tele2 AB, which may present conflicts that are resolved in a manner
unfavorable to us.

Four
MIC board members hold or held executive positions with Kinnevik, our largest shareholder. Cristina Stenbeck, a member of our Board of Directors, is also Vice Chairman of the Board
of Directors of Kinnevik and Invik & Co. In addition, a number of our directors and executive officers hold executive positions with or are directors of Tele2 AB, a pan-European
telecommunications company offering fixed and mobile telephony, as well as data network and Internet services. Tele2 AB is controlled by Kinnevik and certain of its affiliates. These positions could
create, or appear to create, potential conflicts of interest when these directors and executive officers are faced with decisions that could have different implications for us, Kinnevik or Tele2 AB.
These conflicts may ultimately be resolved in a manner that is unfavorable to us. Moreover, a portion of certain of our directors' and officers' time is spent on matters relating to Kinnevik and Tele2
AB, and not us. While it
is the current expectation that we have the initial right to consider any telecommunications opportunity that arises in our markets, there is no contractual arrangement to this effect among us and
Kinnevik or Tele2 AB and there can be no assurance that we would in fact receive such right of first refusal over any such business opportunity.



Under Luxembourg company law, all companies must have losses less than half their subscribed share capital. If this is not the case, the shareholders must vote as
to whether or not to dissolve the company. As of December 31, 2002, we had losses equal to more than half our subscribed share capital. At the annual general meeting held on May 27,
2003, the shareholders elected to continue operations for the coming 12 months. As of December 31, 2003 we had losses equal to more than half

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our
subscribed share capital, and our losses may equal more than half our subscribed share capital in the foreseeable future. There can be no assurance that shareholders will vote to continue
operations.

Our Bolivian venture is in breach of certain financial covenants under its financing agreements. Although none of the lenders have sought to accelerate repayment,
there can be no assurance that this will continue to be the case.

In
June 2001, Telefónica Celular de Bolivia SA ("Telecel") signed financing agreements in the amount of $25,000,000 with the International Finance Corporation
("IFC") and $10,000,000 from the Nederlandse Financierings Maatschappij Voor Ontwikkelingslanden, N.V. ("FMO"), also known as the Netherlands Development Finance Company. In addition, in
November 2001, Telecel signed a financing agreement in the amount of approximately $10,000,000 with Bayerische Landesbank Girozentrale ("Bayerische"). All three of these financings are
guaranteed by MIC. To date, Telecel has made all installment repayments due under these financing agreements and it expects to make the installment repayments due in 2004 totaling $9,826,000. In the
past, MIC has lent money to help Telecel meet its obligations under these financings as they became due. As of December 31, 2003, $28,765,000 in aggregate was outstanding under its third party
financing arrangements.

Since
April 1, 2002, Telecel has been in breach of certain financial covenants contained in each of the three facilities and the outstanding balances have been
re-classified as short-term financing. Telecel has entered into a standstill agreement with the IFC, FMO and Bayerische pursuant to which each has agreed, absent a
deterioration in the credit of Telecel or MIC, not to accelerate payment of the obligations under their respective financings until Telecel's 2003 audited financials become available, so long as MIC
continues to assist Telecel in making scheduled repayments. There can be no assurance, however, that Telecel will be able to resolve this matter
satisfactorily or that any of the lenders will not seek to accelerate repayment of the outstanding balances upon expiration of their respective standstill agreements. If Telecel's obligations under
the financing agreements are accelerated, and if it is unable to meet its obligations, MIC would be obligated to satisfy those obligations pursuant to the guarantees.

U.S. investors will be subject to special tax rules if we are considered to be a passive foreign investment company.

Special
U.S. tax rules apply to U.S. taxpayers who own stock in a "Passive Foreign Investment Company," or "PFIC", or in a "Foreign Personal Holding Company," or "FPHC". We cannot assure
you that that we presently are not, or will not become, a PFIC. Our status under the PFIC rules for each year depends upon our income and assets from time to time during that year. Our substantial
investment in associated companies' securities and other "passive assets" result in a risk that we are a PFIC or could become a PFIC in the future. If we were determined to be a PFIC, then
shareholders who are U.S. persons under U.S. tax laws would be subject to special unfavorable tax rules.



We
are incorporated under the laws of the Grand Duchy of Luxembourg. All of our directors and executive officers are residents of Luxembourg or other countries other than the United
States. All or a substantial portion of our assets and those 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 outside
the United States. 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, Linklaters Loesch, 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

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United
States federal securities laws, would not be 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.

Risks Related to our Cellular Telephone Operations



The cellular systems in which we have interests face competition from the landline telephone networks and other cellular telephone operators in the markets in
which they operate.

We
expect that other cellular telephone operators will obtain licenses in some markets, including markets where we do not currently have a licensed cellular telephone competitor.
Moreover, additional licenses may be awarded in markets where we already face competition from other communications technologies that are being or may be developed and/or perfected in the future. In
some of our markets, there may be more cellular telephone operators than the market is likely to sustain. In addition, in some of our markets, our competitors may have more advanced technology than
us, such as GSM, or greater coverage area than us, or both. The cellular telephone operators in each market
compete for customers principally on the basis of services offered, quality of service, coverage area and price. Some of our competitors have substantially greater capital resources than we do. Price
competition can be significant.

In
addition, new competitors, such as cable companies that are able to leverage their existing networks, may enter the telecommunications markets. The level of competition is influenced
by the continuous and swift technological advances that characterize the industry, the regulatory developments that affect competition and alliances between market participants.

There
is also a risk that, as new competitors enter our prepaid markets and price competition intensifies, our prepaid customers may be more likely to move from one cellular telephone
operator to another than our postpaid customers. This could result in our revenue declining, which could 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 would have a material adverse effect
on our revenues and overall results of operations.



The licensing, construction, ownership and operation of cellular telephone networks, and the grant, maintenance and renewal of cellular telephone licenses, as
well as radio frequency allocations and interconnection arrangements, are regulated by national, state, regional or local governmental authorities in the markets that we service. In addition, such
matters and certain other aspects of cellular telephone operations, including rates charged to customers and the resale of cellular telephone service, may be subject to public utility regulation in
the relevant market. For example, in Vietnam, the regulator determines tariff charges to customers. Our ventures also typically require governmental permits, including permits for the construction and
operation of cell sites. We do not believe that compliance with these permit requirements should have a material adverse effect on our company. However, we could become subject to claims or regulatory
actions relating to any past or future noncompliance with permit requirements. A number of regulators have, or are expected to, reduce interconnection rates. Because we are often one of the larger
suppliers of cellular telephone services in the countries we service, this could have the effect of reducing our revenue. Changes in the regulation

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of
our activities, such as increased or decreased regulation affecting prices, the terms of interconnect arrangements with landline telephone networks or mobile operators or requirements for increased
capital investments, could materially adversely affect us.

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

We
may pursue new license opportunities within existing financial guidelines and group-wide synergy potential. In each market we may face competition for licenses from major
international telecommunications entities as well as from local competitors. While we have not typically paid significant amounts for cellular licenses, the competition for the granting or renewal of
the licenses is increasingly intense. As such, we anticipate that we may have to pay substantial license fees in certain markets, as well as meet specified network build out requirements. We cannot
assure you that we will be successful in obtaining or renewing any cellular telephone licenses, or if licenses are awarded that they can be obtained 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 cannot assure you that such funding will be obtained on satisfactory terms
or at all.

Our markets are characterized by rapid technological change, which could render our products obsolete and cause us to make substantial expenditures to replace our
products.

Fixed
network and other system equipment used in the cellular telephone industry has a limited life and must be replaced because of damage or as a result of ordinary wear and tear. In
addition, as new technologies develop, such as, if our competitors were to introduce third generation systems, equipment may need to be replaced or upgraded or a cellular telephone network may need to
be rebuilt in whole or in part, at substantial cost, to remain competitive. For example, we are currently building out networks based on the GSM standard in Paraguay, Guatemala, Honduras, El Salvador
and Pakistan due to increased competition from other GSM providers in those markets as well as the anticipated benefits of migrating to the GSM standard, including lower repair and maintenance costs,
greater availability of handsets and increased functionality. We cannot assure you that unforeseen technological developments will not render our services unpopular with customers or obsolete. In
addition, 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.

If we cannot successfully develop and manage our networks, we will be unable to expand our subscriber base and could lose market share and
revenues.

Our
ability to increase our subscriber base depends upon the success of the expansion and management of our networks. The build-out of our networks is subject to risks and
uncertainties which could delay the introduction of service in some areas and increase the cost of network construction. To the extent we fail to expand our network on a timely basis, we could
experience difficulty in expanding our subscriber base. In addition, our ability to manage our ventures successfully is dependent upon our ability to implement sufficient operational resources and
infrastructure. The failure or breakdown of key components of our infrastructure in the future, including our billing systems, could 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 a small number of our key senior management and technical personnel. Management of growth
will require, among other things:



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Our
success will also depend, in part, 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. Our failure to manage successfully our growth and personnel needs could have a material negative effect on our business and results of operations.

In some of our markets, our licenses and frequency allocations are subject to ongoing review, which may result in modification or early
termination.

The
continued existence and terms of cellular telephone licenses and frequency allocations are subject to ongoing review and, in some cases, to modification or early termination. The BCC
in Vietnam expires in 2005 and our licenses in Pakistan and Paraguay expire in 2005 and 2007, respectively, although the BCC and each license is subject to renewal. While we would not normally expect
any of our cellular telephone companies to be required to cease operations at the end of the term of its business arrangement, license or permit, we cannot assure you that business arrangements or
licenses will be renewed on equivalent or satisfactory economic terms, or at all. Upon termination, the license and the assets of the cellular telephone company associated with the system may revert
to the government or local telecommunications agency, in some cases without any, or adequate, compensatory payment being made to us.

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

Our
ventures are dependent upon access to networks not controlled by us, primarily networks controlled by current or former government owned public telecommunications operators or
competing cellular telephone operators. Our financial results are affected by the cost of transmission and leased lines to effect interconnection. There can be no assurance that we will be able to
maintain interconnect 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.

The current concerns about the actual or perceived health risks relating to electromagnetic and radio frequency emissions, as well as the attendant 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 automobile braking and steering systems. The actual or perceived risks
relating to mobile communications devices and base stations, or press reports about these risks, could adversely affect us, including by reducing our subscriber growth rate, subscriber base or average
use per subscriber, and could have a negative impact on the market price of our shares. In addition, if a link between electromagnetic or radio frequency emissions and adverse health concerns is
demonstrated, government authorities could increase regulation of mobile handsets and base stations as a result of these health concerns or cellular telephone operators, including us, could be held
liable for costs or damages associated with these concerns. Any such regulation or litigation could also have a materially adverse effect on our financial position and results of operations.



We operate in some markets that are considered politically unstable, which could negatively affect our
operations.

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We
currently have interests in cellular telephone licenses in 15 countries around the world and are subject to government regulation in each market. Most of the countries in which we
operate are emerging economies and are, therefore, subject to greater risks than more developed countries. The governments of the 15 countries differ widely with respect to structure, constitution and
stability, and some of these countries lack mature legal and regulatory systems. Some of the countries in which we operate have suffered political instability and civil unrest and there is the
possibility that these problems may continue or arise in the future. As a result, we face the risk that our networks could be disrupted in particular countries, which could adversely affect our
revenues or results of operations.

In
order for our ventures to provide cellular services, they must receive a license from the government of the countries in which they operate. Our ability to operate is dependent on the
licenses granted by the government of each country. These licenses generally allow our ventures to operate for a number of years after which they are subject to renewal. To the extent that our
operations depend on governmental approval and regulatory decisions, the operations may be adversely affected by changes in the political structure or government representatives in each of the markets
in which we operate. For instance, if a government decided to revoke a license to operate in the middle of its term, our recourse would be to the legal system of the relevant country. Because the
legal and court systems of some of the countries in which we operate are not highly developed and are subject to inherent uncertainties, it may be difficult to obtain a fair or unbiased resolution.
Recent political and economic changes have resulted in political and regulatory uncertainty in certain countries in which we operate, as further described in "Business." There is also a possibility
that a country in which we operate could arbitrarily decide to expropriate the assets of one of our ventures.

In
addition, most of the countries in which our ventures operate have volatile economies. Downturns in the economies of any particular country, or of a region generally, could adversely
affect demand for our services, which could result in reduced revenues. We cannot assure you that factors such as these will not have a material adverse effect on our operations in particular
countries.

We operate in a number of jurisdictions, any of which could effect changes to its laws that could unfavorably affect our financial status.

We
hold interests in our cellular telephone companies through our subsidiaries and affiliates in various jurisdictions in and outside Luxembourg. There can be no assurance that the laws
or administrative practices relating to taxation (including the current position as to withholding taxes on dividends from the ventures, and tax concessions in certain operations), foreign exchange or
otherwise in these jurisdictions will not change. For instance, countries may impose restrictions or other restraints on the conversion of local currencies and the transfer of funds or dividends by
our venture companies to our holding company in Luxembourg. Any such change could have a material adverse effect on our financial affairs and on our ability to receive funds from the venture.

Most of our ventures receive revenue that is denominated in the local currency. In the future, any of the countries in which these ventures are located could
impose foreign exchange controls, which could restrict our ability to receive funds from the ventures.

Most
of the ventures in which we have interests receive substantially all of their revenues in the currency of the markets in which they operate. We expect to derive substantially all of
our revenues through funds generated by the ventures and, therefore, we will rely on the ability of the ventures to transfer funds to us. Although there are foreign exchange controls in some of the
countries in which our cellular telephone companies operate, which could significantly restrict the ability of these ventures to pay interest and dividends and repay loans by exporting cash,
instruments of credit or securities in foreign currencies, we have experienced no material difficulty in obtaining permits to allow our ventures to export cash to us. There can be no assurances,
however, that this will continue to be the case. 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 effect of this is likely to be

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time
delays in accumulating significant amounts of foreign currency. In addition, a few countries in which we operate restrict the export of cash in local currencies. There can be no assurance that
additional foreign exchange control restrictions will not be introduced in the future or that our ability to receive funds from the ventures will not subsequently be restricted.

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

Exchange
rates for currencies of the countries in which our ventures operate may fluctuate in relation to the U.S. dollar, and such fluctuations may have a material adverse effect on our
earnings, assets or cash flows when translating local currency into U.S. dollars. For each venture that reports in a currency other than the U.S. dollar, a decrease in the value of that currency
against the U.S. dollar would reduce our profits while also reducing both our assets and liabilities. A relevant example was the devaluation of the guarani in Paraguay in 2002 which had an adverse
effect on the results of our operations. For the year ended December 31, 2003, we had an exchange loss of $45,602,000, which is mainly due to the exchange loss on the 5% Mandatory Exchangeable
Notes. For the years ended
December 31, 2002 and 2001, we had exchange losses of $23,483,000 and $17,313,000, respectively. To the extent that our ventures retain earnings or distribute dividends in local currencies in
the future, the amount of U.S. dollars we will receive will be affected by fluctuations of exchange rates for such currencies against the U.S. dollar. We generally do not hedge our foreign currency
exposure.

Our ability to reduce our foreign currency exposure may be limited by restrictions on borrowings in local currency.

At
the venture level, we seek to reduce our foreign exchange exposure arising from transactions through a policy of matching, as far as possible, assets and liabilities. Our ability to
reduce our foreign currency exchange exposure may be limited by restrictions on borrowings in local currency. For example, under local regulations in Pakistan, foreign controlled services sector
companies, such as our Pakistan operations, are required to obtain approval from the State Bank of Pakistan to engage in long-term borrowing in the local market and are required to meet
certain requirements imposed by the State Bank of Pakistan, including certain financial ratios. One of our Pakistan operations, Pakcom, has received a waiver from the State Bank of Pakistan, which
expires on December 31, 2004, and expects to be able to meet these ratios in the short term. In addition, our other Pakistan operation, Paktel, does not currently meet the applicable ratios but
has received a waiver from the State Bank of Pakistan in respect of its borrowings for the initial phases of its GSM network build out. If we fail to meet the applicable requirements, or obtain a
waiver, we expect that financing for the later stages of the build out may be financed from cash flows from operations, short-term borrowing or other financing arrangements. We cannot
assure you that in the future Pakcom or Paktel will meet the required ratios or obtain waivers, MIC's ability to fund Pakcom's or Paktel's capital expenditure needs as well as to reduce our foreign
exchange exposure by borrowing in local currency.

Potential inflation in local economies may affect some customers' ability to pay for our ventures' services, and it may also adversely affect the stability of the
cellular operations market in those areas.

Our
operations are dependent upon the economies of the markets in which we have interests. These markets are in countries with economies in various stages of development or structural
reform, some of which are subject to rapid fluctuations in terms of consumer prices, employment levels, gross domestic product and interest and foreign exchange rates. We may be subject to such
fluctuation in the local economies and to the effect of such fluctuations on the ability of customers to pay for our ventures' services. In addition, these fluctuations may affect the ability of the
market to support our existing cellular telephone interests or any growth in cellular telephone operations. It is also possible that a period of significant inflation in any of our markets could
adversely affect our costs and financial condition.

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We are subject to foreign taxes in the countries in which we operate, which may reduce amounts we receive from our operating ventures or may increase our tax
costs.

Many
of the foreign countries in which we operate have increasingly turned to new taxes, as well as aggressive interpretations of current taxes, as a method of increasing revenue. In
addition, the provisions of new tax laws may prohibit us from passing these taxes on to our local customers. Consequently, these taxes may reduce the amount of earnings that we can generate from our
services.

Our
Pakcom venture has received tax assessment notices from Pakistan's tax authorities relating to, among other things, the disallowance of realized foreign exchange losses and interests
in the amount of approximately $12 million. Pakcom has filed petitions disputing these assessments. In some cases, Pakcom has received unfavorable decisions, which it is currently appealing.
Our Paktel venture is seeking an assessment of prior years on the same basis as in 2000. If these or other tax assessments are ultimately resolved unfavorably to us, this could reduce amounts we
receive from our operating ventures or may increase our tax costs.



MIC is incorporated under the laws of the Grand-Duchy of Luxembourg. Substantially all of its directors and executive officers are residents of Luxembourg or
other countries other than the United States. All or a substantial portion of our assets, and of the assets of such persons are located outside the United States. As a result, it may not be possible
for investors in MIC's shares to effect service of process within the United States upon such persons or MIC or to enforce in U.S. courts or outside the United States judgments obtained against such
persons outside the United States. 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, Linklaters Loesch, 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, would not be 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 disputeab intitio.

ITEM 4.    INFORMATION ON THE COMPANY

The Company

We are a global telecommunications operator with a portfolio of investments in the world's emerging markets over which we typically exercise management and voting
control. Our strategy of being a low cost provider, focused on prepaid services using mass market distribution methods, has enabled us to continue to pursue high growth while delivering operating
profitability.

We
currently have interests in 16 cellular systems in 15 countries, focusing on emerging markets in Asia, Latin America and Africa. As of December 31, 2003, our cellular
operations had a combined population under license of approximately 387 million people.

As
we have 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 all of our maturing licenses, generally on terms similar to the original licenses. We operate primarily with prominent local business partners through joint ventures, over which we typically
exercise management control.

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Our markets are very attractive for cellular services due to the low wireline and cellular penetration in economies with potential for high growth and rising disposable personal income
levels. We believe there is a significant opportunity for further growth of cellular services in all of our markets. For example, Vietnam and Pakistan, our two largest markets, had cellular
penetration rates of only approximately 3% and 2%, respectively, as of December 31, 2003.

We
have achieved strong growth and operating profitability. Our total subscribers reached 5.7 million (4.0 million on a proportional basis) as of December 31, 2003.
We generated revenues of $647.1 million in the year ended December 31, 2003.

The
continued improvement in the operating and financial performance of our ventures has allowed us to continue to upstream excess cash to MIC. During the years ended December 31,
2001 and 2002, we upstreamed $55.1 million and $96.7 million, respectively, of which $3.4 million and $8.8 million, respectively, was from divested operations. For the year
ended December 31, 2003, we upstreamed $129.3 million from 14 of the 15 countries in which we operate.

Competitive Strengths

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



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Strategy

Our strategy is to operate with the lowest possible cost base from which we can offer the consumer better value for money through lower tariffs and better network
quality and services. We believe that, given the low cellular penetration in our markets, we can continue to achieve growth in our subscriber base while continuing to improve our operating margins and
cash flows. We intend to accomplish this by:



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Recent Developments

The following data reflects our results of operations for the year ended December 31, 2003. This should be read in conjunction with the audited
consolidated financial statements included elsewhere in this report.

On
September 15, 2003, Telemóvil, our cellular telephone operation in El Salvador, was reconsolidated after we resolved a dispute with our local partners.
Telemóvil is the market leader in El Salvador and, as of December 31, 2003, had 465,150 total subscribers. Following Telemóvil's acquisition of 30% of its own
shares, we have a 100% economic ownership in our operation in El Salvador, while MIC's legal ownership interest remains at 70% until the final settlement date of the acquisition price. Accordingly, we
account for our operation in El Salvador as a 100% owned subsidiary as of September 15, 2003. While our results of operations for the year ended December 31, 2003 include the fully
consolidated results of our operation in El Salvador since September 15, 2003, our results of operations for the same periods in the prior year do not. See "Operating and Financial Review and
ProspectsResults of Operations".

Summary of Highlights



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Subscriber Growth

As of December 31, 2003, our worldwide total cellular subscriber base increased to 5,690,542 cellular subscribers (including El Salvador) from
4,002,911 cellular subscribers (excluding El Salvador) as of December 31, 2002. Total cellular subscribers increased by 42% in the year ended December 31, 2003. Particularly
significant percentage increases were recorded in Ghana, Senegal, Mauritius, Sri Lanka and Vietnam.

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Our
proportional cellular subscriber base increased to 4,025,577 cellular subscribers (including El Salvador) as at December 31, 2003 from 2,784,187 cellular subscribers
(excluding El Salvador) as of December 31, 2002. Our proportional cellular subscribers increased by 44% in the year ended December 31, 2003. Excluding El Salvador, the
proportional cellular subscribers increased by 28%. Of the 4,025,577 proportional cellular subscribers reported as of December 31, 2003, 3,550,322, or 88%, were prepaid customers.

Financial Results for the year ended December 31, 2003

Total revenues for the year ended December 31, 2003 were $647.1 million, an increase from $605.2 million for the year ended
December 31, 2002. Included in total revenues for the year ended December 31, 2003 are revenues of $39.1 million from our operation in El Salvador. Revenues for the year
ended December 31, 2003 for Asia and Africa increased by 26% and 37% to $280.8 million and $84.9 million, respectively, relative to year ended December 31, 2002. Revenues
for Latin America for the year ended December 31, 2003 decreased by 2% to $270.7 million. The evolution of revenues in Latin America was impacted by the divestment of our operation in
Colombia in February 2003 and the reconsolidation of El Salvador since September 15, 2003.

Total
cellular minutes increased by 28% (including El Salvador) and by 23% (excluding El Salvador) for the year ended December 31, 2003 compared with 2002. We
recorded a gain of $246.8 million in the year ended December 31, 2003, reflecting the movement in the market price of our holding in Tele2 AB. In addition, we recorded a charge of
$84.6 million, reflecting the change in the fair value of the Embedded derivative on the 5% Mandatory Exchangeable Notes from August 7, 2003 to December 31, 2003.

Change in Accounting Policy

We have recently changed our accounting treatment in respect of the 5% Mandatory Exchangeable Notes and the underlying Tele2 AB shares. As a result, we mark to
market on a quarterly basis the value of our holding of Tele2 AB shares, with any resulting changes in fair value of the shares being recorded in the profit and loss statement under the heading "Gain
(loss) and valuation movement on investment in securities". We also account for the embedded derivative relating to the corresponding revaluation of the 5% Mandatory Exchangeable Notes and to the
potential 30% premium if the price of the Tele2 AB shares is above the reference price in accordance with the terms of the 5% Mandatory Exchangeable Notes, at fair value with any subsequent change in
its fair value being recorded in the profit and loss statement. The net impact on our results reflects an economic hedge against a decrease in the price of Tele2 AB shares below the reference price
and the gain that we would realize at maturity if the price of the Tele2 AB shares is above the reference price as provided in the 5% Mandatory Exchangeable Notes. Changes in the market value of the
Tele2 AB shares will likely affect our net income (loss) on a quarterly basis until the 5% Mandatory Exchangeable Notes mature in August 2006.

Under
U.S. GAAP, the fair value adjustment of our investment in Tele 2 AB shares is recorded in other comprehensive income, as a separate component of shareholders' equity. Accordingly,
under U.S. GAAP, we reclassified the unrealized gain resulting from the change in fair value of the Tele 2 AB shares of $241,163,000 for the year ended December 31, 2003 to shareholders'
equity.

Completion of Senior Notes Offering

On November 24, 2003, MIC completed its offering of $550 million in aggregate principal amount of 10% Senior Notes due 2013 (the "10% Senior
Notes"). MIC used a portion of the net proceeds from such offering to repay in full $395 million of the 11% Senior Notes and used another part of such net proceeds to repay in full
$137 million of the 13.5% Senior Subordinated Notes due 2006 (the

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"13.5%
Senior Subordinated Notes") on December 29, 2003. See "Results of Tender Offer and Consent Solicitations" below and "Operating and Financial Review and
ProspectsLiquidity and Capital ResourcesOverview".

Results of Tender Offer and Consent Solicitations

On November 7, 2003, MIC commenced a cash tender offer and consent solicitation in respect of its 11% Senior Notes due 2006 (the "11% Senior Notes"). On
November 19, 2003, MIC announced that it had received the requisite consents from the holders of the 11% Senior Notes to (i) the waiver of the possible past default under the indenture
governing the 11% Senior Notes in connection with the securities lending arrangement related to the Mandatorily Exchangeable Notes and (ii) proposed amendments to such indenture. Among other
things, the supplemental indenture giving effect to these amendments, which became effective on November 25, 2003, eliminated certain of the indenture's restrictive covenants, amended certain
other provisions contained in the indenture and shortened the optional redemption notice period of the 11% Senior Notes. On November 25, 2003, MIC used approximately $273 million of the
proceeds of the recent offering of 10% Senior Notes to acquire 11% Senior Notes tendered on or prior to November 18, 2003 in connection with the tender offer and consent solicitation in respect
of the 11% Senior Notes. The tender offer expired at 11:59 p.m., New York City time, on December 8, 2003. On December 10, 2003, MIC used approximately $143.8 million of the
proceeds of the 10% Senior Notes offering to redeem in full the outstanding 11% Senior Notes.

In
addition to the tender offer and consent solicitation in respect of the 11% Senior Notes, on November 7, 2003, MIC commenced a consent solicitation in respect of its 2% Senior
Convertible Payable-In-Kind Notes due 2006 (the "2% Senior Convertible PIK Notes"). On November 19, 2003, MIC also announced that it had received the requisite consents
from holders of the 2% Senior Convertible PIK Notes to (i) the waiver of the possible past default under the indenture governing the 2% Senior Convertible PIK Notes in connection with the
securities lending arrangement related to the Mandatorily Exchangeable Notes and (ii) the waiver of compliance with the limitation on restricted payments covenant in such indenture in
connection with MIC's proposed redemption or repurchase of the 13.5% Senior Subordinated Notes with the proceeds of the recent offering of the 10% Senior Notes. Each waiver became effective with
respect to the 2% Senior Convertible PIK Notes upon receipt of the consent of a majority of the holders of the 2% Senior Convertible PIK Notes. On March 19, 2004, MIC formally requested the
Trustee to call the entire
outstanding amount of 2% PIK Notes for redemption in cash on April 26, 2004 in accordance with the terms of the Indenture covering the 2% PIK Notes. On April 26, 2004, MIC redeemed the
outstanding 2% PIK Notes.

Previously,
Millicom Telecommunications S.A. had convened a meeting of holders of the 5% Mandatory Exchangeable Notes in order to seek their approval to make certain technical amendments
to the documentation relating to the 5% Mandatory Exchangeable Notes in order to ensure compliance with the covenants contained in the indentures governing the 11% Senior Notes and 2% Senior
Convertible PIK Notes. This meeting was inquorate and therefore dissolved.

History

MIC, a stock corporation (société anonyme) organized under the laws of the Grand Duchy of Luxembourg, was formed in
December 1990 by two of the cellular industry's early pioneers, Kinnevik and Millicom Incorporated, a Delaware corporation ("Mil-Inc"), to hold certain of their cellular interests
in 12 countries.

Mil-Inc
was formed in 1979 to pursue opportunities in the nascent American mobile telephone industry. In 1982, the U.S. Federal Communications Commission (the "FCC") awarded
Mil-Inc one of only three developmental licenses for cellular telephony. Also in 1982, Mil-Inc founded, with Racal Electronics Plc, a joint venture that evolved into Vodafone
Group Plc, now the largest cellular

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telephone
operator in the world. The interest in this joint venture was sold to finance Mil-Inc's further development. Mil-Inc, after initially pursuing U.S. cellular
opportunities, decided in 1992 to concentrate on non-U.S. markets, in which licenses generally could be obtained, at that time, without the cost of acquiring interests in licenses awarded
by the FCC lottery system.

From
early 1983, Kinnevik and Mil-Inc began jointly applying for cellular telephone licenses internationally. The first successful joint application resulted in the award of
a cellular license for Hong Kong in 1983. In 1990, after approximately seven years of co-operation, 12 successful license bids and the establishment of cellular operations in a number of
markets, Kinnevik and Mil-Inc agreed to form MIC for the purposes of managing the development of these operations and pursuing new licenses. At the date of formation, the common stock of
MIC was owned approximately 49% by Kinnevik and 46% by Mil-Inc. MIC subsequently disposed of the joint venture in Hong Kong to fund its continuing development.

MIC's
principal executive office is located at 75 Route de Longwy, L-8080 Bertrange, Grand-Duchy of Luxembourg, and its telephone number is +352 27 759 101.

The Merger

In 1993, it was determined that a merger of Mil-Inc and MIC could accomplish goals sought by both companies.

Pursuant
to an Agreement and Plan of Merger and Reorganization (the "Merger Agreement"), dated September 21, 1993, as amended, between MIC, MIC-USA Inc
(MIC-USA"), a wholly owned subsidiary of MIC, and Mil-Inc, Mil-Inc was merged (the "Merger") with and into MIC-USA on December 31, 1993 (the
"Effective Date"). The outstanding shares of Mil-Inc common stock were exchanged for approximately 46.5% of the common stock of MIC (exclusive of the additional merger shares described
below). Kinnevik held the remaining 53.5% of MIC Common Stock.

Immediately
prior to the Merger, substantially all of the operations other than the cellular telephone operations and certain related liabilities of Mil-Inc were transferred
to Great Universal, Inc., a Delaware corporation at that date an indirect wholly owned subsidiary of MIC. Both MIC and Great Universal, Inc. have separate management, and transactions
between Great Universal, Inc., both MIC and our affiliates are subject to certain restrictions as described below.

Following
the Effective Date, MIC contributed to the capital of Great Universal, Inc. an aggregate of 211,864 shares of MIC common stock, par value $2 each, calculated at the time
of issuance as having an aggregate value of $5,027,000.

Merger Warrants

Immediately prior to the Merger, Mil-Inc stockholders received from MIC-USA warrants to purchase from MIC-USA 100% of the
shares (3,867,287 shares) of Great Universal, Inc. common stock for a purchase price equal to $1.30 per share (the "Warrants"). The purpose of the warrant distribution was to afford
Mil-Inc stockholders the opportunity to participate in the future prospects of such non-cellular businesses and to reduce or eliminate MIC's interests in such businesses in the
event the Warrants are exercised. The Warrants are not transferable except in certain limited circumstances. They became exercisable on January 1, 1999 and expire six months after the
registration of Great Universal, Inc. on a public market in the United States, unless extended under certain circumstances (the "Warrant
Expiration Date"). At present, registration statements relating to the shares of Great Universal, Inc. (and, subsequent to the reorganization described below, Modern Holdings) underlying the
Warrants have not yet been filed with the U.S. Securities and Exchange Commission.

On
December 31, 1993, Great Universal, Inc. and MIC entered into an agreement pursuant to which, as an inducement to MIC to contribute MIC common stock to Great
Universal, Inc., as

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described
above, Great Universal, Inc. granted to MIC-USA an option (the "Put Option") to require Great Universal, Inc. to purchase from MIC-USA the shares of
Great Universal, Inc. common stock not acquired by exercise of the Warrants. Additionally, MIC granted to Great Universal, Inc. the option (the "Call Option") to purchase from
MIC-USA the Great Universal, Inc. common stock. The purchase price for the Great Universal, Inc. common stock upon exercise of either the Put Option or the Call Option is an
amount equal to the difference between the aggregate exercise price of such Warrants ($5,027,473) and the actual aggregate exercise price of the Warrants exercised prior to their expiration. The Put
Option and the Call Option are exercisable as to all, but not less than all, of the remaining Great Universal, Inc. common stock for a period of 20 days commencing on the day following
the Warrant Expiration Date. Great Universal, Inc. may pay the purchase price for the Great Universal, Inc. common stock by delivering to MIC-USA that number of the shares of
MIC common stock which in the aggregate equals the purchase price, based upon the last sale price of the MIC common stock as quoted on the NASDAQ Stock Market on the Warrant Expiration Date.

If
all of the Warrants are exercised or all of the shares of Great Universal, Inc. common stock not acquired by exercise of the Warrants are repurchased by Great
Universal, Inc., MIC would have no further ownership interest in Great Universal, Inc. Certain of the MIC's management and shareholders, who became holders of Warrants as part of the
Merger, may become shareholders of Great Universal, Inc. or may participate in the management of Great Universal, Inc. if they choose to exercise the Warrants. From December 30,
1993, the date the Warrants were issued, until the Warrant Expiration Date, MIC will not consummate a transaction with Great Universal, Inc. or any of Great Universal, Inc.'s affiliates
which involves the sum of $1,000,000 or more unless MIC and Great Universal, Inc. shall have received an opinion from an independent investment banker that such transaction is on terms at least
as favorable as those that can be obtained from an unrelated third party. In the event that the Warrants are not exercised prior to the Warrant Expiration Date, management will evaluate other plans to
dispose of Great Universal, Inc. upon the expiration of the Warrants.

In
June 1999, Great Universal, Inc. affected a reorganization of Great Universal, Inc. and its subsidiaries, in which Great Universal, Inc. was merged with
and into Great Universal LLC and operations were spun-off into two separate businesses, being Great Universal, Inc. and Modern Holdings Incorporated (formerly known as XSource
Corporation). Great Universal, Inc. holds the subsidiaries in teleservices, television and media and specialized electronics industries, and Modern Holdings Incorporated holds the subsidiaries
in the integrated network services industries. Great Universal LLC holds 100% of common shares in Great Universal, Inc. and 53% of common shares in Modern Holdings Incorporated. MIC does not
consolidate its investment in Great Universal, Inc. as, due to warrant
holders' right to exercise, it considers it does not control Great Universal, Inc. and also that there exist severe long-term restrictions that significantly impair the ability of
Great Universal, Inc. to transfer funds to MIC.

Following
this reorganization and pursuant to the Warrant agreement, each warrant now entitles the holder to purchase one share of Great Universal, Inc. common stock and 2.0721
shares of Modern Holdings Incorporated common stock at an exercise price of $1.30 per Warrant, subject to adjustment. Following this reorganization, the rights and obligations of MIC-USA
arising from the Warrant agreement and the Put Option and the Call Option agreement referred to above were assigned to Great Universal LLC. Under the terms of the Merger, Great Universal LLC continues
to indemnify MIC against certain contingent liabilities.

On
December 31, 1999, MIC-USA transferred its 100% ownership and related rights in Great Universal, Inc. to Great Universal LLC 1999 Trust for a consideration
of $5,027,000, corresponding to the net book value of MIC's investment in Great Universal, Inc. This amount is recorded in "Investment in other securities". During 2002, MIC recorded an
impairment loss for 100% of this asset due to uncertainty concerning its recoverability.

24

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Great
Universal, Inc. is contingently liable for any liabilities in respect of the representations and warranties made by Mil-Inc to MIC under the Merger Agreement and
in respect of any United States federal, state and local income tax in excess of $13,544,000 which may be payable by Mil-Inc for 1993 and prior years.

The Cellular Telephone Industry

Cellular Telephone Industry Overview

Cellular Telephone Technology.Cellular telephone systems are capable of providing high quality, high capacity voice and data
communications to and from vehicle-mounted and hand-held
radiotelephones. Cellular telephone systems are capable of handling thousands of calls at any one time and providing service to hundreds of thousands of subscribers in any particular area.

Cellular
telephone 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 with cellular telephones in that cell. Each cell is connected by
wire-line or microwave to a central switching point or mobile switching center ("switch") that controls the routing of calls and which, in turn, is connected to the public switched
telephone network. It is the switch mobility software that allows cellular telephone users to move freely from cell to cell while continuing their calls through a process called hand-off.

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

A
cellular telephone 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.

The
Company uses analog and digital technologies that are widely used throughout the world. GSM is a digital standard for cellular telephone systems that the majority of European Union
countries have adopted as a common standard. Commercial launch in several European countries commenced in 1992. 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 subscribers to use their cellular telephones in any country where the GSM system has been adopted, providing
increased mobility and flexibility. In addition to Europe, GSM systems are being used in the Middle East, Australia, India, South Africa, China, Southeast Asia and the Philippines. Advanced Mobile
Phone System ("AMPS") is the analog standard developed for and used in North America, and is used widely throughout the world. Total Access Communication System, or Time Division Multiple Access
("TDMA"), is the system most widely used in North and South America and works by dividing a radio frequency into time slots and then allocating slots to multiple calls. TDMA is one of the world's most
widely deployed digital wireless systems and it provides a natural evolutionary path for analog AMPS networks, and offers efficient coverage. In the United States, a number of digital standards have
been developed and are being deployed in existing AMPS networks. Currently, no one technology has been adopted as the common standard.

25

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Operating Characteristics.The cellular telephone industry is typically characterized by high fixed costs and low variable
costs. Until technological limitations on total capacity are approached, additional cellular telephone system capacity can normally be added in increments that closely match demand and at less than
the proportionate cost of the initial capacity. The industry has also seen declining equipment prices in real terms. Once revenues exceed fixed costs, incremental revenues are expected to yield a high
incremental operating profit, giving cellular telephone system operators an incentive to stimulate and satisfy demand for service in the market. The amount of profit, if any, under such circumstances
is dependent on, among other things, prices and variable marketing costs, which, in turn, are affected by the amount and 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 subscriber growth. In addition, as penetration rates increase there is a tendency for a higher proportion of new
subscribers to use prepaid cards. Prepaid subscribers tend to have lower usage than credit subscribers, however, the operating margin is generally higher than with credit subscribers as the risk of
bad debt is eliminated and there is no subsidizing of handsets.

Development of the Cellular Telephone Industry

Cellular Telephony in Developed Countries.The first cellular telephone networks were introduced in Scandinavia in the early
1980s and experienced modest growth for the first few years. Over the last 10 years, however, cellular telephony has grown rapidly. The majority of developed countries now have cellular
telephone service and levels of penetration have increased substantially in these countries. Worldwide subscribers at December 31, 2003 were an estimated 1,390 million according to EMC.

Given
the rapid growth of cellular telephone subscribers in developed countries and high levels of penetration, particularly in large urban markets, the industry is increasingly
introducing new technology that will expand capacity and improve service, including the introduction of digital cellular telephone networks and the ability to access the Internet from handsets. In
industrialized nations, cellular operators are currently in the process of introducing so-called "third generation" mobile technology that will permit always-on faster access
to the Internet and voice and data transmissions.

Cellular Telephony in Developing Countries.While the cellular telephone industry is well-established in the
developed world, the cellular telephone industry in the developing world is still in its infancy. MIC believes that cellular telephony will continue to grow rapidly in developing countries because of
the poor quality of the existing wire-line service, the unsatisfied demand for basic telephone service and the increasing demand from users who want the convenience of cellular telephones.
In some countries the cellular telephone network provides significantly improved access to the local and international wire-line network compared with the existing wire-line
service. In addition, developing countries are expected to benefit both from better technology and lower equipment costs than those at comparable stages of market development in developed countries.
Penetration rates (the number of subscribers per 100 people) are substantially lower in developing countries than in developed countries. Consequently, MIC believes that its markets offer high growth
potential.

For
developing countries, cellular telephone networks can represent a faster and more cost-effective method of expanding telecommunications infrastructure than traditional
wire-line networks. Wire-line networks involve extensive outside infrastructure in the form of buried or overhead cable networks, while cellular telephone networks require only
minimal construction activities.

Financing of the Company's Business

The Company finances its operations at both the operational and parent entity level.

26

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Operational Level 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 cellular 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 MIC. We seek to refinance the vendor financing with longer-term borrowing from commercial banks and international
agencies. Where practicable, we endeavor to obtain financing in local currencies and without recourse to MIC. However, MIC may guarantee such project financing for an initial period until certain
performance targets are achieved. We intend to continue to pursue a project-by-project approach to fund our systems. If additional investment is required from us, we seek,
whenever possible, to fund such investment through shareholder loans from MIC. 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, 2003, approximately 56% of our debt at the operational level was
denominated in local currency.

MIC Level Entity Financing

In 2003, we implemented a restructuring plan to substantially improve our liquidity by reducing our net indebtedness and debt service obligations. As of
December 31, 2002, we had total consolidated indebtedness of $1,228,575,000, and our total consolidated net indebtedness (representing total consolidated indebtedness after deduction of cash,
cash equivalents and short-term time deposits) was $1,141,924,000 which required a substantial amount of cash from operations to service our debt. In addition to divesting selected assets
(for example, we divested MIC Systems (including Mach), Tele2 AB shares, our operations in the Philippines and our operation in Colombia and Liberty Broadband Limited), we have undertaken a balance
sheet restructuring plan. The restructuring plan included the following steps:



27

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Millicom's
total consolidated indebtedness as of December 31, 2003 was $1,276,865,000 (including the embedded derivative on the 5% Mandatory Exchangeable Notes for an amount of
$103,457,000) and our total consolidated net indebtedness (representing total consolidated indebtedness after deduction of cash, cash equivalents and short-term time deposits) was
$1,095,156,000. Of such indebtedness, $327,635,000 relates to the 5% Mandatory Exchangeable Notes, which are mandatorily exchangeable into Tele2 AB B shares and $103,457,000 to the embedded derivative
on the 5% Mandatory Exchangeable Notes and in respect of which no repayment in cash of principal is required. In addition, our interest obligations in respect of the 5% Mandatory Exchangeable Notes
have been secured by U.S. Treasury STRIPS, which we purchased with a portion of the net proceeds from the offering of the 5% Mandatory Exchangeable Notes. To date, our restructuring plan has enhanced
our balance sheet and significantly improved our liquidity levels by reducing our debt service obligations.

Management Structure

We operate in three major geographic regions of the world: Asia (MIC Asia); Latin America (MIC Latin America); and Africa (MIC Africa). We manage these regional
operations through five cluster managers, each of whom typically is responsible for three to four countries and acts as company manager in the largest country in the region. Each cluster manager
reports directly to MIC's chief operating officer. We believe this structure allows us to maintain a high degree of coordination, cooperation and cross sharing of information among the various cluster
managers while providing a degree of regional responsibility that ensures quick and effective decision making.

We
operate primarily through joint ventures with prominent local business partners, over which we typically exercise management control. While the day-to-day
management of our operations is the responsibility of the local management, which implements the decision of MIC's board of directors, the general manager and other key personnel of our operations are
appointed by us or in co-operation with our partners. In addition, senior management of our operations also typically receive MIC stock options as part of their compensation and incentive
packages.

Operational and Financial Control

We actively manage our operations through:



We
seek to obtain controlling ownership in our operations. In most cases, where we hold less than a majority of the shares in an operation, we manage our operations through stockholders'
agreements or similar arrangements, special rights with respect to board representation or special voting rights. Such provisions provide us with the means to approve or disapprove actions proposed by
our partners. In some cases the stockholders' agreements contain buyout, arbitration or other procedures that can be invoked in the event of a fundamental disagreement among us and our partners.

28

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License Acquisition

In obtaining our licenses, we generally establish a venture with one or more prominent local business partners to apply for a cellular telephone license. We
consider that the selection of the local partner, the technical and financial expertise that we provide to the license application and our successful track record as an international provider of
cellular telephone services are the critical factors for a successful license bid. In most cases, the local partner is instrumental in obtaining the license and maintaining contact with the local
telecommunications agency, post office (the "PTT"), or relevant government department or otherwise plays an important role in ensuring the success of the venture company. In some markets, after the
award of the license, the local partner continues to take an active interest in the management of the venture.

Licenses
are normally sought through a competitive application process in which the license is awarded on the merits of the application. We have generally avoided cash auctions for
cellular telephone licenses. In some cases, our ventures pay royalties on revenue or income to governments, and all of our cellular ventures pay interconnect fees to other telecommunications operators
during the license period. Although the pursuit of cellular telephone licenses is usually highly competitive, our venture companies have been successful in obtaining licenses in preference to other
ventures whose participants have often included major international telecommunications companies.

Sales, Marketing and Distribution

We pursue low-cost, innovative and high-impact approaches to sales, marketing and distribution. In the majority of our markets, we
typically are not involved in the distribution of handsets and typically do not provide handset subsidies for our prepaid subscribers. As a result, we have low overall subscriber 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 outlets such as local convenience
stores, newspaper stands and street vendors. In some of our markets, we are also developing a number of non-traditional distribution channels such as freelance distributors, including
students and housewives. We believe that our focus on branded prepaid services and non-traditional distribution channels will enable us to expand our market share and reduce our operating
costs. We focus our advertising on cost-effective promotions.

Insurance

The Company believes that it holds sufficient levels of insurance for the prudent operation of its business.

Operations and Investments

Descriptions of the operations of each of the ventures and other related businesses are provided below. The description of our cellular operations has been
divided into the following sub-sections:



We
also have investments in high-speed cellular data services in Argentina, El Salvador, Paraguay, Peru and Cambodia.

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In
the country descriptions of our ventures in "Business", we have indicated any instances where the operations of our ventures, or our relationships with our venture partners, are
different from the description given under the captions above.

Cellular Operations

The following table shows certain information for each of MIC's cellular operations as at December 31, 2003.

|Market                           |  | Ownership |  | Method of
consolidation(1) |  | Start-Up
Date |  | Technology(2) |  | Estimated
Population
of Area
under
License(3) |  | Cellular
Penetration
as of
December 31,
2003(4) |  | Number of
Subscribers
as of
December 31,
2003 |     | Estimated
Market
Position
at
December 31,
2003(4) |    
|-------------------------------- |  | --------- |  | -------------------------- |  | ------------- |  | ------------- |  | --------------------------------------------- |  | ----------------------------------------------- |  | --------------------------------------------- | --- | ------------------------------------------------- | ---
|
|MIC Asia                         |  |           |  |                            |  |               |  |               |  |                                               |  |                                                 |  |                                               |     |                                                   |    
|Cambodia                         |  | 58.4%     |  | JV                         |  | 1997          |  | GSM           |  | 13.2                                          |  | 4.7                                             |  | 431.9                                         |     | 1 of 4                                            |    
|Lao People's Democratic Republic |  | 78.0%     |  | S                          |  | 2003          |  | GSM           |  | 6.0                                           |  | 2.4                                             |  | 17.4                                          |     | 2 of 4                                            |    
|PakistanPakcom                  |  | 61.3%     |  | S                          |  | 1990          |  | TDMA/AMPS     |  |                                              |  |                                                |  | 491.0                                         |     | 2 of 3                                            | (5)
|PakistanPaktel                  |  | 98.9%     |  | S                          |  | 1990          |  | GSM/TDMA/AMPS |  | 152.2                                         |  | 2.2                                             |  | 333.2                                         |     | 2 of 3                                            | (5)
|Sri Lanka                        |  | 99.9%     |  | S                          |  | 1989          |  | GSM/TACS      |  | 19.8                                          |  | 6.9                                             |  | 368.1                                         |     | 2 of 4                                            |    
|Vietnam(6)                       |  | 80.0%     |  | S                          |  | 1995          |  | GSM           |  | 82.8                                          |  | 3.3                                             |  | 1035.6                                        |     | 2 of 4                                            |    
|MIC Latin America                |  |           |  |                            |  |               |  |               |  |                                               |  |                                                 |  |                                               |     |                                                   |    
|Bolivia                          |  | 100.0%    |  | S                          |  | 1991          |  | TDMA/AMPS     |  | 8.7                                           |  | 14.3                                            |  | 334.3                                         |     | 2 of 4                                            |    
|El Salvador(7)                   |  | 70.0%     |  | S                          |  | 1993          |  | TDMA/AMPS     |  | 6.5                                           |  | 16.0                                            |  | 465.1                                         |     | 1 of 4                                            |    
|Guatemala                        |  | 55.0%     |  | JV                         |  | 1990          |  | TDMA/AMPS     |  | 13.8                                          |  | 13.5                                            |  | 596.1                                         |     | 2 of 4                                            |    
|Honduras                         |  | 50.0%     |  | JV                         |  | 1996          |  | CDMA/AMPS     |  | 6.8                                           |  | 5.2                                             |  | 351.3                                         |     | 1 of 2                                            |    
|Paraguay                         |  | 96.0%     |  | S                          |  | 1992          |  | TDMA/AMPS     |  | 6.1                                           |  | 21.5                                            |  | 605.0                                         |     | 1 of 4                                            |    
|MIC Africa                       |  |           |  |                            |  |               |  |               |  |                                               |  |                                                 |  |                                               |     |                                                   |    
|Ghana                            |  | 100.0%    |  | S                          |  | 1992          |  | GSM/TACS      |  | 20.8                                          |  | 3.8                                             |  | 117.8                                         |     | 2 of 4                                            |    
|Mauritius                        |  | 50.0%     |  | JV                         |  | 1989          |  | GSM           |  | 1.2                                           |  | 38.1                                            |  | 136.6                                         |     | 2 of 2                                            |    
|Senegal                          |  | 75.0%     |  | S                          |  | 1999          |  | GSM           |  | 11.0                                          |  | 7.1                                             |  | 206.5                                         |     | 2 of 2                                            |    
|Sierra Leone                     |  | 70.0%     |  | S                          |  | 2001          |  | GSM           |  | 5.9                                           |  | 1.6                                             |  | 31.7                                          |     | 2 of 2                                            |    
|Tanzania(9)                      |  | 59.4%     |  | JV                         |  | 1994          |  | GSM/TACS      |  | 38.6                                          |  | 2.8                                             |  | 168.9                                         |     | 2 of 3                                            |    
|                                 |  |           |  |                            |  |               |  |               |  |                                               |  |                                                 |  |                                               |     |                                                   |    
|Grand Total                      |  |           |  |                            |  |               |  |               |  | 393.4                                         |  |                                                 |  | 5,690.5                                       | (8) |                                                   |    
|                                 |  |           |  |                            |  |               |  |               |  |                                               |  |                                                 |  |                                               |     |                                                   |    

---



30

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

|                                 |  | As at December 31,
|-------------------------------- |  | ------------------
|
|
|
|
|MIC Asia                         |  |                   
|Cambodia                         |  | 431,911           
|Lao People's Democratic Republic |  | 17,374            
|PakistanPakcom                  |  | 491,011           
|PakistanPaktel                  |  | 333,169           
|Sri Lanka                        |  | 368,102           
|Vietnam(1)                       |  | 1,035,582         
|                                 |  |                   
|Subtotal                         |  | 2,677,149         
|MIC Latin America                |  |                   
|Bolivia                          |  | 334,319           
|El Salvador(2)                   |  | 465,150           
|Guatemala                        |  | 596,078           
|Honduras                         |  | 351,285           
|Paraguay                         |  | 605,057           
|                                 |  |                   
|Subtotal                         |  | 2,351,889         
|MIC Africa                       |  |                   
|Ghana                            |  | 117,816           
|Mauritius                        |  | 136,620           
|Senegal                          |  | 206,506           
|Sierra Leone                     |  | 31,699            
|Tanzania(3)                      |  | 168,863           
|                                 |  |                   
|Subtotal                         |  | 661,504           
|                                 |  |                   
|Total                            |  | 5,690,542         
|                                 |  |                   

---

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The
following table presents, for the periods indicated, revenues for each of MIC's cellular operations. These figures do not include MIC's non-cellular operations.

|                                 |  |    |  | Revenues
|-------------------------------- |  | -- |  | --------
|
|
|
|MIC Asia                         |  |    |  |         
|Cambodia                         |  | JV |  | 40,617  
|Lao People's Democratic Republic |  | S  |  | 1,093   
|PakistanPakcom                  |  | S  |  | 50,751  
|PakistanPaktel                  |  | S  |  | 33,135  
|Sri Lanka                        |  | S  |  | 21,716  
|Vietnam(2)                       |  | S  |  | 129,936 
|                                 |  |    |  |         
|Subtotal                         |  |    |  | 277,248 
|MIC Latin America                |  |    |  |         
|Bolivia                          |  | S  |  | 38,358  
|El Salvador(3)                   |  | S  |  | 39,052  
|Guatemala                        |  | JV |  | 78,485  
|Honduras                         |  | JV |  | 47,858  
|Paraguay                         |  | S  |  | 60,985  
|                                 |  |    |  |         
|Subtotal                         |  |    |  | 264,738 
|MIC Africa                       |  |    |  |         
|Ghana                            |  | S  |  | 16,803  
|Mauritius                        |  | JV |  | 12,002  
|Senegal                          |  | S  |  | 25,963  
|Sierra Leone                     |  | S  |  | 6,972   
|Tanzania(4)                      |  | JV |  | 23,118  
|                                 |  |    |  |         
|Subtotal                         |  |    |  | 84,858  
|                                 |  |    |  |         
|Total                            |  |    |  | 626,844 
|                                 |  |    |  |         

---



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MIC ASIA

Background

MIC Asia comprises our Asian cellular telephone operations with interests in six cellular operations in five markets: Vietnam, Pakistan (two operations),
Cambodia, Sri Lanka and Lao People's Democratic Republic. MIC Asia also operates an international gateway and a high-speed data business in Cambodia. MIC Asia's license areas cover
approximately 274 million people as of December 31, 2003.

Vietnam

Vietnam is a developing country that has had to recover from times of war, the loss of financial support from the former Soviet Bloc, and the rigidities of a
centrally planned economy. Substantial progress was achieved from 1986 to 1996growth averaged around 9% per year from 1993 to 1997. The 1997 Asian financial crisis highlighted the
problems in the Vietnamese economy and reaffirmed the government's belief that shifting to a market-oriented economy would be undesirable. GDP growth of 8.5% in 1997 fell to 6% in 1998 and 5% in 1999.
Growth then rose to 6% to 7% in 200002 even against the background of global recession. These numbers mask some major difficulties in economic performance. Many domestic industries have
reported large stockpiles of inventory and tough competition from more efficient foreign producers. Meanwhile, Vietnamese authorities have moved to implement the structural reforms needed to modernize
the economy and to produce more competitive, export-driven industries.

We
currently have an 80% equity interest in Comvik International (Vietnam) AB ("CIV"), which has entered into a business cooperation contract ("BCC") to operate a nationwide cellular GSM
network in Vietnam known as Mobifone. The remaining 20% interest in CIV is held by our private business partner, Mr. M.A. Zaman. Service commenced in July 1995 and covers all provinces,
including the important cities of Hanoi, Ho Chi Minh City and Da Nang. Mobifone operates a digital network based
upon the GSM standard. As of December 31, 2003, Mobifone's network consisted of 672 cell sites covering approximately 29.4% of the population.

CIV,
together with MIC's controlling shareholder Kinnevik and Vietnam Mobile Services Co. ("VMS"), a government owned company, entered into the BCC in 1994. In May 1995, the
Vietnamese State Committee gave final approval for this agreement, and a license to provide cellular service throughout the entire country was issued to VMS.

The
BCC has a 10-year term from July 1, 1995. The BCC provides for revenue sharing between CIV and VMS and sets forth certain obligations of the parties, including
CIV's obligations to make certain investments in network infrastructure and to provide training and other services to Mobifone. The BCC provides for negotiation for extension commencing after eight
years. We have proposed extending the BCC for a ten-year period. Although management currently expects the BCC to be extended, there can be no assurance that it will be extended on
equivalent or satisfactory terms, or at all.

The
BCC originally provided that CIV would be entitled to receive 50% of Mobifone's net revenues for the first five years of operation and 40% thereafter. In October 2000, the BCC
received an amended investment license which increased CIV's contribution to the BCC and provided for a 50:50 revenue sharing arrangement until June 2005. CIV initially contracted to invest
$128 million in the venture, and the full amount of this commitment was met as of December 31, 2003. In connection with the amendments to the BCC in 2000, 2002 and 2003, CIV committed to
invest an additional minimum amount of $75 million, of which approximately $46.6 million was disbursed as of December 31, 2003. As a result of these amendments, CIV's minimum
agreed contribution to the venture over the term of the license to June 2005 amounts to $203 million.

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Under
the terms of the BCC, MIC does not exercise management control over Mobifone. Certain management decisions, such as the decision to make certain capital expenditures and other
business policy decisions, are made by an advisory committee comprised of eight members (four of which are appointed by CIV and four of which are appointed by VMS). Although the advisory committee has
in the past made decisions based on our recommendations, we cannot assure you that the advisory committee will make decisions based on our recommendations in the future or that it will act in a manner
consistent with our interests. In addition, CIV and VMS must agree in writing to amend the BCC, sell all or substantially all of the business assets or terminate any business license. If a dispute
occurs between us and VMS and we are unable to resolve it satisfactorily, our results of operations and financial condition would be adversely affected.

Upon
expiration of the BCC at the end of June 2005, legal title to all equipment will be transferred to VMS at the depreciated book value of those assets on such date, which will
equal $1. If the revenue sharing agreement is not extended or CIV is unable to maintain its operations in Vietnam through
another agreement, its telecommunications services would cease on June 30, 2005. In such event, CIV would no longer generate any revenues from cellular operations in Vietnam. CIV's revenues for
the year ended December 31, 2003 were $129,936,000 (20% of Millicom's total revenues) and operating profit was $51,292,000 (32% of Millicom's total operating profits). At present, all equipment
recorded in CIV's financial statements will be fully amortized by July 1, 2005, at which date legal title to all equipment will be transferred to VMS at a price of $1.

Vietnam
is a highly regulated market. The Vietnamese Ministry of Posts and Telematics ("MPT"), which regulates telecommunications services in Vietnam, has recently issued a
telecommunications ordinance outlining its regulatory policy. The MPT has introduced the concept of "significant market power" (i.e., greater than 30% market share) and is expected to adopt
regulations which favor competition, including the regulation of end-user tariffs for operators with "significant market power" such as Mobifone. These regulations could have a negative
effect on our results of operations. In addition, the MPT has recently adopted new interconnection rates which lowered rates for calls terminating in fixed and mobile networks as from July 1,
2003. Although the reduction in rates has adversely impacted Mobifone's revenues, it has resulted in a corresponding decrease in costs and Mobifone's gross margins have improved since their adoption.
Vietnam has a calling party pays system.

Mobifone
currently has three competitors in the cellular telephony market in Vietnam: the most important one being VinaPhone, which launched GSM services in June 1996 and is
wholly owned by the government. According to EMC, as of December 31, 2003, Mobifone had the number two market position behind VinaPhone. We anticipate increased competition as the number of GSM
and CDMA nationwide operators is likely to grow, which is expected to spur further market growth. We currently attempt to differentiate ourselves from our competitors in the areas of marketing and
distribution. The telecom regulator, MPT, has recently issued a new CDMA 800MHz GSM license and a CDMA 450 limited wireless local loop license. Currently there is no expectation that MPT will issue
further licenses. MPT is also expected to issue new regulations governing mergers and acquisitions among operators emerging as dominant players over the coming years.

Pakistan

Pakistan suffers from internal political disputes, low levels of foreign investment, and a costly, ongoing confrontation with neighboring India. Pakistan's
economic prospects, although still marred by poor human development indicators, continued to improve in 2002 following unprecedented inflows of foreign assistance beginning in 2001. Foreign exchange
reserves have grown to record levels, supported largely by fast growth in recorded worker remittances. Trade levels rebounded after a sharp decline in late 2001. The government has made significant
inroads in macroeconomic reform since 2000, but progress is beginning to slow. Although it is in the second year of its $1.3 billion IMF Poverty Reduction and Growth Facility, the government
continues to require waivers for politically difficult

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reforms.
Long-term prospects remain uncertain as development spending remains low, regional tensions remain high, and political tensions weaken Pakistan's commitment to lender-recommended
economic reforms. GDP growth will continue to hinge on crop performance; dependence on foreign oil leaves the import bill vulnerable to fluctuating oil prices; and efforts to open and modernize the
economy remain uneven.

Pakistan
is our largest market in terms of population. We have two distinct cellular operations in Pakistan, Pakcom Limited ("Pakcom") which we formed in 1990, and Paktel Limited
("Paktel"), which we acquired in November 2000. We manage these operations separately, addressing different market segments with different brands. We have consolidated our support and
infrastructure functions to take advantage of available synergies. Following Paktel's receipt of a GSM license and the allocation of the necessary frequency, in the near term, growth is expected in
our cellular operation in Paktel.



We have a 61.3% equity interest in Pakcom. MIC's partners in Pakcom are Grand Canyon Corporation, Arfeen International and members of the Arfeen family, which
together own 38.7% of the equity.

In
early 1990, Pakcom was granted a license to operate a cellular telephone network throughout Pakistan. In 1999, Pakcom received regulatory approval to operate digital services under
its existing license. Pakcom's license expires in April 2005 and is renewable thereafter. In April 2004, the government issued two new 15 year licenses with frequencies of 13.6 MHZ to two new
entrants, Telenor and Space Telecom, by public auction for $291 million each. Pakcom has obtained a letter from the Pakistan Telecommunications Authority ("PTA") stating its intention to renew
Pakcom's licenses subject to certain conditions, including the payment of renewal fees and the application to the renewed license of the same terms and conditions that apply to new licenses issued
through open bids, including
the dates of issuance and expiry of the license. Because renewal fees are based on frequency allocation, MIC estimates that it will be required to pay a maximum of $214 million as part of the
renewal process. The payment terms of the renewal fees are currently under negotiation. Pakcom currently pays a royalty to the Pakistan Telecommunications Authority at the rate of 1.5% of gross sales
revenues (net of leased circuit and public switched telephone network charges paid to Pakistan Telecommunications Company Limited ("PTCL")), which is payable quarterly in arrears.

Pakcom
launched commercial service, providing analog services, in December 1990. Pakcom implemented the digitalization of its cellular network and launched TDMA services in
Karachi in October 2000. As of December 31, 2003, Pakcom's network consisted of 198 cell sites, covering approximately 45% of the population.

In
December 2000, the government of Pakistan implemented calling party pays. End-user tariffs in Pakistan are subject to price caps set by the Pakistan
Telecommunications Authority.

Pakcom
and Paktel currently have two other competitors in the cellular telephony market in Pakistan: Pakistan Mobile Communications (Private) Limited ("PMCL"); and
Pakistan Telecommunications Mobile Limited ("PTML"), a subsidiary of PTCL. PMCL and PTML each operate a GSM network. According to EMC, as of December 31, 2003, Pakcom and Paktel
had a combined number two market position behind PMCL. We presently compete in this market primarily on the basis of network coverage and pricing. Although the local regulator, PTCL, has taken steps
over the course of the last 9 years to become privatized, it is uncertain when the privatization will be completed and whether it will result in a division of the PTCL between mobile and fixed
line. Such privatization could impact interconnect pricing and cross-subsidization. Recent government policy initiatives on deregulation and mobile telephony are expected to result in further market
liberalization.

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In
2000, Pakcom was granted the frequencies required to launch high-speed cellular data services. Pakcom has entered into an agreement on an arm's length basis with Telecard,
an affiliate of one of Pakcom's individual shareholders, to allow Telecard to operate a mobile virtual network using these frequencies.



We have a 98.9% equity interest in Paktel, which we acquired in November 2000.

Paktel
was granted a license in early 1990 to operate a cellular telephone network throughout Pakistan. In October 2002, Paktel was granted a modification to its license, allowing
it to operate a GSM network. The Frequency Allocation Board has awarded Paktel the necessary frequency.

Under
the terms of the modification to its license, Paktel is required to submit to the Pakistan Telecommunications Authority a roll-out plan, subject to commercial and
economic viability, for investment amounting to $150 million over a period of three years. Following the award of the necessary frequency in September 2003, Paktel expects to submit
shortly a roll-out plan in accordance with those terms.

Paktel's
license expires in April 2005 and is renewable thereafter. In April 2004, the government issued two new 15 year licenses with frequencies of 13.6 MHZ to two new entrants,
Telenor and Space Telecom, by public auction for $291 million each. Paktel has obtained a letter from the Pakistan Telecommunications Authority ("PTA") stating its intention to renew Paktel's licenses
subject to certain conditions, including the payment of renewal fees and the application to the renewed license of the same terms and conditions that apply to new licenses issued through open bids,
including the dates of issuance and expiry of the license. Because renewal fees are based on frequency allocation, MIC estimates that it will be required to pay a maximum of $214 million as
part of the renewal process. The payment terms of the renewal fees are currently under negotiation. Pakcom currently pays a royalty to the Pakistan Telecommunications Authority at the rate of 1.5% of
gross sales revenues (net of leased circuit and public switched telephone network charges paid to Pakistan Telecommunications Company Limited ("PTCL")), which is payable quarterly in arrears.

Paktel
launched commercial service in 1990. In April 2001, Paktel commenced offering prepaid services under the brand name Tango. As of December 31, 2003, Paktel's network
consisted of 85 cell sites, covering approximately 45% of the population. Paktel expects to build out a GSM network and to introduce GSM services in the first half of 2004.

Cambodia

Cambodia's economy slowed dramatically in 19971998 due to the regional economic crisis, civil violence, and political infighting. Foreign investment
and tourism fell off. In 1999, the first full year of peace in 30 years, progress was made on economic reforms and growth resumed at 5.0%. Despite severe flooding, GDP grew at 5.0% in 2000,
6.3% in 2001, and 5.2% in 2002. Tourism was Cambodia's fastest growing industry, with arrivals up 34% in 2000 and up another 40% in 2001 before the September 11, 2001 terrorist attacks in the
US. Even given these growth figures, the long-term development of the economy after decades of war remains a challenge. The population lacks education and productive skills, particularly
in the rural areas, which suffer from an undeveloped infrastructure. Fear of renewed political instability and corruption within the government discourage foreign investment and delay foreign aid. The
government is addressing these issues with assistance from bilateral and multilateral donors.

We
have a 58.4% equity interest in CamGSM Company Limited ("CamGSM"). The remaining 41.6% of CamGSM is owned by a Cambodian company, Royal Group of Companies Ltd ("RGC") (38.5%) and a
private business partner, Mr. M.A. Zaman (3.1%). MIC and RGC entered into a joint

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agreement
in November 1997 to operate a GSM mobile cellular telephony network throughout Cambodia. Pursuant to this agreement, MIC and RGC appoint four and three directors, respectively, and one
director as Chairman and Vice-Chairman, respectively, of CamGSM. The board decides major issues such as approving the annual business plan, approving any distribution of profits, the employment of
senior officers, and termination and liquidation of CamGSM, subject to shareholder approval. RGC is responsible for the provision of business facilities and assisting the joint venture in obtaining
government licenses and approvals. MIC is entitled to a 62.3% profit distribution with 34.4% to RGC and 3.3% to Mr. M.A. Zaman, respectively. Because the shareholders' meeting requires minority
shareholder participation, and because the board meeting requires the participation of the board representative of the minority shareholder, the minority shareholder can effectively block the vote at
both the shareholders' and board meetings by not participating in the meeting. MIC therefore accounts for this operation as a joint venture.

On
April 20, 1996, CamGSM was awarded a 25-year license to operate a nationwide GSM cellular network, the first such license granted in that country. The annual
license fee payable to the Ministry of Posts and Telecommunications of Cambodia ("MPTC") for the years 1999 to 2001 was 10% of gross revenue, net of interconnection and certain other charges. This fee
increased to 15% from 2002 onwards.

The
operation commenced commercial service in Phnom Penh in March 1997, and coverage has been expanded significantly to cover five regional capitals as well as all provinces and
major towns. We are the only operator with coverage in all provinces and major towns.

CamGSM's
network is based upon the GSM standard. As of December 31, 2003, CamGSM's network consisted of 135 cell sites covering approximately 19.4% of the population.

Cambodia
has a calling party pays system.

CamGSM
currently has two principal competitors in the cellular telephony market in Cambodia, each of which operates a GSM network: Shinawatra; and CaSaCom, a joint venture between Samart
and Telecom Malaysia. According to EMC, as of December 31, 2003, CamGSM had the number one market position. Coverage in the provinces and major towns is a principal area of competition relative
to other market participants. MPTC currently functions as both a regulator and operator in Cambodia, and there have been recent efforts to revise the Law on Telecommunications to provide for a
separate and independent regulatory body.

In
addition to our cellular telephony operation, since November 2000, we also operate an international gateway in Cambodia, under the name Royal Telecam International Limited
("Telecam"), facilitating both incoming and outgoing international traffic. The license is for 25 years from November 2000, subject to renewal for an additional five-year
period. MIC owns 57% of Telecam with the remaining 43% owned by a Cambodian company and a private business partner. The license fee is 51% of gross revenues, net of interconnection and
accounting/settlement rates. Telecam's joint venture arrangements are similar to those of CamGSM. MIC accounts for its operations in Cambodia as a joint venture.

Since
January 2001, we have also provided cellular broadband services in certain cities in Cambodia and, through a joint venture with the Cambodian Ministry of Information,
broadcast-to-air UHF television services.

Sri Lanka

In 1977, Sri Lanka abandoned statist economic policies and its import substitution trade policy for market-oriented policies and export-oriented trade. Sri
Lanka's most dynamic sectors now are food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking. By 1996 plantation crops made up only 20% of exports
(compared with 93% in 1970), while textiles

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and
garments accounted for 63%. GDP grew at an average annual rate of 5.5% in the early 1990s until a drought and a deteriorating security situation lowered growth to 3.8% in 1996. The economy
rebounded in 19972000 with average growth of 5.3%, but 2001 saw the first contraction in the country's history, (1.4%), due to a combination of power shortages, severe budgetary problems,
the global slowdown, and continuing civil strife. Growth recovered to 3.2% in 2002. About 800,000 Sri Lankans work abroad, 90% in the Middle East. They send home about $1 billion a year.

Tensions
between the Sinhalese majority and Tamil separatists erupted in violence in the mid-1980s, and the ethnic war continues to fester. After two decades of fighting, the
government and Liberation Tigers of Tamil Eelam began a ceasefire in December 2001, with Norway brokering peace negotiations, and a joint accord was entered into in 2002.

We
have a 99.99% equity interest in Celltel Lanka (Private) Limited ("Celltel"). The remaining equity interest in Celltel is held by four local individuals.

Celltel
has a license to operate a cellular telephone network, which expires in 2008, covering the entire country. This license was a renewal of Celltel's initial license that was
granted in 1988 and expired in 1995. An annual license fee is payable to the Telecommunications Regulatory Commission of Sri Lanka ("TRCSL").

Celltel
operates an analog network and a digital network and in 2000 launched GSM services. The present network covers almost all the major towns in Sri Lanka, including the Greater
Colombo area, Kandy, Galle, Kurunegala and Nuwara Eliya. As of December 31, 2003, Celltel's network consisted of 131 cell sites, covering approximately 46% of the population.

Sri
Lanka currently has a mobile party pays system and is expected to adopt a calling party pays system in mid 2004.

Celltel
currently has three competitors in the cellular telephony market in Sri Lanka: Dialog-MTN Networks, which operates a GSM network and in which Telekom Malaysia is a shareholder;
Mobitel, which operates an AMPS and GSM network and in which Sri Lanka Telecom, the national fixed line operator is a shareholder; and Lanka Cellular, which operates both an analog and a GSM network
and in which Hutchison Whampoa is a shareholder. According to EMC as of December 31, 2003, Celltel had the number two market position behind Dialog-MTN Networks. We compete with other operators
primarily on the basis of branding and distribution. The introduction of calling party pays is expected to boost market growth, although it is uncertain when this will occur given the recent change in
government.

Pursuant
to arrangements with the Board of Investment, Celltel has had a tax-free holiday since 1998, during which period it has been exempt from corporate tax. Under the
present arrangement, Celltel's tax-free holiday expires in 2008. Celltel has the option of applying for a further five-year extension of the tax-free holiday.

In
addition to our cellular telephony operation, since early 2003, we have also operated an international gateway in Sri Lanka, facilitating both incoming and outgoing international
traffic. The license is for 10 years from 2003.

Lao People's Democratic Republic

The government of Laos, one of the few remaining official Communist states, began decentralizing control and encouraging private enterprise in 1986. As a result,
growth averaged 7% in 19882001 except during the period of the Asian financial crisis beginning in 1997. Despite this high growth rate, Laos remains a country with an undeveloped
infrastructure; it has no railroads, a rudimentary road system, and limited external and internal telecommunications. Electricity is available in only a few urban areas. Subsistence agriculture
accounts for half of GDP and provides 80% of total employment.

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The
economy will continue to benefit from aid from the IMF and other international sources and from new foreign investment in food processing and mining.

We
have a 78% equity interest in our most recent start-up, Millicom Lao Co. Ltd. ("Millicom Lao"), a joint venture to provide cellular telephone service in Lao
People's Democratic Republic ("Laos"). The Laotian Ministry of Communications, Posts, Transports and Construction ("MCPTC") owns the remaining 22%.

In
January 2002, we were awarded a 20-year license to operate in Laos. The annual license fee is $100,000 per year plus 2% of net airtime revenues. The joint venture
commenced operations in April 2003 and offers only prepaid services.

Millicom
Lao operates a digital network based upon the GSM standard, with coverage in three major cities, including the capital city. Millicom Lao is currently in the process of rolling
out its network to other main urban centers. As of December 31, 2003, the Millicom Lao's network consisted of 21 cell sites covering approximately 6.7% of the population.

Laos
has a calling party pays system.

We
compete with three other GSM operators in Laos: Laos Telecommunications Company, a joint venture between Shinawatra and the government of Laos; and ETL, which is wholly owned by the
government of Laos. In addition, a virtual mobile network operator, LAT, offers services using ETL's network. According to EMC, as of December 31, 2003, our Laos joint venture
had the number two market position behind Laos Telecommunications Company. We expect to continue expanding out network coverage in line with our competitors. The local regulator, MCPTC, functions as
both regulator and operator.

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MIC LATIN AMERICA

Background

MIC Latin America consists of MIC's cellular operations in Guatemala, Honduras, El Salvador, Bolivia and Paraguay. MIC Latin America's licenses cover
approximately 40.6 million people as of December 31, 2003.

Guatemala

During the second half of the 20th century, Guatemala experienced a variety of military and civilian governments as well as a 36-year guerrilla war.
In 1996, the government signed a peace agreement formally ending the conflict, which had led to the death of more than 100,000 people and had created some 1 million refugees. The agricultural
sector accounts for about one-fourth of GDP, two-thirds of exports, and half of the labor force. Coffee, sugar, and bananas are the main products. Former President Arzu
(19962000) worked to implement a program of economic liberalization and political modernization, which President Portillo has largely continued. The 1996 signing of the peace accords,
which ended the civil war, removed a major obstacle to foreign investment, but the corruption associated with the Portillo administration has dampened investor confidence. The distribution of income
remains unequal, with approximately 75% of the population below the poverty line. Ongoing challenges include increasing government revenues, negotiating further assistance from international donors,
upgrading both government and private financial operations, and narrowing the trade deficit.

We
have a 55% equity interest in Comunicaciones Celulares S.A. ("Comcel Guatemala"). Comcel Guatemala's other stockholders are Miffin Associates Corp., owning 35%, and Arkade
International Inc., owning 10%. The board of directors contains five member positions, of which three are appointed by MIC. A unanimous vote of the board is required for certain substantial operating
decisions, including any significant changes in the budget, the appointment of the general manager and other senior officers and the determination of officers' salaries. A quorum for the shareholders'
meeting
consists of 85% of the voting shares, and the majority of resolutions require an 80% majority. MIC does not have a controlling interest in Comcel Guatemala, as a number of operating decisions require
the vote of the minority shareholders. Therefore, MIC accounts for its operation in Guatemala as a joint venture.

From
January 1990, Comcel Guatemala had a concession to operate a cellular telephone network, and in March 2003 it purchased a license for a period of 15 years
ending 2018, which is renewable thereafter. Comcel Guatemala also has a license to offer international long-distance services, ISP and local services.

Comcel
Guatemala launched commercial service in October 1990. The cellular telephone network currently covers most of the country. Comcel Guatemala operates both an analog network
and a digital network, which is based on the TDMA standard. As of December 31, 2003, Comcel Guatemala's network consisted of 264 cell sites. Comcel Guatemala plans to migrate to GSM in 2004.

Guatemala
has a calling party pays system. Comcel Guatemala has entered into interconnection arrangements with Telgua, the former PTT, and with 18 other local and international
operators. The interconnection charges are subject to adjustment by mutual agreement between the parties.

Comcel
Guatemala currently has three competitors in the cellular telephony market in Guatemala: Sercom, which operates a GSM and a CDMA network and is controlled by
América Movil; Consultora de Inversiones BSC Comunicaciones y Cia, which operates a digital network based on the CDMA standard and in which BellSouth is a shareholder; and
Telefónica Centroamérica Guatemala, which operates a digital network based on the CDMA standard and is wholly owned by Telefónica Móviles.
During the first quarter of 2003, two new licenses were granted to potential entrants, including a license to operate a network in the GSM 900 Mhz frequency band. The licenses allow the purchaser to

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provide
cellular services nationwide. Neither of the operators who were recently awarded licenses have commenced operations. According to EMC, as of December 31, 2003, Comcel Guatemala had the
number two market position behind Sercom. Our principal areas of competition in this market are in the areas of marketing and distribution. Guatemala has a liberalized telecommunications market.
Regulation by the PTT of access charges and interconnect prices are in place.

Honduras

After two and one-half decades of mostly military rule, a freely elected civilian government came to power in 1982. During the 1980s, Honduras was a
haven for anti-Sandinista contras fighting the Marxist Nicaraguan Government and an ally to Salvadoran Government forces fighting against leftist guerrillas. The country was devastated by
Hurricane Mitch in 1998, which killed about 5,600 people and caused almost $1 billion in damage. Honduras anticipates expanded trade privileges, such as a suspension in import tariffs for
certain goods manufactured in Honduras, under the Enhanced Caribbean Basin Initiative and debt relief under the Heavily Indebted Poor Countries initiative. While the country has met most of its
macroeconomic targets, it failed to meet the IMF's goals to liberalize its energy and telecommunications sectors. Growth remains dependent on the status of the US economy, its major trading partner,
on commodity prices, particularly coffee, and on reduction of the high crime rate.

Pursuant
to a shareholders' agreement, we have a 50% economic interest in Telefónica Celular S.A. ("Celtel"). The other shareholders are Motorola Inc. ("Motorola")
and Proempres Panama S.A. ("Proempres"). On January 23, 1995, Millicom, Motorola and Proempres entered into a shareholders agreement to provide a cellular-radio-telephone system in Honduras.
Pursuant to this agreement, Millicom holds directly 25% of the shares in Celtel and another shareholder holds 25% on Millicom's behalf, with any risks and benefits deriving therefrom, as described
below, accruing to Millicom. Pursuant to the agreement, Millicom holds two of the four positions on the board of directors of Celtel while Motorola and Proempres each hold one. The president of the
board of directors, who does not hold special voting rights, is appointed by rotation with Millicom exercising two appointments in turn and the other shareholders exercising one each. Each board
member receives one vote. The board is responsible for establishing financial and business objectives, approving Celtel's annual long-term business plan and budget, approving significant or long-term
contracts, including any significant indebtedness and the granting of security interests in the assets of Celtel, approving material transactions or agreements between Celtel and any of its officers,
directors or the general manager, and offering, redeeming or canceling shares. Although a majority vote is necessary to pass shareholder decisions, the minority shareholders have substantive
participation rights, including the right to appoint the president of the board in turn and to vote on certain operating and capital decisions as described above. Millicom therefore accounts for its
operation in Honduras as a joint venture.

In
1996 Celtel was awarded a 10-year cellular license for the Republic of Honduras. Celtel paid a license fee of $5.1 million to the Honduran government for the
license. The license has since been extended until 2021, subject to the payment of a fee in 2006, which we expect will be nominal. MIC cannot guarantee that this fee will be on terms acceptable to us.

The
operation commenced commercial service in September 1996. Celtel operates both an analog network and a digital network, which is based on the CDMA standard. As of
December 31, 2003, Celtel's network consisted of 93 cell sites, covering approximately 49.2% of the population. Celtel intends to migrate to GSM in 2004.

Honduras
has a calling party pays system.

Megatel,
majority owned by a local Honduras investor launched a GSM network in October 2003 in urban areas. In addition, a third operator may enter the market in early 2006,
following the award of a license by the Honduran government. We consider our distribution network to be a primary source of

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competition
in relation to our competitors. The international access monopoly in Honduras continues to date, and regulation of access charges and interconnect rates by the National Telecoms Regulator
are in place.

El Salvador

A 12-year civil war, which cost about 75,000 lives, was brought to a close in 1992 when the government and leftist rebels signed a treaty that
provided for military and political reforms. In recent years, this Central American economy has been suffering from a weak tax collection system, factory closings, the aftermaths of Hurricane Mitch of
1998 and the devastating earthquakes of early 2001, and weak world coffee prices. On the other hand, inflation has fallen to single digit levels, and total exports have grown substantially. The trade
deficit has been offset by annual remittances of almost $2 billion from Salvadorans living abroad and by external aid. The US dollar is now the legal tender. Because competitor countries have
fluctuating exchange rates, El Salvador faces the challenge of raising productivity and lowering costs.

On
September 15, 2003, MIC's operation in El Salvador, Telemóvil, entered into a share purchase agreement with the minority shareholders of Telemóvil. The
agreement provides for the acquisition by Telemóvil of 30% of its own shares for a consideration of $70 million payable over a period of a maximum of 6 years and an annual
dividend premium of $1 million, with a corresponding net present value of $67,371,000. Of this amount $16 million was paid in cash at the closing of the transaction. The payment of the
acquisition price is guaranteed by MIC. During this period Telemóvil has an ownership interest in 30% of its own shares, while the record title remains with an escrow agent for the
benefit of the minority shareholders pending the final settlement date. Based on this agreement, MIC regained control and began consolidating Telemóvil at 100% since
September 15, 2003. The legal ownership interest of MIC remains at 70% until the final settlement date. Telemóvil's license contract was signed in September 1991 for a 15-year
period. The license is automatically renewable for successive five-year periods after the initial 15-year period in the absence of default by Telemóvil under the license conditions.

Telemóvil
currently operates a digital network based on the TDMA standard. As of December 31, 2003, Telemóvil's network consisted of 169 cell sites
covering approximately 90% of the population. We intend to migrate to the GSM standard in 2004.

El
Salvador has a calling party pays system.

Telemóvil
currently has three competitors in the cellular telephony market in El Salvador: Telefónica Móviles El Salvador, which operates a
digital network based on the CDMA standard and is controlled by Telefónica Móviles; CTE Telecom Personal, which operates a GSM network and in which America Movil recently
acquired a majority stake; and Digicel which operates a GSM network. In addition, another license has been granted to a potential entrant. According to EMC, as of December 31, 2003,
Telemóvil had the number one market position. We believe that GSM migration will allow us to compete effectively with other operators. El Salvador has a fairly liberalized
telecommunications market. Regulation of access charges and interconnect prices by the National Telecoms Regulator are in place. Access charges are negotiated among operators.

Bolivia

Bolivia made considerable progress in the 1990s toward the development of a market-oriented economy. Successes under President Sanchez de Lozada
(1993-97) included the signing of a free trade agreement with Mexico and becoming an associate member of the Southern Cone Common Market, as well as the privatization of the state airline,
telephone company, railroad, electric power company, and oil company. Growth slowed in 1999, in part due to government budget policies, which limited appropriations for anti-poverty
programs, and the fallout from the Asian financial crisis. In 2000, civil

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disturbances
limited growth to 2.5%. Bolivia's GDP failed to grow in 2001 due to the slowdown in global and domestic activity. Growth picked up slightly in 2002, but 2003 saw protests and loss of
confidence in the government. Bolivia will remain dependent on foreign aid unless and until it can develop its substantial natural resources.

We
have a 100% equity interest in Telecel, which has a license to operate a nationwide cellular telephone network. The license is valid until November 2015. Although the license
was initially awarded to cover only La Paz, in May 1997, Telecel received an extension of the license to cover the entire country. The license establishes a "price cap" mechanism for
interconnection charges and services between telecommunications operators and provides for charges on the use of frequencies. Telecel pays a concession fee for access to the fixed-line
network equal to 1% of the monthly net recurring subscriber revenue generated from the three main cities of La Paz, Cochabamba and Santa
Cruz and a regulatory fee to the telecommunications regulatory authority equal to 1% of the total monthly gross recurring revenue.

Telecel
currently operates both an analog network and a digital network, which is based on the TDMA standard. Telecel's coverage includes eight of the nine districts in the country,
including La Paz, Santa Cruz (including Puerto Suarez), Cochabamba, Sucre, Beni, Potosi, Taraija and Oruro. As of December 31, 2003, Telecel's network consisted of 187 cell sites, covering
approximately 59.6% of the population.

Bolivia
has a calling party pays system.

Telecel
currently has two principal competitors in the cellular telephone market in Bolivia: Movil de Entel, the mobile subsidiary of Entel, which is a joint venture between Telecom
Italia and the Bolivian government; and NuevaTel, a joint venture between Western Cellular and a local telephone company. Movil de Entel began providing cellular service in the last quarter of 1996.
It currently operates a GSM network as well as a TDMA network. In 2000, NuevaTel won a license for GSM services which it commenced providing in 2001. According to EMC, as of December 31, 2003,
Telecel had the number two market position behind Movil de Entel. Telecel's distribution and sales network are primary areas of competition with other market participants. The telecommunications
market in Bolivia was opened to competition in 2002 as a result of long distance and local services deregulation, after five years of exclusivity privileges afforded to fixed long distance and local
services operators. Mobile cellular and personal communications services have been open to competition since 1996. New telecommunications and competition regulations are still under discussion and are
expected to be issued in September 2004.

In
November 2001, Bolivia deregulated its long-distance market, and Telecel signed a 40-year concession to provide long-distance services
throughout the country. In February 2002, Telecel began offering both national and international long-distance services. The long-distance license imposes certain
network coverage requirements and is subject to a regulatory fee of 1% of monthly gross revenue.

Telecel
is currently in breach of certain financial covenants under its financing agreements. To date, Telecel has made all installment repayments due under these financing agreements.
Telecel has entered into a standstill agreement with each of the lenders under these facilities. See "Operating and Financial Review and ProspectsLiquidity and Capital
ResourcesOperational Financing".

Paraguay

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. Paraguay has a market economy marked by a large informal sector. The informal sector features both reexport of
imported consumer goods to neighboring countries as well as

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the
activities of thousands of microenterprises and urban street vendors. Because of the importance of the informal sector, accurate economic measures are difficult to obtain. A large percentage of
the population derives their living from agricultural activity, often on a subsistence basis. The formal economy grew by an average of about 3% annually in 199597; but GDP declined
slightly in 1998, 1999, and 2000, rose slightly in 2001, only to fall again in 2002. On a per capita basis, real income has stagnated at 1980 levels. Most observers attribute Paraguay's poor economic
performance to political uncertainty, corruption, lack of progress on structural reform, substantial internal and external debt, and deficient infrastructure.

We
have a 96% equity interest in Telefónica Celular del Paraguay S.A. ("Telecel Paraguay"), and one local partner owns the remaining 4%.

In
July 1991, Telecel Paraguay was awarded a license to build, maintain and operate a cellular telephone network. The license now covers the entire country. Telecel Paraguay's
license was originally for a 10-year period ending in 2001. In December 2000, the license was renewed for a further five years, expiring in September 2006, and it is
renewable for successive 5-year periods subject to Telecel Paraguay's commitment to further investments. Telecel Paraguay will launch GSM service in 2004. The license has no limitations on
technology, and therefore implementing a GSM network requires no regulatory approval. In December 1997, Telecel Paraguay was also awarded a license for digital personal communications services,
which covers the whole of Paraguay. The license was renewed in January 2003 for a period ending November 2007.

Telecel
Paraguay currently operates both an analog network and a digital network, which is based on the TDMA standard. As of December 31, 2003, Telecel Paraguay's network
consisted of 178 cell sites covering approximately 60% of the population.

Paraguay
has a free market in terms of prices for telecommunications services to end users. Only changes in charges for interconnection to the fixed line operator and other mobile
operators included in license arrangements and interconnection among cellular operators are subject to prior approval from the telecommunications authority. The license arrangements include
interconnection facilities to the wire-line network at standard charges. The regulator is currently reviewing mobile
interconnection rates and a reduction is expected beginning in 2005. Telecel Paraguay expects that the impact on its pricing advantage for in-network calls will be balanced by an increase
in market volumes and penetration levels in the rural areas. In addition, our migration to GSM is expected to provide us with further opportunities to strengthen our competitive position. The
Telecommunications Law of 1995, which governs Paraguay's telecommunications market, provides for the deregulation of telecommunications services. However, there is only one fixed line telephone
operator which also holds the exclusive license for international services including telephone and data. Interconnection charges between telephone operators, fixed and mobile, are negotiated among
operators according to specific rules (LRIC, or long run incremental costs) and subject to prior approval from the telecommunications authority. The regulator is currently reviewing interconnection
rates to fixed and mobile operators and a reduction is expected in 2004.

Telecel
Paraguay currently has three competitors in the cellular telephony market in Paraguay: Núcleo, which operates a digital network in the TDMA standard and in which
Telecom Argentina is a shareholder; Hola Paraguay, which operates a GSM network; and HT Paraguay, which operates a GSM network and in which Hutchison Whampoa is a shareholder. Núcleo is
planning a GSM migration in 2004. According to EMC, as at December 31, 2003, Telecel Paraguay had the number one market position. Two new licenses have been issued but the licensees have not
yet commenced operations. Telecel Paraguay does not expect these licenses to become operational due to the high level of competition in the market and the limited profitability levels for new
entrants.

Telecel
Paraguay also provides broadband and dial-up Internet services in Paraguay under the brand "Telesurf". As at December 31, 2003, Telesurf was one of the leading
Internet service providers

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in
Paraguay in terms of subscribers. In addition, since May 2000, we have provided data transmission services in Paraguay.

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MIC AFRICA

Background

MIC Africa consists of MIC's cellular operations in Senegal, Tanzania, Ghana, Mauritius and Sierra Leone. MIC Africa's licenses cover approximately
74.8 million people as of December 31, 2003.

Senegal

In January 1994, Senegal undertook an 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, conditions improved as a result of the reform program, with real growth in GDP averaging 5% annually during 19952002. Annual inflation, which had been less than
1%, rose to an estimated 3.3% in 2001 and 3.0% in 2002. Investment rose steadily from 13.8% of GDP in 1993 to 16.5% in 1997. As a member of the West African Economic and Monetary Union, Senegal is
working toward greater regional integration with a unified external tariff. Senegal also realized full Internet connectivity in 1996, creating a miniboom in information technology-based services.
Private activity now accounts for 82% of GDP. In 2003, GDP will probably again grow at about 5%. However, Senegal faces long-term unemployment, trade union militancy, juvenile delinquency,
and drug addiction.

We
have a 75% equity interest in SentelGSM. The remaining 25% of SentelGSM is owned by a local businessman, Mr. Pape Abdoul Ba.

In
July 1998, SentelGSM was awarded a GSM license for The Republic of Senegal. The license, awarded for a period of 20 years, is renewable every five years thereafter. The
license required no initial
payment; however, there is an annual administrative fee of approximately $100,000 in addition to a $16,000 annual fee per used channel frequency.

The
venture commenced operations in April 1999 and currently only offers a prepaid product.

SentelGSM
operates a digital network based upon the GSM standard. As of December 31, 2003, SentelGSM's network consisted of 55 cell sites covering approximately 60% of the
population.

Senegal
has a calling party pays system.

SentelGSM
currently has only one other competitor in the cellular telephony market in Senegal, Sonatel Mobiles, which is operated by Sonatel Mobile, a branch of Sonatel, the local
privatized PTT and in which France Telecom is a shareholder. Sonatel Mobiles operates a GSM network. According to EMC, as of December 31, 2003 SentelGSM had the number two market position. A
third license is in the process of being granted. We currently attempt to differentiate ourselves from our competitors on the basis of pricing, distribution and customer service. The public
telecommunications operator, Sonatel, is partially privatized (40% owned by France Telecom, 51% by the government of Senegal and 9% by individuals). Since 2002 the government has been offering
additional licenses for sale. The present regulatory agenda is focused on possible changes in interconnect rates effective April 2004.

Tanzania

Shortly after independence, Tanganyika and Zanzibar merged to form the nation of Tanzania in 1964. 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. The economy depends heavily on agriculture, which accounts for half 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 was traditionally based on the processing of

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agricultural
products and light consumer goods. The World Bank, the International Monetary Fund, and bilateral donors have provided funds to rehabilitate Tanzania's economic infrastructure and to
alleviate poverty. Growth in 19912002 included a pickup in industrial production and a substantial increase in output of minerals, led by gold. Oil and gas exploration and development
played an important role in this growth. Recent banking reforms have helped increase private sector growth and investment. Continued donor support and solid macroeconomic policies should support
continued real GDP growth of 5% in 2003.

We
have a 57% equity interest in MIC Tanzania Limited ("MIC Tanzania"). Our joint venture partners are Ultimate Communications Ltd., a private Tanzanian company, and a government
entity. In February 2004, MIC acquired an additional 26% equity interest in MIC Tanzania from The Tanzanian State.

In
1993, MIC Tanzania acquired a 15 year license to operate a cellular telephone network in the United Republic of Tanzania. In November 2003 the term of the license was
changed to 25 years. The modified license expires in 2018. MIC Tanzania currently pays a royalty of 1% of airtime revenue (reduced from 5% in 2002) and cellular frequency fees based on the
allocated number of frequencies, which are dependent upon the number of cell sites. The license was re-issued in 2001 with additional frequency ranges.

Analog
cellular service became operational in September 1994, and in September 2000 MIC Tanzania launched its GSM network. MIC Tanzania operates both an analog network and
a digital network, which is based upon the GSM standard. As of December 31, 2003, MIC Tanzania's network consisted of 122 cell sites, covering approximately 10% of the population. MIC Tanzania
currently provides coverage to all major urban areas and a substantial number of rural areas and Zanzibar. MIC Tanzania plans to add eight new coverage sites and increase capacity in main regional
centers.

Tanzania
has a calling party pays system.

MIC
Tanzania currently has two principal competitors in the cellular telephony market in Tanzania: Vodacom Tanzania which operates a GSM network; and Celtel Tanzania, which also operates
a GSM network and is a subsidiary of Tanzania Telecommunications Company Limited ("TTCL"), the privatized former PTT. In 1999 and 2000, three new licenses were issued, of which one,
Zanzibar Telecom, commenced operations on the island of Zanzibar in 1999. In 2000, Vodacom Tanzania commenced operations and has rapidly built-out its network to provide coverage in most
of the areas covered by MIC Tanzania. According to EMC, as of December 31, 2003, MIC Tanzania had the number two market position behind Vodacom Tanzania. We presently compete with other
operators principally in the areas of pricing and competitive coverage. The Tanzanian Communications Regulatory Authority ("TCRA") is expected to establish new interconnect rates in 2004 and
telecommunications deregulation is anticipated in 2005.

MIC
Tanzania has recently won a claim against TTCL in the amount of $13,000,000 for interconnection charges accrued but not paid prior to the privatization. As of December 31,
2003, MIC has received $900,000 of this amount. Although we continue to be in discussions regarding payment of the remaining amount owed to us, we cannot assure you that we will recover the full
amount.

Ghana

Well endowed with natural resources, Ghana has roughly twice the per capita output of the poorer countries in West Africa. Even so, Ghana remains dependent on
international financial and technical assistance. Gold, timber, and cocoa production are major sources of foreign exchange. The domestic economy continues to revolve around subsistence agriculture,
which accounts for 36% of GDP and employs 60% of the work force, mainly small landholders. Ghana opted for debt relief under the

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Heavily
Indebted Poor Country program in 2002. Policy priorities of the current government include tighter monetary and fiscal policies, accelerated privatization, and improvement of social services.

We
have a 100% equity interest in Millicom (Ghana) Ltd., having increased our shareholding from 70% to 100% in mid-2002. We granted a call option regarding the 30%
equity stake, which may be exercised from June 2005 to June 2007 at an exercise price of $190,000.

Millicom
(Ghana) Ltd, operating under the trade name "Mobitel", currently has a license to operate analog cellular services throughout Ghana. In addition, in 2002 Mobitel obtained
a license to operate GSM cellular services throughout the country. The government of Ghana and the country's telecommunications operators are currently in discussions regarding the issuance of new
licenses to replace existing ones. We expect the new license to have a term of 15 to 25 years, subject to renewal.
Although MIC also expects the licenses to have substantially similar terms to our existing license, we cannot guarantee that the replacement license will be awarded on terms acceptable to us.
Additionally, in 2001 we paid a frequency charge that was determined retrospectively.

Mobitel
commenced operations in May 1992, providing analog cellular services, and in June 2002 successfully launched its GSM network.

Mobitel
operates both an analog network and a GSM network, consisting of 65 cell sites, covering approximately 28% of the population.

A
new interconnection agreement entered into with Ghana Telecom provides that, as from October 1, 2003, the parties will pay interconnection rates that are pegged to the U.S.
dollar. As a result, revenues from interconnection and interconnection costs have increased.

Mobitel
currently has three competitors in the cellular telephony market in Ghana: Ghana Telecom, which operates a GSM network; Scancom Ltd., which also operates a GSM network;
and Celltel, which operates an analog network. According to EMC, as of December 31, 2003, Mobitel had the number two market position behind Scancom Ltd. Mobitel currently competes with
other market participants principally in the areas of pricing and operating costs. The liberalization of the telecommunications market occurred in February 2002, following a partial
privatization in 1996. The local PTT, Ghana Telecom, is partially privatized, with 30% owned by Telecom Malaysia and the remaining share held by the government. The regulatory agenda is presently
focused on the increase in interconnect rates effective October 2003. The issuance of new licenses and spectrum fees are under discussion.

Mauritius

Since independence in 1968, Mauritius has developed into 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. Sugarcane is grown on about 90% of the cultivated land area and accounts for 25% of export earnings. The government's development strategy centers on
foreign investment. Mauritius has attracted more than 9,000 offshore entities, many aimed at commerce in India and South Africa, and investment in the banking sector alone has reached over
$1 billion. Mauritius, with its strong textile sector and responsible fiscal management, has been well poised to take advantage of the Africa Growth and Opportunity Act. The government is
encouraging foreign investment in the information technology field.

We
have a 50% equity interest in Emtel Limited ("Emtel"). A local partner, Currimjee Jeewanjee & Co. Ltd., owns the remaining 50% of the share capital.

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In
1989, Emtel was granted a license, which allows it to operate a cellular telephone system covering the entire island. The license was renewed in 1998 and expires in
November 2014.

Emtel
commenced operations in May 1989, providing analog cellular services, and in November 1999 launched GSM services.

Emtel
operates a digital network based upon the GSM standard. As of December 31, 2003, Emtel's network consisted of 75 cell sites covering approximately 98% of the population.

Emtel
pays interconnection charges to Mauritius Telecom and license fees to the regulatory authority, the Information and Communications Technologies Authority ("ICTA"). Emtel's pricing
structure is subject to the ICTA's prior approval.

Mauritius
has a mobile party pays system.

Emtel
currently has only one other competitor in the cellular telephony market in Mauritius, Cellplus Mobile Communications, a government owned telecommunications company which commenced
operations during 1996 and currently operates a GSM network. According to EMC, as of December 31, 2003, Emtel had the number two market position. Emtel expects to continue to strengthen its
product and distribution network relative to other operators. The regulator, Information and Communication Technologies Authority, is presently focused on tariff rebalancing and establishing
interconnect rates. Calling party pays is expected to be implemented in 2004.

Sierra Leone

Since 1991, civil war between the government and the Revolutionary United Front ("RUF") has resulted in the displacement of more than 2 million people
(well over one-third of the population), many of whom are now refugees in neighboring countries. After several setbacks, the end to the 11-year civil war in Sierra Leone may
finally be near at hand. With the support of
the UN peacekeeping force and contributions from the World Bank and international community, demobilization and disarmament of the RUF and Civil Defense Forces combatants has been completed. National
elections were held in May 2002 and the government continues to slowly reestablish its authority.

Sierra
Leone has substantial mineral, agricultural, and fishery resources. However, the economic and social infrastructure is not well developed, and serious social disorders continue to
impede economic development, following the civil war. About two-thirds of the working-age population engages in subsistence agriculture. Manufacturing consists mainly of the
processing of raw materials and of light manufacturing for the domestic market. Plans continue to reopen bauxite and rutile mines shut down during the conflict. The major source of hard currency
consists of the mining of diamonds. The economic outlook depends upon the maintenance of domestic peace and the continued receipt of substantial aid from abroad, which is essential to offset the
severe trade imbalance and to supplement government revenues.

We
have a 70% equity interest in Millicom Sierra Leone Limited ("MSL") with the remaining 30% owned by a number of investors.

In
August 2000, MSL acquired a nationwide license to provide GSM cellular telephony in Sierra Leone. The license expires in August 2015.

MSL
commenced operations in late May 2001 and currently operates a prepaid service in all major provinces.

MSL
operates a digital network based upon the GSM standard. As of December 31, 2003, MSL's network consisted of 8 cell sites covering approximately 10% of the
population. MSL initially rolled out its operation in Freetown, the capital, with a population of 1.5 million people.

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MSL
currently has only one other competitor in the cellular telephony market in Sierra Leone, Celtel Sierra Leone. According to EMC, as of December 31, 2003, MSL had the number
two market position. Our present coverage in the major provinces and our extensive dealer network are primary sources of competition relative to other market participants. We believe there is growth
potential as the security situation stabilizes.

OTHER INVESTMENTS

Tele2 AB (formerly named NetCom AB)

Tele2 AB is an alternative pan-European telecommunications company offering fixed and mobile telephony, as well as data network and Internet services.
In August 2003, Millicom Telecommunications, our wholly owned subsidiary through which we hold our interest in Tele2 AB, issued 5% Mandatory Exchangeable Notes which are exchangeable on or
before August 7, 2006 into substantially all of our shares of Tele2 AB. For a more detailed description of the offering and the terms of the 5% Mandatory Exchangeable Notes and the related
securities lending arrangement entered into in connection with the offering of the 5% Mandatory Exchangeable Notes, see "Operating and Financial Review and ProspectsLiquidity and Capital
ResourcesMillicom Telecommunications S.A.'s 5% Mandatory Exchangeable Notes".

The
Tele2 AB series B shares underlying the 5% Mandatory Exchangeable Notes have been lent to Deutsche Bank AG London pursuant to a securities lending arrangement. Millicom
Telecommunications S.A. is obligated to deliver Tele2 AB series B shares upon exchange of the 5% Mandatory Exchangeable Notes even in the event of a failure of Deutsche Bank AG London to
redeliver to Millicom Telecommunications S.A. Tele2 AB series B shares.

Tele2
AB is listed on the Stockholm Stock Exchange under TEL2A and TEL2B, and on the NASDAQ Stock Market under TLTOA and TLTOB.

As
at December 31, 2003, the Company held 6.1% (2002: 6.8%) of Tele2 AB with a market value of $479,040,000 (2002: $265,571,000).

Argentina

In 1998, MIC obtained a license to provide fixed wireless data, Internet access and fixed telephony services in Argentina. Millicom Argentina SA ("Millicom
Argentina"), in which MIC has a 65% equity interest, launched services in May 2000. The license covers the six largest cities in Argentina, covering approximately 90% of the urban population.
Millicom Argentina is focused on providing Internet access and communications for bandwidth intensive applications such as high-speed data
transmission and Internet access to small, medium and large sized businesses and home office workers. We intend to exit this business.

Peru

In July 2000, MIC was awarded a license to provide fixed wireless data, Internet access and fixed telephony services in Peru. The license covers the main
nine cities and is valid for a 20-year period with renewal for a similar period. The frequency award is one of three license awards of this type in Peru. MIC is focused on providing
Internet access and communications for bandwidth intensive applications such as high-speed data transmission and Internet access to businesses and home office workers. Services were
launched in January 2001 in Lima and now cover Chiclayo and Trujillo.

In
May 2002, MIC entered into a concession agreement with the Peruvian government, allowing it to provide long-distance (domestic and international) carrier services.
The concession area comprises the states of Ancash, Arequipa, Ica, La Libertad, Lambbayeque, Lima and the constitutional province

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of
Callao as well as signals abroad. The concession agreement is for a term of 20 years with renewal for a similar period or partial renewals for five years, not to exceed 20 years.

We
intend to exit these businesses.

Other licenses

MIC has been actively pursuing further licenses in countries where it has existing cellular networks and strong brand recognition. A fixed wireless license has
also been awarded in Venezuela. We do not intend to commence providing services in Venezuela.

Organizational Structure

Below is a list of MIC's significant subsidiaries and joint ventures as of March 31, 2004, including the name, country of incorporation or residence and
proportion of ownership interest.

|Name                                |  | Country of residence             |  | Proportion of
ownership
interest |  
|----------------------------------- |  | -------------------------------- |  | -------------------------------- | -
|Cam GSM Company Limited             |  | Cambodia                         |  | 58.4                             | %
|Royal Telecam International Limited |  | Cambodia                         |  | 57.0                             | %
|Millicom Lao Co. Ltd.               |  | Lao People's Democratic Republic |  | 78.0                             | %
|Pakcom Limited                      |  | Pakistan                         |  | 61.3                             | %
|Paktel Limited                      |  | Pakistan                         |  | 98.9                             | %
|Celltel Lanka Limited               |  | Sri Lanka                        |  | 99.9                             | %
|Comvik International (Vietnam) AB   |  | Vietnam                          |  | 80.0                             | %
|Millicom Argentina SA               |  | Argentina                        |  | 65.0                             | %
|Telefonica Celular de Bolivia SA    |  | Bolivia                          |  | 100.0                            | %
|Telemóvil El Salvador SA            |  | El Salvador                      |  | 70.0                             | %
|Comunicaciones Celulares SA         |  | Guatemala                        |  | 55.0                             | %
|Telefónica Cellular SA              |  | Honduras                         |  | 50.0                             | %
|Telefonica Celular del Paraguay SA  |  | Paraguay                         |  | 96.0                             | %
|Millicom Peru SA                    |  | Peru                             |  | 100.0                            | %
|Millicom (Ghana) Limited            |  | Ghana                            |  | 100.0                            | %
|Emtel Limited                       |  | Mauritius                        |  | 50.0                             | %
|Sentel GSM                          |  | Senegal                          |  | 75.0                             | %
|Millicom (SL) Limited               |  | Sierra Leone                     |  | 70.0                             | %
|MIC Tanzania Limited                |  | Tanzania                         |  | 84.4                             | %

Property, Plant and Equipment

We and our operating companies own, or control through long-term leases or licenses, properties consisting of plant and equipment used to provide
cellular 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 cellular telephone services. The leased properties are owned by private
and municipal entities.

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



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MIC's
principal executive offices are located in Bertrange, the Grand Duchy of Luxembourg, where it leases approximately 448 square meters. The lease is automatically renewable from year
to year unless terminated by MIC or the lessor upon six months advance written notice. The current annual rental is approximately $167,000. MIC believes its principal executive offices are suitable
and adequate for its operations.

Insurance

We and our operations maintain the types and amounts of insurance customary in the industries and countries in which we and our operations operate, including
coverage for employee related accidents and injuries and property damage. We consider our insurance coverage and that of our operations to be adequate both as to risks and amounts for the business
conducted by us and our operating companies.

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. See Note 31 of the "Notes to the Consolidated Financial Statements" for certain reconciliations between IFRS and U.S. GAAP.

Overview

Introduction

We are a global telecommunications operator with a portfolio of investments in the world's emerging markets over which we typically exercise management and voting
control. Our strategy of being a low cost provider, focused on prepaid services using mass market distribution methods, has enabled us to continue to pursue high growth while delivering operating
profitability.

We
currently have interests in 16 cellular systems in 15 countries, focusing on emerging markets in Asia, Latin America and Africa. As of December 31, 2003, our cellular
operations had a combined population under license of approximately 387 million people.

As
we have 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 all of our maturing licenses, generally on terms similar to the original licenses. We operate primarily with prominent local business partners through ventures, over which we typically
exercise management control.

Subscriber Base

We have consistently achieved strong subscriber growth across our operations. As of December 31, 2003, we had total subscribers of 5.7 million. This
represented an increase of 42% from 4.0 million as of December 31, 2002 and excluding El Salvador an increase of 31%. Excluding El Salvador, our total

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subscriber
base grew 28% in 2002 to 4 million total subscribers as of December 31, 2002 and grew 38% in 2001 to 3.1 million as of December 31, 2001 from 2.2 million
as of December 31, 2000.

As
of December 31, 2003, we had a proportional subscriber base of 4 million, an increase of 44% from December 31, 2002 and excluding El Salvador an increase of 28%.
Excluding El Salvador, our proportional subscribers increased 24% to 2.8 million subscribers as of December 31, 2002 and increased by 38% to 2.2 million as of December 31,
2001 from 1.6 million as of December 31, 2000.

The
subscriber data above excludes subscribers of our divested operations.

Revenue

We derive our revenue from the provision of telecom services, such as monthly subscription fees, airtime usage fees, roaming fees, interconnect fees and other
telecommunications services, initial connection fees, equipment sales and prepaid cards. In addition, in Vietnam, we derive our revenue through a revenue sharing agreement with a Vietnamese government
owned entity.

Our
revenue was $647.1 million for the year ended December 31, 2003 as compared to $605.2 million for the year ended December 31, 2002. Included in revenue
for the year ended December 31, 2003 are revenues of $39.1 million from our operation in El Savador. Included in total revenues for the year ended December 31, 2003 are revenues
of $5.9 million from our operation in Colombia which was divested in February 2003 and revenues of $39.1 million from our operation in El Salvador which was reconsolidated from
September 15, 2003. Included in total revenues for the year ended December 31, 2002 are revenues of $32.3 million from operations divested in 2002 and $50.5 million from
our divested operation in Colombia.

Revenues
from our continuing operations increased during the year ended December 31, 2003 compared with the year ended December 31, 2002, reflecting the continued expansion
of the subscriber base in continuing operations. Although total revenues from our existing operations have increased, airtime per subscriber has tended to decrease as the subscriber base has grown and
the proportion of prepaid subscribers, whose usage and airtime tends to be lower than that of postpaid customers, has increased. In addition, connection fees were reduced, in some cases to zero, by
most ventures as part of programs to spur subscriber growth. The improvement in operating profit reflects in part our cost reduction program applied across our operations and realization of economies
of scale as our subscriber base continues to grow.

We
note that a number of our 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. Nonetheless, we believe that lower cost to customers may have the effect of expanding our markets over time.

We
believe there is a significant opportunity for rapid growth in our markets due to low cellular penetration in economies with high growth potential and substantial pent-up
demand for basic voice telephony services. We believe we can grow our subscriber base and revenue by continuing to focus on prepaid services while controlling costs and maintaining our position with
postpaid customers. We are developing a number of non-traditional distribution channels in our ventures to expand our market share and reduce our operating costs. There is, however, a risk
that, as new competitors enter our prepaid markets and price competition intensifies, our prepaid customers may be more likely to move from one cellular operator to another than our postpaid
customers. 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.

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Costs

The primary cost of sales incurred by us in relation to the provision of telecommunication services relate to interconnection costs, roaming costs, depreciation
and impairment of network equipment.

Our
other main operating costs include commissions payable to agents for obtaining customers on our behalf, commissions for selling prepaid cards, advertising and promotion costs, staff
costs and depreciation of non-network equipment.

We
will continue to seek ways to further reduce our overall cost base by rationalizing our operations. In 2002, we initiated a more strict, centralized cost reduction program across our
operations, which has lowered our costs. In addition, we expect to realize additional synergies across our multi country operations, such as sharing information, human resources, best practices and
technologies and centralized negotiations of financing and of supply contracts for network and equipment handsets.

Upstreaming of Cash

The continued improvement in the operating and financial performance of our ventures has allowed us to continue to upstream excess cash from our ventures to MIC.
During the years ended December 31, 2001 and 2002, we upstreamed $55.1 million and $96.7 million, respectively, of which $3.4 million and $8.8 million, respectively,
was from divested operations. For the year ended December 31, 2003, we upstreamed $129.3 million from 13 of the 15 countries in which we operate.

Divestitures

We have made a number of significant divestitures as part of our debt reduction plan and focus on delivering profitable growth over recent years. These
divestitures have included:



See
"Investments, Capital Expenditures and Divestments".

Debt Restructuring Plan

In 2003, we implemented a restructuring plan to substantially improve our liquidity by reducing our net indebtedness and debt service obligations. As of
December 31, 2002, we had total consolidated indebtedness of $1,228,575,000, and our total consolidated net indebtedness (representing total consolidated indebtedness after deduction of cash,
cash equivalents and short-term time deposits) was $1,141,924,000 which required a substantial amount of cash from operations to service our debt. In addition to divesting selected assets
(for example, we divested MIC Systems (including Mach), Tele2 AB shares, our operations in the Philippines and our operation in Colombia and Liberty Broadband Limited), we have undertaken a balance
sheet restructuring plan. The restructuring plan included the following steps:



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Millicom's
total consolidated indebtedness as of December 31, 2003 was $1,276,865,000 (including the embedded derivative on the 5% Mandatory Exchangeable Notes for an amount of
$103,457,000) and our total consolidated net indebtedness (representing total consolidated indebtedness after deduction of cash, cash equivalents and short-term time deposits) was
$1,095,156,000. Of such indebtedness, $327,635,000 relates to the 5% Mandatory Exchangeable Notes, which are mandatorily exchangeable into Tele2 AB B shares and $103,457,000 to the embedded derivative
on the 5% Mandatory Exchangeable Notes and in respect of which no repayment in cash of principal is required. In addition, our interest obligations in respect of the 5% Mandatory Exchangeable Notes
have been secured by U.S. Treasury STRIPS, which we purchased with a portion of the net proceeds from the offering of the 5% Mandatory Exchangeable Notes. To date, our restructuring plan has enhanced
our balance sheet and significantly improved our liquidity levels by reducing our debt service obligations.

El Salvador operations

On September 15, 2003, MIC's operation in El Salvador, Telemóvil, entered into a share purchase agreement with the minority shareholders of
Telemóvil. The agreement provides for the acquisition by Telemóvil of 30% of its own shares for a consideration of $70 million payable over a period of a maximum
of 6 years and an annual dividend premium of $1 million, with a corresponding net present value of $67,371,000. Of this amount $16 million was paid in cash at the closing of the
transaction. The payment of the acquisition price is guaranteed by MIC. During this period Telemóvil has an ownership interest in 30% of its own shares, while the record title remains
with an escrow agent for the benefit of the minority shareholders pending the final settlement date. Based on this agreement, MIC regained control and began consolidating Telemóvil at
100% since September 15, 2003. The legal ownership interest of MIC remains at 70% until the final settlement date. Telemóvil's license contract was signed in
September 1991 for a 15-year period. The license is automatically renewable for successive five-year periods after the initial 15-year period in the absence
of default by Telemóvil under the license conditions.

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Completing our Migration to the GSM standard

We expect GSM subscribers to exceed 50% of our total subscriber base by the end of 2004. Our Asian and African businesses are fully GSM-based, except
for Pakistan, where GSM will be rolled out to our customers in 2004. In Latin America, we plan to introduce GSM systems in Paraguay, Guatemala, Honduras and El Salvador in 2004. The equipment costs
relating to GSM have decreased significantly over the last few years. We believe that GSM will increase our revenues from prepaid minutes and roaming services while lowering our infrastructure and
maintenance costs. GSM also offer our customers greater choice of handsets at a lower cost with improved functionality.

Effect of Exchange Rate Fluctuations

Exchange rates for currencies of the countries in which our ventures operate may fluctuate in relation to the U.S. dollar, and such fluctuations may have a
material adverse effect on our earnings, assets or cash flows when translating local currency into U.S. dollars. For each venture that reports in a currency other than the U.S. dollar, a decrease in
the value of that currency against the U.S. dollar would reduce our profits while also reducing both our assets and liabilities. A relevant example for us during 2002 was the devaluation of the
currency in Paraguay, which had a substantial adverse effect on our results of operations. In the years ended December 31, 2003, 2002 and 2001, for the group as a whole, we suffered exchange
losses of $45,602,000, which are mainly due to the exchange loss on the 5% Mandatory Exchangeable Notes, $23,483,000 and $17,313,000, respectively. To the extent that our ventures upstream cash in the
future, the amount of U.S. dollars we will receive will be affected by fluctuations of exchange rates for such currencies against the U.S. dollar. The exchange rates obtained when converting local
currencies into U.S. dollars are set by foreign exchange markets over which we have no control. We have not entered into any significant hedging transactions to limit our foreign currency exposure.

Expiration of Telephone Licenses and the BCC

We are currently seeking to renew the BCC in Vietnam and our telephone license in Pakistan, which are our two largest contributors to revenue among our ventures.
Although we are currently in negotiations to extend the life of the BCC and the license for a significant period of time and management expects that they will be extended, we cannot assure you that
the BCC or the license will be extended on equivalent or similar terms, or at all. If the BCC or the license is not extended on equivalent or satisfactory terms, or at all, our results of operations
and financial condition would be adversely affected. If the revenue sharing agreement is not extended or CIV, our Vietnamese subsidiary, is unable to maintain its operations in Vietnam through another
agreement, its telecommunications services would cease on June 30, 2005. In such event, CIV would no longer generate any revenues from cellular operations in Vietnam. CIV's revenues for the
year ended December 31, 2003 were $129,936,000 (20% of total revenues) and operating profit was $51,292,000 (32% of total operating profits). At present, all equipment recorded in CIV's
financial statements will be fully amortized by
July 1, 2005, at which date legal title to all equipment will be transferred to VMS at a price of $1. In Pakistan, our two subsidiaries, Paktel and Pakcom, have obtained a letter from the
Pakistan Telecommunication Authority stating its intention to renew the licenses subject to certain conditions.

In
each of our markets we may face competition for business arrangements or licenses from major international telecommunications entities as well as from local competitors. While we have
not typically paid significant amounts in connection with our business arrangements or for cellular licenses, the competition for the granting or renewal of business arrangements or licenses is
increasingly intense. As such, we anticipate that we may have to pay substantial renewal fees in certain markets, as well as meet specified network build out requirements. We cannot assure you that we
will be successful in obtaining or renewing any profit sharing arrangement or cellular telephone licenses, or if they are awarded that

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they
are on terms acceptable to us. In addition, we may need to seek future funding through additional borrowings or equity offerings, and we cannot assure you that such funding will be obtained on
satisfactory terms or at all.

Economic and Political Environments in our Emerging Markets

We currently have interests in 15 countries in emerging markets around the world and are subject to government regulation in each market. The governments of the
15 countries differ widely with respect to structure, constitution and stability, and some of these countries lack mature legal and regulatory systems. In the normal course of business, we are
involved in discussions regarding taxation, interconnect and tariffing arrangements, which can have a significant impact on the long-term economic viability of our operations. To the
extent that our operations depend on governmental approval and regulatory decisions, the operations may be adversely affected by changes in the political structure or government representatives in
each of the markets in which we operate. Recent political and economic changes have resulted in political and regulatory uncertainty in certain countries in which we operate. We cannot assure you that
factors such as these will not have a material adverse effect on our operations in particular countries. For a more complete description of the economic and political environments in the markets in
which we operate, see "Information on the Company."

Critical Accounting Policies

The consolidated financial statements of MIC and its subsidiaries have been prepared in accordance with IFRS. In compiling these 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.

Although
MIC owns 70% of the share capital of its operation in El Salvador, due to a dispute which arose with local shareholders, management determined in May 2001 that it was no
longer able to exercise a significant influence in the operation and thus that it was more appropriate to show its investment as a long-term asset in the balance sheet under the caption
"Investment in securities". As a result of the resolution of this dispute, management determined in September 2003 that it will begin to fully consolidate the operation in El Salvador effective
from September 15, 2003 onwards. See "Results of Operations".

Collectability of Assets

Management is required to estimate the collectability of trade debtors. As of December 31, 2003, these totaled $149,949,000, of which management had
estimated that $36,199,000 was unlikely to be collected. These estimates are based on knowledge of the local markets, prior credit history and estimates of future cash flows generated from these
receivables. The basis for the impairment made will

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vary
between subscribers and amounts due from other telephone companies and are management's best estimates.

Impairment of Non-current Assets

MIC records significant intangible and tangible assets relating to cellular and non-cellular operations. Intangible assets mainly relate to goodwill
and license values and tangible assets mainly relate to network value recorded as property, plant and equipment. Significant estimates, assumptions and judgments are required to decide the useful
expected lives of these assets and whether these assets are impaired. These estimates are made on a regular basis throughout the year as they can be significantly affected by changes in competition,
technology and other similar factors. When certain operational, financial or other factors indicate an impairment of value, management evaluates the carrying value of property, plant and equipment as
well as other assets including licenses and goodwill, in relation to the operating performance and future cash flows of the underlying assets. When indicated, the impairment losses are measured based
on the difference between the estimated recoverable amount and the carrying amount of the asset. Management's estimates of recoverable amounts for the individual asset or, if not possible, the
cash-generating unit, are based on prices of similar assets, to the extent available in the circumstances, and the result of valuation techniques. These include net present values of
estimated future cash flows and valuations based on market transactions in similar circumstances. 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. Any negative change in relation to the operating performance or the expected future cash flow of individual
assets or of a cash generating unit will change the expected recoverable amount of the underlying assets and therefore will decrease the fair value of the underlying assets.

During
2003, MIC entered into discussions concerning the sale of its high-speed wireless data operation in Peru. Following these discussions, MIC has recognized an impairment
charge of $3,073,000 in the carrying value of the license in Peru.

Due
to revised anticipated lower revenues from non-digital equipment, MIC recognized an impairment loss of $4,097,000 over certain network equipment in MIC Africa in 2003. In
addition MIC reversed an impairment loss in MIC Latin America for an amount of $1,579,000.

In
the year ended December 31, 2002, management identified an impairment of its licenses to operate high-speed wireless data services in Peru and Venezuela and, as a
consequence, made a write-down of $3,034,000 in the value of these licenses. Also, in 2002, MIC recognized an impairment on both goodwill and license value in its operations in Colombia
and Argentina, for respectively $77,456,000 and $2,496,000.

During
2001, management identified impairment of its license to operate high-speed cellular data services in the United Kingdom (held by Liberty Broadband Ltd.) due to
initial market conditions that delayed profitable asset deployment. Therefore, an impairment was measured as the difference between the recoverable amount, determined by reference to discounted cash
flows and the carrying value of the license at the measurement date, resulting in a write-down of $20,074,000. Liberty Broadband Ltd. was sold in September 2002.

During
2000, management identified impairment of its analog fixed assets and related licenses and intangibles due to the faster-than-expected migration of its
analog subscribers to digital platforms. This rapid migration created a likely expectation that the analog assets would be decommissioned or disposed of significantly before the end of their
previously estimated useful life. As a result of this rapid migration, the Company re-assessed the recoverability of its investments in the third quarter of 2000. The discounted cash flows
projected to be generated from analog assets indicated that the recoverable amount of these assets was lower than the carrying value. Therefore, impairment was measured as the difference between the
recoverable amount, determined by reference to discounted

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cash
flows, and the carrying value of the analog assets at the measurement date. As a result, an impairment charge of $105,668,000 was recognized.

Investments in Securities

MIC holds significant investments in marketable and non-marketable securities. Marketable securities are carried at fair value with unrealized changes
in market value being recorded within the statement of profit and loss under the heading "Gain (loss) and valuation movement on investment in securities". See "Recent
DevelopmentsFinancial Results for the Year Ended December 31, 2003Change in Accounting Policy". Prior to the change in accounting policy for
available-for-sale securities on January 1, 2003, where securities classified as available-for-sale were sold or impaired or when there was a
significant or prolonged decline in the fair value below acquisition cost, the accumulated fair value adjustments were included in the profit and loss statement as "Gain (loss) and valuation movement
on investment in securities". Prior to the change in accounting policy for available-for-sale securities on January 1, 2003, on a regular basis the Company compared the
market value of its investments to their cost in order to identify potential impairment issues. In considering whether the investment has been impaired, the Company considered all available evidence
such as, among other things, significant financial difficulties of the issuer, breaches or default in loan agreements, the recognition of prior impairment losses on that asset or the extent and
duration of a decline in fair value below cost. In 2003, MIC recorded an unrealized gain of $246,760,000 resulting from the change in fair value of the Tele 2 AB shares. In 2002, MIC recorded a loss
of $168,818,000 resulting from the sale of shares and recorded a loss of $119,138,000 resulting from the prolonged decline in value of the Tele 2 AB shares. During 2002, MIC recognized an impairment
on its investment in Great Universal, Inc. and Modern Holdings Incorporated of $5,027,000 and $7,050,000, respectively.

During
the period from December 31, 2002 to September 15, 2003, MIC accounted for its investment in Telemóvil El Salvador as an
available-for-sale financial asset because management determined that during that period it did not have control or significant influence over Telemóvil El
Salvador as a result of a dispute with local shareholders. Because the shares of Telemóvil El
Salvador are not quoted on a public market and management had not been able to obtain reliable financial information since May 2001, management made different estimates to value this investment using
different valuation techniques that resulted in a wide range of fair values. Management therefore concluded that estimating a fair value in these conditions was inappropriate. Consequently, the
investment in Telemóvil El Salvador was carried at its December 31, 2002 carrying amount until September 15, 2003. On September 15, 2003, MIC resolved the
shareholders dispute with the minority shareholders in Telemovil and as a result, recommenced consolidating Telemovil as from that date.

Revenue recognition

Our revenue comprises the following:

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Functional currency

MIC's functional currency is the U.S. dollar because of the significant influence of the U.S. dollar on its operations. MIC is located in Luxembourg and its
subsidiaries, joint ventures and associated
companies operate in different currencies. The functional currency of each subsidiary, joint venture and associated company, where these are foreign entities, is determined in accordance with the
requirements of Standing Interpretation Committee No. 19 (SIC 19) "Reporting CurrencyMeasurement and Presentation of Financial Statements under IAS 21 and IAS 29".

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Derivatives

IAS 39 requires that all financial assets and financial liabilities, including derivatives, be recognized on the balance sheet. Derivatives are initially recorded
at cost either in other current assets or other financial liabilities as applicable and then are subsequently measured to fair value through the statement of profit and loss under the caption "Fair
value result on financial instruments". Upon adoption of IAS 39 on January 1, 2001, the Company recorded a cumulative negative adjustment related to these derivatives, reflected in
shareholders' equity of $45,264,000.

A
derivative embedded in a financial instrument, such as the embedded derivative on the 5% Mandatory Exchangeable Notes in Tele2 AB series B shares, is treated as a separate
derivative when its economic risks and characteristics are not closely related to those of the host contract, a separate instrument with the same terms as the embedded derivative would qualify as a
derivative, and the combined instrument (derivative and host contract) is not carried at fair value with unrealized gains and losses reported in the profit and loss.

Goodwill

The excess of cost of an acquisition over our interest in the fair value of the identifiable net assets of the acquired subsidiary, associate or joint venture at
the date of transaction is recorded as goodwill and recognized as an intangible asset in the balance sheet. Goodwill is amortized using the straight-line method over its estimated useful
life but not longer than 20 years.

At
each balance sheet date, we assess whether there is any indication of impairment. If such indications exist an analysis is performed to assess whether the carrying amount of goodwill
is fully recoverable. A write-down is made if the carrying amount exceeds the recoverable amount.

Negative
goodwill represents the excess of the fair value of our share of the identifiable net assets acquired over the cost of acquisition. Negative goodwill is presented in the same
balance sheet classification as goodwill. To the extent that negative goodwill relates to expectations of future losses and expenses that are identified in our plan for the acquisition and can be
measured reliably, but which do not represent identifiable liabilities, that portion of negative goodwill is recognized in the income
statement when the future losses and expenses are recognized. Any remaining negative goodwill, not exceeding the fair values of the identifiable non-monetary assets acquired, is recognized
in the income statement over the remaining weighted average useful life of the identifiable acquired depreciable/amortizable assets; negative goodwill in excess of the fair values of those assets is
recognized in the income statement immediately.

Equity compensation benefits

Share options are granted to management and key employees. Options are granted at the market price of the shares on the date of the grant and are exercisable at
that price. Options granted prior to January 1, 2003, are exercisable over a five-year period, with one third vesting after three years, two-thirds vesting after four
years and 100% vesting after five years, and have a contractual option term of six years. Options granted in May 2003 are exercisable one year from the date of grant and have a contractual
option term of six years. When the options are exercised, the proceeds received net of any transaction costs are credited to share capital (nominal value) and share premium. MIC does not make a charge
in connection with share options.

Recent U.S. GAAP pronouncements

In January 2003, the FASB issued Financial Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, which was subsequently
revised in December 2003 (FIN 46-R). FIN 46-R generally applies to all business enterprises and all arrangements used by business enterprises, and it

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requires
that a business enterprise identifies all its Variable Interest Entities ("VIEs"). VIEs are those entities possessing certain characteristics, which indicate either a lack of equity
investment to cover expected losses of the entity or a lack of controlling financial interest by an investor. The party that absorbs a majority of the entity's expected losses, receives a majority of
its expected residual returns, or both, as a result of holding variable interests is deemed to be the Primary Beneficiary and must consolidate the VIE. The measurement principles of this
interpretation apply to all VIEs created after January 31, 2003 and to all VIEs in which an enterprise obtains an interest after that date. Additionally, MIC will adopt the measurement
principles of FIN 46-R for all VIEs held by MIC prior to January 31, 2003 on March 31, 2004 as a cumulative change in accounting principle. The Company is in the process of
evaluating arrangements which could be considered VIEs under FIN 46-R. However, MIC has determined that it is reasonably possible that it will at least consolidate its interest in the
following VIEs, held prior to January 31, 2003, upon adoption: Cam GSM Company Limited ("Cam GSM"), Royal Telecam International Limited ("Telecam"), Millicom Argentina S.A., Comunicaciones
Celulares S.A., Telefonica Celular and Emtel Limited. Except for Telecam and Millicom Argentina S.A., each of these entities are substantive mobile telecom operating businesses in their respective
countries (see Note 3 of the notes to the consolidated financial statements). Telecam and Millicom Argentina S.A. are substantive high speed wireless data service providers in their respective
countries. The size of each of these entities and MIC's maximum exposure to loss (as defined in FIN 46) as a result of its involvement with these entities is as follows:

|Under IFRS                    |  | Revenue |  | Operating
profit/(loss) |   | Total
assets |  | Maximum
exposure
to loss
|----------------------------- |  | ------- |  | ----------------------- | - | ------------ |  | ------------------------
|
|Cam GSM                       |  | 70,334  |  | 12,414                  |   | 68,215       |  | 20,580                  
|Telecam                       |  | 9,434   |  | 1,085                   |   | 8,262        |  | 2,000                   
|Millicom Argentina S.A.       |  | 3,506   |  | (225                    | ) | 2,775        |  | 14,886                  
|Comunicaciones Celulares S.A. |  | 142,700 |  | 53,197                  |   | 160,629      |  | 46,056                  
|Telefonica Celular            |  | 95,716  |  | 45,959                  |   | 79,220       |  | 28,563                  
|Emtel Limited                 |  | 24,004  |  | 6,904                   |   | 29,138       |  | 4,291                   

In
March 2003, MIC's Pakistani subsidiary Paktel entered into a receivables securitization arrangement with a special purpose entity (the "Paktel SPV"), whose sole purpose is to
finance MIC's receivables. Further information regarding the Paktel SPV is contained in Note 18 of the notes to the consolidated financial statements.

In
December 2002, the Emerging Issues Task Force reached a consensus in EITF Issue 00-21 ("EITF 00-21"),Accounting for Revenue
Arrangements with Multiple Deliverables. The Issue addresses a vendor's accounting for transactions involving the delivery of more than one product or service, and when it is
necessary to separate the transaction into individual component deliverables, each with its own separate earnings process. If the conditions requiring separate revenue recognition exist, revenue is
allocated among the different deliverables based on their relative fair values (the relative fair value of each of the component deliverables to the aggregated relative fair value of the bundled
deliverables), with revenue for each component deliverable recognized when the revenue is realized and earned. The Company is required and plans to adopt the provisions of EITF 00-21, for
revenue arrangements entered into or modified on or after January 1, 2004. To accomplish this, the Company must identify and determine the fair value of the component
deliverables in its revenue arrangements. The Company is currently assessing the impact that the implementation of EITF 00-21 will have on its results of operations, financial position and
cash flows.

In
December 2003, the SEC issued Staff Accounting Bulletin No. 104 (SAB 104), Revenue Recognition, which supersedes SAB 101. SAB 104's primary purpose is to rescind
accounting guidance contained in SAB 101 related to multiple element revenue arrangements, superseded as a result of the

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issuance
of EITF 00-21. Additionally, SAB 104 rescinds the SEC's Revenue Recognition in Financial Statements Frequently Asked Questions and Answers (the FAQ) issued with SAB 101 that had
been codified in SEC Topic 13, Revenue Recognition. Selected portions of the FAQ have been incorporated into SAB 104. While the wording of SAB 104 has changed to reflect the issuance of EITF
00-21, the revenue recognition principles of SAB 101 remain largely unchanged by the issuance of SAB 104. Therefore, aside from EITF 00-21, the Company does not expect there to
be a significant difference to its accounting under SAB 101.

Results of Operations

Prior to May 1, 2001, our results of operations included our proportionate share of the results of our operation in El Salvador. As of May 1, 2001,
due to a dispute with our local partners, we determined that proportional consolidation was no longer appropriate and we began accounting for our operation in El Salvador under the equity method and
recorded our investment on the balance sheet under the caption "Investment in associated companies". As of December 31, 2002, the dispute was still ongoing and we determined that we could no
longer exercise significant control over our operation in El Salvador and recorded our investment as a long-term asset in the balance sheet under the caption "Investment in other
Securities". Accordingly, while our results of operations prior to May 1, 2001 include our proportionate share of the results of our operation in El Salvador, our results of operations for the
periods from May 1, 2001 to September 15, 2003 do not include the results of our operation in El Salvador.

On
September 15, 2003, MIC's operation in El Salvador, Telemóvil, entered into a share purchase agreement with the minority shareholders of
Telemóvil. The agreement provides for the acquisition by Telemóvil of 30% of its own shares for a consideration of $70 million payable over a period of a maximum
of 6 years and an annual dividend premium of $1 million, with a corresponding net present value of $67,371,000. Of this amount $16 million was paid in cash at the closing of the
transaction. The payment of the acquisition price is guaranteed by MIC. During this period Telemóvil has an ownership interest in 30% of its own shares, while the record title remains
with an escrow agent for the benefit of the minority shareholders pending the final settlement date. Based on this agreement, MIC regained control and began consolidating Telemóvil at
100% since September 15, 2003. The legal ownership interest of MIC remains at 70% until the final settlement date. Telemóvil's license contract was signed in
September 1991 for a 15-year period. The license is automatically renewable for
successive five-year periods after the initial 15-year period in the absence of default by Telemóvil under the license conditions.

This
change in accounting treatment relating to our operation in El Salvador, together with our selected divestitures over recent periods and the implementation of our debt restructuring
program, may limit the comparability of our financial information and operating data. Thus, our historical financial information and operating data may not be indicative of what our results of
operations, financial position or cash flows will be in the future.

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Years Ended December 31, 2003 and 2002

The following table sets forth certain profit and loss statement items for the periods indicated.

|                                                       |  |          |   |          |   | Impact on Comparative
Results for Period |  
|------------------------------------------------------ |  | -------- | - | -------- | - | ---------------------------------------- | -
|
|
|
|
|Revenues                                               |  | 647,104  |   | 605,186  |   | 41,918                                   |  
|Cost of sales                                          |  | (258,002 | ) | (259,530 | ) | 1,528                                    |  
|Sales and marketing                                    |  | (87,575  | ) | (80,941  | ) | (6,634                                   | )
|General and administrative expenses                    |  | (108,449 | ) | (186,491 | ) | 78,042                                   |  
|Gain from sale of subsidiaries and joint ventures, net |  | 2,213    |   | 88,814   |   | (86,601                                  | )
|Other operating expenses                               |  | (32,776  | ) | (44,725  | ) | 11,949                                   |  
|Operating profit                                       |  | 162,515  |   | 122,313  |   | 40,202                                   |  
|Profit (loss) from investment securities               |  | 246,760  |   | (299,963 | ) | 546,723                                  |  
|Interest expense                                       |  | (135,172 | ) | (185,959 | ) | 50,787                                   |  
|Exchange gains (losses)                                |  | (45,602  | ) | (23,483  | ) | (22,119                                  | )
|Charge for taxes                                       |  | (52,369  | ) | (22,734  | ) | (29,635                                  | )
|Net profit (loss) for the year                         |  | 178,823  |   | (385,143 | ) | 563,966                                  |  

Subscribers.Our worldwide total cellular subscribers increased by 42% to 5,690,542 as of December 31, 2003 from
4,002,911 as of December 31, 2002. Net additions of subscribers for the year ended December 31, 2003 were 1,687,631, a 93% increase over the 873,305 additions for year ended
December 31, 2002. Of the total subscribers as of December 31, 2003, 4,956,257, or 87%, were prepaid, an increase of 44% over the 3,448,269 prepaid subscribers as of December 31,
2002. Excluding El Salvador, MIC's total subscriber base increased by 31% from December 31, 2002. Our proportional subscribers increased by 45% to 4,025,577 as of December 31, 2003 from
2,784,187 as of December 31, 2002. Excluding El Salvador, MIC's proportional subscriber base increased by 28%. The three largest contributors to subscriber growth in the year ended
December 31, 2003 were the operations in Pakistan, Vietnam and Guatemala with a total of 738,319 new subscribers. All of our operations experienced growth, except for Bolivia, where the number
of subscribers fell due to a delay in our investment.

The
subscriber data above excludes subscribers of our divested operations.

Revenues.Total revenues for the year ended December 31, 2003 were $647,104,000, an increase of 7% over the year ended
December 31, 2002. The increase is due to revenue growth throughout the Group's operations, the reconsolidation of El Salvador since September 15, 2003 and is reduced due to the
divestment of certain operations in the second half of 2002, notably our cellular operation in the Philippines and our interest in MIC Systems, and the divestment of Colombia in February 2003.
Included in total revenues for the year ended December 31, 2003 are revenues of $5,926,000 from our divested operation in Colombia, and included in total revenues for the year ended
December 31, 2002 are revenues of $31,456,000 from operations divested in 2002 and $50,506,000 from our divested operation in Colombia. The three largest contributors to revenues during the
year ended December 31, 2003 were our operations in Vietnam, Guatemala and Paraguay.

Cost of sales.Cost of sales decreased by 1% for the year ended December 31, 2003 to $258,002,000. The lower cost of
sales is explained by the divestments referred to above but also by lowering costs as a result of the impact of our cost reduction program in 2002 and is, on the other hand, increased by the
reconsolidation of El Salvador since September 15, 2003. For the year ended December 31, 2003, our divested operation in Colombia had consolidated cost of sales of $3,725,000, and for
the year ended December 31, 2002, our operations divested in 2002 had consolidated cost of

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sales
of $17,596,000 and our divested operation in Colombia had consolidated cost of sales of $13,763,000. As a percentage of total revenues, cost of sales for operations decreased from 44.7% for the
year ended December 31, 2002 to 39.1% for the year ended December 31, 2003.

Sales and marketing.Sales and marketing expenses increased by 8% for the year ended December 31, 2003 to $87,575,000.
This increase reflects the reconsolidation of El Salvador since September 15, 2003, the increase in sales and marketing expenses in MIC's operations and the decrease due to the divestments
referred to above, which had consolidated sales and marketing expenses of $13,956,000 for the year ended December 31, 2002. Sales and marketing expenses as a percentage of total revenues
were 13.5% for the year ended December 31, 2003 compared to 13.4% for the year ended December 31, 2002.

General and administrative expenses.General and administrative expenses decreased by 42% for the year ended
December 31, 2003 to $108,449,000. The decrease is largely due to the divestments referred to above, which had consolidated general and administrative expenses of $61,906,000 for the year ended
December 31, 2002, and our cost reduction program in 2002.

Gain from sale of subsidiaries and joint ventures, net.For the year ended December 31, 2003, we made a net gain of
$2,213,000 from the sale of subsidiaries and joint ventures, down from $88,814,000 for the year ended December 31, 2002. The net gain in the year ended December 31, 2003 was due almost
entirely to the sale of our operation in Colombia.

Other operating expenses.Other operating expenses decreased by 27% for the year ended December 31, 2003 to
$32,776,000 from $44,725,000 for the year ended December 31, 2002. The decrease was mainly due to lower goodwill impairment and amortization in 2003 compared to 2002.

Operating profit.Total operating profit for the year ended December 31, 2003 was $162,515,000, compared with
$122,313,000 for the year ended December 31, 2002 for the reasons stated above.

Gain (loss) and valuation movement on investment in securities.The gain and valuation movement on investment in securities
for the year ended December 31, 2003 was $246,760,000 (relating to the change in market price of the Tele2 AB shares). This compares to a loss of $299,963,000 for the year ended
December 31, 2002.

Interest expenses.Interest expense for the year ended December 31, 2003 decreased by 27% to $135,172,000 from
$185,959,000 for the year ended December 31, 2002. This decrease arose primarily from the debt reduction plan that was implemented in 2003, as well as the divestment of MIC's highly leveraged
operations in Colombia and the Philippines.

Exchange gain (loss).MIC had net exchange losses for the year ended December 31, 2003 of $45,602,000 compared to
losses of $23,483,000 for the year ended December 31, 2002. In 2003, the exchange loss was mainly due to the revaluation at the year-end exchange rate of the 5% Mandatory
Exchangeable Notes of SEK 2.5 billion resulting in an exchange loss of $41,820,000. In 2002, the exchange loss was mainly a result of the weakening of the U.S. dollar against the majority of
currencies used by the group.

Charge for taxes.The net tax charge for the year ended December 31, 2003 increased to $52,369,000 from $22,734,000 in
the year ended December 31, 2002. This increase is due to the increased profitability of our operations in 2003.

Net profit (loss) for the year.The net profit for the year ended December 31, 2003 was $178,823,000 compared to a
loss of $385,143,000 for the year ended December 31, 2002 for the reasons stated above.

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Years Ended December 31, 2002 and 2001

Our results of operations for the year ended December 31, 2001 include our proportionate share of the results of our operation in El Salvador through
April 30, 2001, while the remainder of this period does not include the results of our operation in El Salvador. Our results of operations for the year ended December 31, 2002 do not
include the results of our operation in El Salvador for the entire period. See "Results of Operations" above.

The
following table sets forth certain profit and loss statement items for the years indicated.

|                                                       |  |          |   |          |   | Impact on Comparative
Results for Period |  
|------------------------------------------------------ |  | -------- | - | -------- | - | ---------------------------------------- | -
|
|
|
|
|Revenues                                               |  | 605,186  |   | 644,570  |   | (39,384                                  | )
|Cost of sales                                          |  | (259,530 | ) | (274,591 | ) | 15,061                                   |  
|Sales and marketing                                    |  | (80,941  | ) | (95,463  | ) | 14,522                                   |  
|General and administrative expenses                    |  | (186,491 | ) | (181,764 | ) | (4,727                                   | )
|Gain from sale of subsidiaries and joint ventures, net |  | 88,814   |   | 35,047   |   | 53,767                                   |  
|Other operating expenses                               |  | (44,725  | ) | (35,013  | ) | (9,712                                   | )
|Operating profit                                       |  | 122,313  |   | 92,786   |   | 29,527                                   |  
|Loss from investment securities                        |  | (299,963 | ) | (15,931  | ) | (284,032                                 | )
|Interest expense                                       |  | (185,959 | ) | (209,912 | ) | 23,953                                   |  
|Exchange losses                                        |  | (23,483  | ) | (17,313  | ) | (6,170                                   | )
|Charge for taxes                                       |  | (22,734  | ) | (8,217   | ) | (14,517                                  | )
|Net loss for the period                                |  | (385,143 | ) | (138,053 | ) | (247,090                                 | )

Subscribers.Our worldwide total cellular subscribers increased for the year ended December 31, 2002 by 28% to
4,022,911 from 3,129,606 subscribers as of December 31, 2001. Of the total subscribers as of December 31, 2002, 3,448,269, or 86%, were prepaid, an increase of 37% over the 2,525,357
prepaid subscribers as of December 31, 2001. Our proportional subscribers increased 24% to 2,784,187 subscribers as of December 31, 2002 from 2,236,357 subscribers as of
December 31, 2001. The three largest contributors to subscriber growth in 2002 were our operations in Cambodia, Guatemala and Vietnam with a total of 421,956 subscribers. All of our operations
experienced subscriber growth except for Paraguay, where a general economic downturn impacted our operation.

The
subscriber data above excludes subscribers of our divested operations and El Salvador.

Revenues.Total revenues in 2002 were $605,186,000, a decrease of 6% over the previous year. The decrease was largely due to
our operations in Russia and India (Madras) which were divested during 2001 and the change in consolidation method of our operation in El Salvador in May 2001. In addition, revenues were
reduced by currency devaluations, in particular, a 54% decline in the value of the currency in Paraguay. In 2001, our divested operations in Russia and Madras and our operation in El Salvador had
consolidated revenues of $59,089,000. The three largest contributors to revenues were our operations in Vietnam, Paraguay and Guatemala.

Cost of sales.Cost of sales decreased by 5% in 2002 to $259,530,000. The lower cost of sales is explained by the divestment
of Madras and the Russian operations and the change in consolidation method of our operation in El Salvador in May 2001. In 2001, our divested operations in Madras and Russia and our operation
in El Salvador had consolidated cost of sales of $24,724,000. In addition, during 2002, we charged $6,833,000 as an impairment against network equipment in Liberty Broadband.

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Sales and marketing.Sales and marketing expenses decreased by 15% in 2002 to $80,941,000. This decrease reflected the large
sales and marketing expenses in the prior year in connection with the digitalization of networks and the divestment of Madras and the Russian operations and the change in consolidation method of our
operation in El Salvador. In 2001, our divested operations in Madras and Russia and our operation in El Salvador had consolidated sales and marketing expenses of $10,247,000. Sales and marketing
expenses as a percentage of total revenues decreased from 14.8% in 2001 to 13.3% in 2002.

General and administrative expenses.General and administrative expenses increased by 3% in 2002 to $186,491,000. The
increase was primarily due to an impairment charge of $43,333,000 that was recorded mainly for licenses in Argentina, Colombia, Peru and Venezuela. In 2001 there was an impairment charge of
$21,416,000 mainly for license values.

Gain from sale of subsidiaries and joint ventures, net.During 2002 we made a net gain of $88,814,000 from the sale of
subsidiaries and joint ventures, up from $53,767,000 compared with 2001. This was due to a gain of $87,655,000 on the sale of MIC Systems, a gain of $16,603,000 realized when the local partner in
Vietnam exercised his option to purchase 10% of our interest in Vietnam and a loss of $35,988,000 on the sale of our cellular operation in the Philippines. In addition, during 2002, after obtaining
certain GSM licenses for the Russian operations disposed of in 2001, we received the second payment for such operations and realized a further gain of $30,859,000. Also, in 2002, we incurred a loss of
$10,294,000 on the sale of Liberty Broadband Ltd. and $21,000 on the sale of our interest in the Democratic Republic of Congo.

Other operating expenses.Other operating expenses increased by 28% in 2002 to $44,725,000 from $35,013,000 in 2001. The
increase was mainly due to an increased goodwill impairment charge in respect of Colombia and Argentina as we recognized a difference between the recoverable amount and the carrying amount of our
goodwill. Goodwill amortization remained relatively constant during 2002 at $7,865,000 compared to $8,090,000 in 2001. Corporate costs decreased from $25,271,000 in 2001 to $21,591,000 in 2002,
reflecting the reorganization of the regional offices and our cost reduction program during the year.

Operating profit.Total operating profit for the year ended December 31, 2002 was $122,313,000, compared with
$92,786,000 in 2001, an increase of 32% for the reasons stated above.

Loss and valuation movement on investment in securities.The loss and valuation movement on investment in securities
increased from $15,931,000 in 2001 to $299,963,000 in 2002. During 2002, Millicom recorded a realized loss of $168,818,000 compared to $15,931,000 in 2001 on the sale of shares in Tele2 AB, as
Millicom sold parts of its investment in Tele2 AB at a loss in order to meet liquidity needs. In 2002, we also recognized a prolonged decline in our remaining investment in Tele2 AB of $119,138,000
recorded in the profit and loss account. In addition, during 2002, we recognized an impairment on our investments in Modern Holdings Incorporated (formerly known as XSource) and Great
Universal, Inc., totaling $12,077,000 due to uncertainty concerning its recoverability. See Note 22 of the "Notes to the Consolidated Financial Statements".

Interest expenses.Interest expense for the year ended December 31, 2002 decreased by 11% to $185,959,000 from
$209,912,000 in 2001. This decrease arose from the repayment of debt during the year and, to a lesser extent, from the repurchase of $44,000,000 nominal value of our 13.5% Senior Subordinated Notes.

Exchange losses.Net exchange losses for the year ended December 31, 2002 were $23,483,000 compared to $17,313,000 for
2001, an increase of 36% largely due to the sharp devaluation of the peso in Argentina and losses on the Toronto Dominion loan which was denominated in Swedish krona.

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Charge for taxes.The net tax charge for 2002 increased to $22,734,000 from $8,217,000 in 2001 for two reasons. Firstly,
increased profitability throughout the group resulted in higher tax charges in 2002. Secondly, a tax provision that was established at the date of the formation of the group was reversed,
significantly reducing the tax charge in 2001. See "Certain Relationships and Related Party TransactionsHistory and Merger Warrants".

Net loss for the year.The net loss for the year ended December 31, 2002 was $385,143,000 compared to $138,053,000 in
2001 for the reasons stated above.

Geographical Segment Information

The table below sets forth our revenue by geographical segment for the periods indicated.

|                                         |                   | Year Ended December 31, |      
|---------------------------------------- | ----------------- | ----------------------- | -----
|
|
|MIC Asia                                 |                   | 280,956                 |      
|                                         | Of which divested |                         |     
|MIC Latin America                        |                   | 270,664                 |      
|                                         | Of which divested |                         | 5,926
|MIC Africa                               |                   | 84,858                  |      
|Other                                    |                   | 10,626                  |      
|                                         | Of which divested |                         | 250  
|MIC Systems (divested in 2002)           |                   |                         |      
|FORA Telecom (Russia) (divested in 2001) |                   |                        |      
|Unallocated items                        |                   |                        |      
|Inter-segment eliminations               |                   |                        |      
|                                         |                   |                         |      
|Total revenue                            |                   | 647,104                 |      
|                                         |                   |                         |      

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

|                                |  | 2003 |   | 2002 |   | 2001 |  
|------------------------------- |  | ---- | - | ---- | - | ---- | -
|MIC Asia                        |  | 43   | % | 37   | % | 31   | %
|MIC Latin America               |  | 42   | % | 46   | % | 49   | %
|MIC Africa                      |  | 13   | % | 10   | % | 8    | %
|Other                           |  | 2    | % | 2    | % | 2    | %
|MIC Systems (divested in 2002)  |  | 0    | % | 5    | % | 4    | %
|FORA Telecom (divested in 2001) |  | 0    | % | 0    | % | 6    | %
|                                |  |      |   |      |   |      |  
|Total                           |  | 100  | % | 100  | % | 100  | %
|                                |  |      |   |      |   |      |  

Liquidity and Capital Resources

Overview

We believe our working capital is sufficient for our present requirements.

As
at December 31, 2002, on a consolidated basis, we had total outstanding debt and other financing of $1,228,575,000. Of the total indebtedness of the combined ventures,
$189,395,000 represented indebtedness secured by pledged assets, letters of credit or MIC guarantees.

As
a result of liquidity concerns resulting from our substantial indebtedness in 2002, we implemented a restructuring program in 2003. The restructuring program included, in addition to

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divesting
selected assets, (1) the issuance of $562 million principal amount of 11% Senior Notes and $64 million principal amount of 2% Senior Convertible PIK Notes in exchange
for $776 million principal amount of 13.5% Senior Subordinated Notes; (2) the issuance by our subsidiary, Millicom Telecommunications, of approximately $310 million principal
amount of 5% Mandatory Exchangeable Notes, exchangeable into shares of Tele2 AB; (3) the repurchase in private transactions of $57 million and the redemption of $110 million
principal amount of the 11% Senior Notes and (4) the issuance of $550 million of 10% Senior Notes. The interest obligations in respect of the Mandatory Exchangeable Notes are secured by
U.S. government treasury STRIPS, which were purchased by us with a portion of the net proceeds from the offering.

As
at December 31, 2003, we had total consolidated outstanding debt and other financing of $1,276,865,000. Of this amount,



The
outstanding amount under the Toronto Dominion Securities facility was repaid in full in July 2003 with the proceeds of the 5% Mandatory Exchangeable Notes. See "Operating and
Financial Review and ProspectsDescription of Certain IndebtednessMillicom Telecommunications S.A.'s 5% Mandatory Exchangeable Notes". The proceeds from the 5% Mandatory
Exchangeable Notes were also used to repurchase $57 million and redeem $110 million principal amount of the 11% Senior Notes and to purchase U.S. government treasury STRIPS to secure
interest payments on the 5% Mandatory Exchangeable Notes.

The
2% Senior Convertible PIK Notes were convertible at any time into MIC common stock at a conversion price of $2.69 per share ($10.75 before the February 2004 stock split). On
April 26, 2004 MIC called the entire outstanding amount of 2% Senior Convertible PIK Notes Due 2006 (the "2% Notes") in an aggregate principal amount of approximately $160,000 for redemption in
cash in accordance with the terms of the Indenture covering the 2% Notes. An amount of $63,371,000 out of the total $63,531,000 2% Notes was converted into MIC shares before April 26, 2004.
Following these conversions, the total number of outstanding MIC shares is 89,638,927 shares with a par value of $1.50 each.

On
November 25, 2003, we used approximately $273 million of the proceeds of the offering of the 10% Senior Notes to acquire 11% Senior Notes tendered on or prior to
November 18, 2003 in connection with our tender offer and consent solicitation in respect of the 11% Senior Notes. On December 10, 2003, we used approximately $143.8 million of
the net proceeds of the 10% Senior Notes offering to redeem in full the outstanding 11% Senior Notes. We also fully redeemed the 13.5% Senior Subordinated Notes on December 29, 2003 with
another portion of the net proceeds of such offering. As of December 31, 2003, a liability of $103,457,000 was recorded in respect of the embedded derivative on the 5% Mandatory Exchangeable
Notes.

We
expect to meet our payment obligations on our outstanding debt through operating income and cash flows from our operations.

At
the venture level, we seek, in the long term, to finance the costs of developing and expanding cellular operations on a project-by-project basis. Ventures are
typically financed initially by

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contributions
from MIC in the form of equity and, in some cases, debt. In many cases, we seek to replace such debt with third party financing, which after the initial stages of a venture's
development, is typically non-recourse to MIC. Sources of financing at the venture level have included vendor financing provided by equipment suppliers, project financing from commercial
banks and international agencies such as the International Finance Corporation ("IFC") and the Overseas Private Investment Corporation ("OPIC"), bank lines of credit and sales of equity and debt
issued by the venture companies.

We
seek to obtain financing at a venture level in the relevant local currency so as to limit the impact of currency fluctuations, although this is not always possible.

Cash Flows

For the year ended December 31, 2003, cash provided by operating activities was $184,360,000, compared to $72,581,000 for the year ended
December 31, 2002. The increase is mainly due to increased operating profits and lower interest payments.

Cash
used by investing activities was $95,589,000 for the year ended December 31, 2003, compared with cash generated by investing activities of $141,665,000 for the year ended
December 31, 2002. The decrease is mainly due to lower proceeds from the sale of subsidiaries and joint ventures and lower proceeds from the disposal of investments in securities in 2003 as
well as higher purchases of investment in securities and lower purchases of property, plant and equipment.

Financing
activities used total cash of $11,638,000 for the year ended December 31, 2003, compared with $199,780,000 for the year ended December 31, 2002. In 2003, as a
result of the debt restructuring activities, we repaid debt of $899,008,000 while raising an additional $969,607,000 through the issuance of new debt and financing.

The
net cash inflow in the year ended December 31, 2003 was $78,378,000 compared with an inflow of $14,175,000 for the year ended December 31, 2002. Millicom had a closing
cash and cash equivalents balance of $148,829,000 as of December 31, 2003.

In
2002, cash provided by operating activities was $72,581,000, compared with $103,969,000 in 2001. The decrease is mainly due to an additional payment of interest on the 13.5% Senior
Subordinated Notes.

Cash
generated by investing activities was $141,665,000 in 2002, compared with a $167,074,000 usage of cash in 2001. During 2002, we sold part of our interest in Tele2 AB, realizing
proceeds of $167,238,000. In addition, we realized net proceeds of $114,271,000 on the sale of MIC Systems and the final cash received for the Russian operation after expenses amounted to $27,547,000.
The main outflow in 2002 was the purchase of tangible fixed assets for $135,818,000, consisting principally of network equipment. This was to expand coverage and upgrade to new technologies, such as
GSM, and was a decrease from $192,177,000 in 2001.

Financing
activities used total cash of $199,780,000 in 2002, compared with cash provided of $22,576,000 in 2001. In the course of 2002, we used $363,584,000 to repay debt while raising
an additional $182,828,000 through the issuance of debt and other financing.

The
net cash generated in 2002 was $14,175,000 compared with an outflow of $38,645,000 in 2001. We had closing cash and cash equivalents balance of $70,451,000 as of December 31,
2002.

In
recent years, we have sold certain operations and shares in Tele2 AB in order to provide funding and to reduce indebtedness. We may make further asset sales from time to time, by
means of selling all or a part of any existing operation for strategic reasons. Our ability to continue to make asset sales may be restricted by covenants contained in financing agreements, which
would require the consent of the lenders to amend.

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Investments, Capital Expenditures and Divestments

Investments.In September 2003, MIC's operation in El Salvador, Telemovil, entered into a share purchase agreement
(the "Agreement") with the minority shareholders of Telemovil. The Agreement provides for the acquisition by Telemovil of 30% of its own shares for a consideration of $70,000,000 payable over a period
of a maximum of 6 years and an annual dividend premium of $1,000,000, with a
corresponding net present value of $67,371,000. Based on this agreement, MIC regained control and started reconsolidating Telemovil at 100% since September 15, 2003.

In
2003, MIC increased its holding in its operation in Tanzania from 57% to 59.4%.

In
November 2002, we acquired the remaining 30% shareholding in Millicom (Ghana) Limited for a purchase price of $190,000. We also issued a call option to the former shareholder.
The option allows the holder to reacquire the 30% equity stake which he sold to MIC in 2002. The option is exercisable from June 2005 to June 2007.

During
2002, we increased our ownership in Celcaribe, our cellular operation in Colombia to 95.4% as of December 31, 2002, through partial repayment of Celcaribe's debt, which was
treated as a capital increase, and through a capital increase. We subsequently sold our interest in Celcaribe in February 2003.

In
2002, we invested $500,000 in our new venture in Laos.

In
the first quarter of 2001, we increased our beneficial ownership in Celtel Honduras from 25% to 50%.

In
May 2001, a 15% interest in Telemóvil was put to us for a price of $29.2 million. This increased our interest in Telemóvil El Salvador to
70%.

In
March and September 2001, certain shareholders in Celcaribe put a part of their interest to us for a consideration of $20.1 million. In addition, we contributed to a
capital increase in Celcaribe. As a result of the above, as at December 31, 2001, our ownership in Celcaribe had increased to 92.7% from 73.2% at December 31, 2000.

Divestments.In February 2003, we sold our interest in Celcaribe (Colombia) for consideration of $9,876,000, realizing
a gain of $1,819,000.

In
the first half of 2003, we sold 1,044,129 B shares in Tele2 AB to Kinnevik realizing proceeds of $33,291,000.

Following
the sale of our interest in FORA Telecom BV during 2001, we received an additional $30 million in cash proceeds for the reasons described below. In addition, certain
loans for which we were liable were settled at less than their carrying value. The amount realized on these less costs incurred in the acquisition of the licenses, resulted in a net gain of
$30,859,000 in 2002.

In
December 2002, we sold our cellular operation in the Philippines for a nominal sum, recognizing a loss of $35,988,000.

In
November 2002, we completed the disposal of MIC Systems, including Mach, realizing a gain of $87,655,000.

In
September 2002, we sold our interest in our cellular operation in the Democratic Republic of Congo, recognizing a loss of $21,000.

In
September 2002, we sold our 100% interest in Liberty Broadband Ltd. (formerly known as Tele2 UK), recognizing a loss of $10,294,000.

In
July 2002, our partner in our cellular operation in Vietnam exercised its options to purchase 10% of the share capital of the company. We recognized a gain of $16,603,000 on
this transaction.

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In May 2002, we sold a 17% interest in MIC Systems BV, the parent company of Mach, to Kinnevik for a total consideration of $17,000,000 in order to make a repayment on the Toronto
Dominion financing. In November 2002, we sold our remaining 83% interest in the subsidiaries of MIC Systems BV for a total consideration of approximately $97,000,000. These proceeds were mainly
used to meet our interest obligation on our outstanding 13.5% Senior Subordinated Notes.

During
the course of 2002, we sold 8,743,110 Tele2 AB class B shares, recognizing a loss of $168,818,000. The proceeds were used to make repayments on the Toronto-Dominion
financing and to meet our interest obligation on our outstanding 13.5% Senior Subordinated Notes.

During
2001, we sold 3,513,000 Tele2 AB class B shares realizing net proceeds of $125.2 million, resulting in an approximate net loss of $15,931,000 over the average book
value.

In
November 2001, we sold 100% of our interest in FORA Telecom BV, our Russian cellular telephony operations, to Tele2 AB. The agreement called for $80 million of Tele2 AB
class B shares, (corresponding to 2,461,449 Tele2 AB class B shares), to be exchanged for the assets plus a maximum of an additional $30,000,000 depending on the outcome of GSM license
applications for three of our existing cellular telephony operations in Russia. Upon execution of the sale agreement, we agreed to assign deposits held for loans by Banque Invik and waived all
intercompany balances between the Russian operations and ourselves. The total disposal resulted in a $6.7 million non-cash gain recognized in 2001.

In
September 2001, we sold our 24.5% stake in SkyCell Communications Limited, the Indian cellular company operating in Chenai (formerly known as Madras), to Bharti
Tele-Ventures Limited. The sale resulted in a $28,354,000 gain.

Capital Expenditure

Our capital expenditure by geographical region has been as follows during the periods indicated:

|                  |  | For the Years
Ended December 31,
|----------------- |  | --------------------------------
|
|
|MIC Asia          |  | 57,757                          
|MIC Latin America |  | 22,057                          
|MIC Africa        |  | 24,002                          
|MIC Systems       |  |                                
|Other             |  | 12                              
|                  |  |                                 
|Total             |  | 103,828                         
|                  |  |                                 

The
main expenditures were for the introduction of digitalization in Latin America, Asia and Africa and the expansion of existing networks both in terms of areas covered and capacity.

Based
on existing operations and current conditions, we expect to incur capital expenditures of approximately $150,000,000 over the next 12 months.

We
expect to direct our capital expenditures towards the roll out of GSM in Paraguay, Guatemala, Honduras, El Salvador and Pakistan in 2004, and to provide additional capacity to meet
expected subscriber demand.

We
expect to fund such expenditures from operating cash flow.

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Gain and Loss on Exchange, Disposal and Write-down of Assets

|Market                       |  | Ownership |   | Approximate
Population
Covered |  | Number of
Subscribers |  | Price(3) |  | Debt
Assumed by
Purchaser |     | Date of Sale              
|---------------------------- |  | --------- | - | ------------------------------ |  | --------------------- |  | -------- |  | ------------------------- | --- | --------------------------
|
|Colombia                     |  | 95.4      | % | 8.7                            |  | 237,686               |  | 99.0     |  | 86.5                      |     | February 2003             
|MIC Systems                  |  | 100       | % |                               |  |                      |  | 114.0    |  |                          |     | May 2002 and November 2002
|Democratic Republic of Congo |  | 50.9      | % | 55.2                           |  |                      |  | 1.5      |  |                          |     | September 2002            
|Philippines(1)               |  | 40.0      | % | 84.0                           |  | 29,896                |  | nominal  |  | 29.5                      | (2) | December 2002             
|Russia                       |  | From 20   | % | 47.5                           |  | 236,516               |  | 110.0    |  |                          |     | November 2001             
|                             |  | to 100    | % |                                |  |                       |  |          |  |                           |     |                           
|IndiaMadras                 |  | 24.5      | % | 5.7                            |  | 99,023                |  | 21.1     |  |                          |     | September 2001            

---

Operational financing

At the venture level there are a number of significant debt financings, described in detail at "Description of Certain IndebtednessOperational
Financing".

In
June 2001, Telecel, our Bolivian operation, signed financing agreements in the amount of $25,000,000 with the International Finance Corporation ("IFC") and $10,000,000 with the
Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden, N.V. ("FMO"), also known as the Netherlands Development Finance Company. In addition, in November 2001, Telecel signed a
financing agreement in the amount of approximately $10,000,000 with Bayerische Landesbank Girozentrale ("Bayerische"). All three of these financings are guaranteed by MIC. The IFC and FMO financings
bear interest at LIBOR plus 3.00% and are repayable in installments beginning in December 2002 until December 2006. The Bayerische financing bears interest at LIBOR plus 0.90%. Among other
things, each financing requires Telecel to maintain certain financial covenants, namely a debt to equity ratio, debt to EBITDA ratio and long-term debt service coverage. Since
April 1, 2002, Telecel has been in breach of the debt to EBITDA ratio and the long-term debt service coverage contained in each of the three facilities, and the outstanding balances
have been re-classified as short-term financing. Telecel has entered into a standstill agreement with the IFC, FMO and Bayerische pursuant to which each has agreed, absent a
deterioration in the credit of Telecel or MIC, not to accelerate payment of the obligations under their respective facilities until Telecel's 2003 audited financials become available, so long as MIC
continues to assist Telecel in making scheduled repayments. There can be no assurance, however, that Telecel will be able to resolve this matter satisfactorily or that the lenders will not seek to
accelerate repayment of the outstanding balances upon expiration of the standstill agreements. As of December 31, 2003, $28,765,000 was outstanding related to these financings.

Corporate financing

In June 1996, MIC issued $962,000,000 principal amount at maturity of 13.5% Senior Subordinated Notes due June 2006. The 13.5% Senior Subordinated
Notes were issued at 52.075% of their principal amount, and the purchase discount on the Senior Subordinated Notes accreted at a rate of 13.5% compounded semiannually from issuance until
June 1, 2001. The net cash proceeds to MIC from the issuance of the 13.5% Senior Subordinated Notes, after deducting discount and estimated expenses,

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were
$483,433,000. The 13.5% Senior Subordinated Notes began accruing cash interest on June 1, 2001 at a rate of 13.5%.

During
2002, MIC purchased 13.5% Senior Subordinated Notes with a face value of $44,000,000 at market prices at the time. As of December 31, 2002, MIC had offset $5,461,000, as
compared with $7,399,000 in 2001, of deferred financing fees against the value of the 13.5% Senior Subordinated Notes.

As
of December 31, 2002, MIC had total consolidated debt of $1,228,575,000 which required substantial free cash flows (i.e., cash flows generated from operations and available for
repayment of debt and interest) to finance interest payments. During 2002, operating cash flows available to MIC were insufficient to pay interest on the 13.5% Senior Subordinated Notes as it became
due, and there was a risk that the cash flows generated and our planned dispositions would be insufficient to pay the interest on the 13.5% Senior Subordinated Notes as it became due. Reflecting the
risks involved with our leverage, the market price of the 13.5% Senior Subordinated Notes had traded significantly below par value. In order to reduce the extent of our payments, on January 21,
2003, MIC made an exchange offer and consent solicitation to holders of the 13.5% Senior Subordinated Notes. On May 8, 2003, MIC announced the closing of this offer with the tendering of
approximately 85% of the 13.5% Senior Subordinated Notes. Under the terms of this exchange, holders who tendered their 13.5% Senior Subordinated Notes received $720 of our newly issued 11% Senior
Notes due 2006 and $81.70 of our newly issued 2% Senior Convertible PIK Notes due 2006 per $1,000 of 13.5% Senior Subordinated Notes. In addition, in consideration for consenting to certain amendments
to the indenture under which the 13.5% Senior Subordinated Notes were issued, eligible holders who consented to the amendments to the indenture received $50.00 in cash for each $1,000 in principal
amount of 13.5% Senior Subordinated Notes they tendered. Following the successful completion of the exchange offer, MIC had significantly reduced its overall level of indebtedness and interest burden,
improved its near-term liquidity position and created greater ongoing financial and operating flexibility.

On
August 8, 2003, our subsidiary, Millicom Telecommunications S.A., issued for an aggregate value of SEK 2,555,994,000 ($310 million) 5% Mandatory Exchangeable Notes,
which are mandatorily exchangeable into our Tele2 AB shares and in respect of which no cash repayment of principal is required. In addition, our interest obligations in respect of the Mandatorily
Exchangeable Notes have been secured by U.S. government treasury STRIPS, which were purchased by us with a portion of the net proceeds from the offering. We used remaining proceeds from the
Mandatorily Exchangeable Notes in part to repurchase and redeem $167 million of the 11% Senior Notes.

We
used a portion of the net proceeds from our recent $550,000,000 offering of 10% Senior Notes to repay in full $395 million of the 11% Senior Notes and used another portion of
such net proceeds to repay in full $137 million of the 13.5% Senior Subordinated Notes, which in each case were outstanding as of the date of such offering. See "Liquidity and Capital
ResourcesOverview".

As
of December 31, 2003, our total consolidated indebtedness was $1,276,865,000 (including the embedded derivative on the 5% Mandatory Exchangeable Notes for an amount of
$103,457,000) and our total consolidated net indebtedness (representing total consolidated indebtedness after deduction of cash, cash equivalents and short-term time deposits) was
$1,095,156,000.

On
April 26, 2004 MIC called the entire outstanding amount of 2% Senior Convertible PIK Notes Due 2006 (the "2% Notes") in an aggregate principal amount of approximately $160,000 for
redemption in cash in accordance with the terms of the Indenture covering the 2% Notes. An amount of $63,371,000 out of the total $63,531,000 2% Notes was converted into MIC shares before
April 26, 2004. Following these conversions, the total number of outstanding MIC shares is 89,638,927 shares with a par value of $1.50 each.

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During
the years ended December 31, 2001 and 2002, we upstreamed $55.1 and $96.7 million, respectively, of which $3.4 million and $8.8 million, respectively,
was from divested operations. For the year ended December 31, 2003, we upstreamed $129.3 million.

Other Short-Term Liabilities

As of December 31, 2003, we had a total of $403,413,000 of short-term liabilities, including $132,664,000 of short-term debt and
other financing. Management expects a substantial portion of such short-term debt to be extended prior to maturity.

As
of December 31, 2003, we had commitments to purchase within one year network equipment, land and buildings and other fixed assets with a value of $39,472,000 from a number of
suppliers.

As
of December 31, 2003, we had outstanding letters of credit and guarantees of $29,187,000 and $124,410,000, respectively.

Contractual Obligations

We have various contractual obligations to make future payments, including debt agreements and lease obligations. The following table summarizes our obligations
under these contracts due by period as of December 31, 2003.

|                    |  | Within
1 year |  | Within
23 years |  | Within
45 years |  | After
5 years |  | Total    
|------------------- |  | ------------- |  | ---------------- |  | ---------------- |  | ------------- |  | ---------
|
|Debt                |  | 132,664       |  | 505,640          |  | 15,565           |  | 573,074       |  | 1,226,943
|Operating leases    |  | 310           |  | 417              |  | 237              |  | 125           |  | 1,089    
|Financial leases    |  | 137           |  | 23               |  |                 |  |              |  | 160      
|Capital expenditure |  | 39,472        |  |                 |  |                 |  |              |  | 39,472   
|                    |  |               |  |                  |  |                  |  |               |  |          
|Total               |  | 172,583       |  | 506,080          |  | 15,802           |  | 573,199       |  | 1,267,664
|                    |  |               |  |                  |  |                  |  |               |  |          

The
following table summarizes our obligations under these contracts due by period as of December 31, 2002.

|                    |  | Within
1 year |  | Within
23 years |  | Within
45 years |  | After
5 years |  | Total    
|------------------- |  | ------------- |  | ---------------- |  | ---------------- |  | ------------- |  | ---------
|
|Debt                |  | 156,666       |  | 143,119          |  | 935,342          |  | 1,807         |  | 1,236,934
|Operating leases    |  | 246           |  | 427              |  | 295              |  | 196           |  | 1,164    
|Financial leases    |  | 290           |  | 164              |  | 2                |  |              |  | 456      
|Capital expenditure |  | 11,867        |  |                 |  |                 |  |              |  | 11,867   
|                    |  |               |  |                  |  |                  |  |               |  |          
|Total               |  | 169,069       |  | 143,710          |  | 935,639          |  | 2,003         |  | 1,250,421
|                    |  |               |  |                  |  |                  |  |               |  |          

Off-balance Sheet and Other Arrangements

The Tele2 AB class B shares underlying the 5% Mandatory Exchangeable Notes have been lent to Deutsche Bank AG London pursuant to a securities lending
arrangement. Deutsche Bank AG London may sell or on-lend the Tele2 AB class B shares it has borrowed from Millicom Telecommunications under the securities lending agreement.
Deutsche Bank AG London is contractually required to deliver to Millicom Telecommunications such Tele2 AB class B shares upon requisite notice to Deutsche Bank AG London by Millicom
Telecommunications, if (1) Millicom Telecommunications requires Tele2 AB class B shares to satisfy its obligations from time to time to deliver Tele2 AB class B shares upon
exchange of the 5% Mandatory Exchangeable Notes by the noteholders or (2) specified bankruptcy related events with respect to Deutsche Bank AG London or defaults in the performance by Deutsche
Bank AG London of its obligations under the securities lending agreement have occurred. Millicom

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Telecommunications
is obligated to deliver Tele2 class B shares upon exchange of the 5% Mandatory Exchangeable Notes even in the event of a failure of Deutsche Bank AG London to redeliver to
Millicom Telecommunications Tele2 class B shares. Millicom Telecommunications' obligations in respect of the delivery of those shares has not been guaranteed by MIC. See "Operating and
Financial Review and ProspectsDescription of Certain IndebtednessMillicom Telecommunications S.A.'s 5% Mandatory Exchangeable Notes".

MIC
has a number of commitments and contingencies, as described in Note 28 to the consolidated financial statements.

Description of Certain Indebtedness

10% Senior Notes

On November 24, 2003, MIC issued $550 million aggregate principal amount of 10% Senior Notes due 2013. The 10% Senior Notes were issued pursuant to
an indenture dated November 24, 2003 between MIC and The Bank of New York, as Trustee (the "10% Senior Notes Indenture").

The
10% Senior Notes are senior, unsecured obligations of MIC. The 10% Senior Notes bear interest at 10% per annum, payable semiannually in arrears on June 1 and December 1
of each year, with a final maturity on December 1, 2013. The interest on the 10% Senior Notes is payable in cash.

At
any time and from time to time on or after December 1, 2008, MIC may redeem the 10% Senior Notes, in whole or in part, at a redemption price equal to the percentage of
principal amount set forth below plus accrued and unpaid interest to the redemption date.

12-month period commencing December 1 in Year

Percentage2008

105.000
%2009

103.333
%2010

101.667
%2011 and thereafter

100.000
%


At
any time and from time to time prior to December 1, 2006, MIC may redeem 10% Senior Notes with the net cash proceeds received by it from any sale of its common stock at a
redemption price equal to 110% of the principal amount plus accrued and unpaid interest to the redemption date, in an aggregate principal amount for all such redemptions not to exceed 35% of the
original aggregate principal amount of the 10% Senior Notes (including additional notes, if any, issued under the 10% Senior Notes Indenture); provided that

The
10% Senior Notes may also be redeemed at MIC's option in whole, but not in part, at any time at a price equal to the principal amount thereof, together with accrued and unpaid
interest, if any, and other amounts due to the date of redemption, if MIC (or its successor) becomes obligated to pay certain additional amounts as a result of any change in, or amendment to, the laws
(or any regulations or rulings promulgated thereunder) of Luxembourg (or such successor's jurisdiction) or their respective political subdivisions or taxing authorities, or any change in the
application or official interpretation of such laws, regulations or rulings, which change or amendment becomes effective after the issue date of the 10% Senior Notes (or the date such successor
assumes MIC's obligations under the 10% Senior Notes).

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The
10% Senior Notes Indenture contains certain covenants that, among others, restrict our ability to (i) incur additional debt; (ii) make certain payments, including
dividends or other distributions, with respect to our capital stock, or prepayments of subordinated debt; (iii) make certain investments or sell assets; (iv) create certain liens or
engage in sale and leaseback transactions; (v) provide guarantees for certain debt; (vi) enter into restrictions on the payment of dividends and other amounts; (vii) engage in
certain transactions with affiliates; (viii) incur indebtedness other than at the MIC or operating subsidiary levels; (ix) consolidate, merge or transfer all or substantially all our
assets; and (x) enter into other lines of business.

Upon
the occurrence of a change of control triggering event, which is defined in the 10% Senior Notes Indenture as a rating decline and change of ownership, holders of the 10% Senior
Notes may require MIC to purchase all or a portion of the 10% Senior Notes at a purchase price of 101% of the stated principal amount of the 10% Senior Notes, plus accrued and unpaid interest, if any,
on the 10% Senior Notes to the date of purchase.

Under
the 10% Senior Notes Indenture, MIC may not incur indebtedness unless the "leverage ratio" would be less than 4 to 1. The leverage ratio is the ratio of the consolidated principal
amount of net debt outstanding to four times operating income. Even if MIC ceases to meet the leverage ratio requirement, it may incur debt under several "debt baskets" as set forth in the 10% Senior
Notes Indenture.

13.5% Senior Subordinated Notes

In June 1996, MIC issued $962,000,000 principal amount at maturity of 13.5% Senior Subordinated Notes. MIC redeemed the 13.5% Senior Subordinated Notes in their
entirety on December 29, 2003 in connection with the exchange offer and consent solicitation to holders of the 13.5% Senior Subordinated Notes. See "Recent DevelopmentsResults of
Tender Offer and Consent Solicitations" and "Operating and Financial Review and ProspectsLiquidity and Capital ResourcesCorporate Financing" above.

11% Senior Notes and 2% Senior Convertible PIK Notes

In May 2003, MIC issued $562 million of 11% Senior Notes due 2006 and approximately $64 million of 2% Senior Convertible PIK Notes due 2006
in exchange for $776 million of 13.5% Senior Subordinated Notes. The 11% Senior Notes were issued pursuant to an indenture dated May 8, 2003 between MIC and The Bank of New York, as
Trustee, and the 2% Senior Convertible PIK Notes were issued pursuant to an indenture dated May 8, 2003 between MIC and The Bank of New York, as Trustee (the "2% Senior Convertible PIK Notes
Indenture").

The
11% Senior Notes and the 2% Senior Convertible PIK Notes have been redeemed in full and are no longer outstanding. See "Recent DevelopmentsResults of Tender Offer and
Consent Solicitations" and "Operating and Financial Review and ProspectsLiquidity and Capital ResourcesOverview".

On
March 19, 2004 MIC formally requested the Trustee of the 2% PIK Notes to call the entire outstanding amount of the 2% PIK Notes for redemption in cash in accordance with the
terms of the indenture covering the 2% PIK Notes. On April 26, 2004 MIC called the entire outstanding amount of 2% Senior Convertible PIK Notes Due 2006 (the "2% Notes") in an aggregate
principal amount of approximately $160,000 for redemption in cash in accordance with the terms of the Indenture covering the 2% Notes. An amount of $63,371,000 out of the total $63,531,000 2% Notes
was converted into MIC shares before April 26, 2004. Following these conversions, the total number of outstanding MIC shares is 89,638,927 shares with a par value of $1.50 each. See "Recent
DevelopmentsResults of Tender Offer and Consent Solicitations".

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Millicom Telecommunications S.A.'s 5% Mandatory Exchangeable Notes

On August 7, 2003, Millicom Telecommunications, MIC's wholly owned subsidiary, issued for an aggregate value of SEK 2,555,994,000 (approximately
$310 million) 5% Mandatory Exchangeable Notes, which are exchangeable into Tele2 AB class B shares. The 5% Mandatory Exchangeable Notes may be exchanged either voluntarily at the option
of the noteholders or mandatorily by Millicom Telecommunications as described below. The 5% Mandatory Exchangeable Notes will be exchangeable for an aggregate of up to 8,968,400 of the 8,968,414 Tele2
AB class B shares which MIC beneficially owned through Millicom Telecommunications at the time of the offering of the 5% Mandatory Exchangeable Notes. The number of Tele2 AB class B
shares that Millicom Telecommunications is obligated to deliver upon exchange of the 5% Mandatory Exchangeable Notes is based on a formula that takes into account the market price of the Tele2 AB
class B shares prior to any exchange. Under the formula, Millicom Telecommunications could retain up to 30% of the increase in value of the Tele2 AB class B shares over the designated
reference price of SEK 285 per share. As a result, at August 6, 2006 or earlier, if all of the 5% Mandatory Exchangeable Notes have been redeemed and exchanged prior to that date, Millicom
Telecommunications could own up to approximately 23% of the 8,968,400 Tele2 AB class B shares underlying the 5% Mandatory Exchangeable Notes.

The
5% Mandatory Exchangeable Notes bear interest on the U.S. dollar equivalent amount of each note at a rate of 5% per annum. The aggregate U.S. dollar equivalent amount at the time of
issuance of the 5% Mandatory Exchangeable Notes was approximately $310 million.

The
5% Mandatory Exchangeable Notes may be exchanged voluntarily at the option of the noteholder at any time during the period commencing on September 17, 2003 and ending on the
25th trading day prior to August 7, 2006, which is expected to be July 11, 2006. In addition, the 5% Mandatorily Exchangeable Notes may be exchanged voluntarily at the option of
the holder in the event of certain changes in tax laws and in the event of a takeover offer in respect of Tele2 AB.

Unless
otherwise previously redeemed and exchanged or purchased and canceled, each 5% Mandatory Exchangeable Note will be mandatorily exchanged by Millicom Telecommunications on
August 7, 2006. If an event of default occurs under the trust deed governing the 5% Mandatory Exchangeable Notes, Millicom Telecommunications will be required to redeem and exchange the
outstanding 5% Mandatory Exchangeable Notes in whole but not in part.

Millicom
Telecommunications' obligations in respect of the exchange of the 5% Mandatory Exchangeable Notes have been secured by, among other things:



Millicom
Telecommunications has secured its obligations in respect of interest payments under the 5% Mandatory Exchangeable Notes by granting a security interest in certain U.S. Treasury
STRIPS which were purchased by Millicom Telecommunications with a portion of the net proceeds of the offering. Millicom Telecommunications S.A. may not dispose of such securities without the consent
of the trustee under the trust deed governing the 5% Mandatory Exchangeable Notes. Millicom Telecommunications' obligations to pay interest on the 5% Mandatory Exchangeable Notes, including

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additional
amounts payable to noteholders if cash dividends or other cash distributions are made in respect of the Tele2 AB class B shares, have been guaranteed by MIC. Under the terms of the
5% Mandatory Exchangeable Notes, Millicom Telecommunications will be required to pay to the noteholders an amount equal to the amount of any cash dividend or distribution on the Tele2 AB
class B shares underlying the exchangeable notes.

Of
the net proceeds of the offering of 5% Mandatory Exchangeable Notes, which amounted to SEK 2,483 million ($300.3 million), Millicom Telecommunications used
$45.3 million to purchase U.S. Treasury STRIPS for purposes of securing the payment of interest on the 5% Mandatory Exchangeable Notes and approximately $60 million to repay borrowings
under a short-term credit facility which had been used to refinance Millicom Telecommunications' facility with Toronto Dominion Securities.

Pursuant
to the securities lending agreement entered into with Deutsche Bank AG London (the "Securities Lending Agreement"), Millicom Telecommunications agreed to lend to and delivered
to Deutsche Bank AG London, on or about July 22, 2003, 8,968,414 Tele2 AB class B shares, of which 8,968,400 currently remain borrowed. Deutsche Bank AG London may sell or
on-lend the Tele2 AB class B shares it has borrowed from Millicom Telecommunications under the Securities Lending Agreement, subject to compliance with applicable securities laws.
Millicom Telecommunications may require Deutsche Bank AG London to deliver to it Tele2 AB class B shares by providing requisite notice to Deutsche Bank AG London, if (i) Millicom
Telecommunications requires Tele2 AB class B shares to satisfy its obligations from time to time to deliver Tele2 AB class B shares upon exchange of the 5% Mandatory Exchangeable Notes
by the noteholders or (ii) specified bankruptcy related events with respect to Deutsche Bank AG London or defaults in the performance by Deutsche Bank AG London of its obligations under the
Securities Lending Agreement have occurred. Under the Securities Lending Agreement, Deutsche Bank AG London has agreed that if any dividends or other distributions are made in relation to the borrowed
Tele2 AB class B shares, it shall pay and deliver to Millicom Telecommunications a sum of money or property equivalent to the dividends or distributions. We have been informed by our advisors
that, while the issue is not free from doubt, the Securities Lending Agreement may have inadvertently resulted in a technical breach of certain negative covenants relating to transfers of assets
contained in the respective indentures governing the 11% Senior Notes and the 2% Senior Convertible PIK Notes. On November 13, 2003, we announced that, pursuant to a tender offer and consent
solicitation in respect of the 11% Senior Notes and a consent solicitation in respect of the 2% Senior Convertible PIK Notes, we had received the requisite consents of the holders of the relevant
notes to the waiver of this possible past default arising from the 5% Mandatory Exchangeable Notes and the Securities Lending Agreement. See "Recent DevelopmentsResults of Tender Offer
and Consent Solicitations".

Other Debt

A portion of MIC's share of the indebtedness of its ventures is secured by cash deposits and standby letters of credit issued at the request of, and guaranteed
by, MIC. Such corporate guarantees, cash deposits and standby letters of credit issued at MIC's request and guaranteed by MIC secured liabilities of $124,410,000 at December 31, 2003.

Operational financing



Telecel financed the expansion and further digitalization of its cellular network and refinanced existing debt by borrowings under:



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MIC
has guaranteed each of these loans, and debt owed by Telecel to MIC is subordinated in right of payment to the loans. As security for its obligations under these loans, Telecel has
also granted a security interest in respect of certain of its assets.

Since
April 1, 2002, Telecel has been in breach of certain financial covenants contained in each of the three facilities. Telecel has entered into a standstill agreement with the
IFC, FMO and Bayerische pursuant to which each has agreed, absent a deterioration in the credit of Telecel or MIC, not to accelerate payment of the obligations under their respective facilities until
Telecel's 2003 audited financials become available, so long as MIC continues to assist Telecel in making scheduled repayments. There can be no assurance, however, that Telecel will be able to resolve
this matter satisfactorily or that any of the lenders will not seek to accelerate repayment of the outstanding balances upon expiration of the standstill agreements.



In connection with the purchase of GSM equipment, Comcel entered into a facility agreement dated September 8, 2003 with a syndicate of banks led by Banco
G&T Continental. The facility agreement provides for an amortizing seven-year term loan facility in an aggregate principal amount of Quetzal 400,000,000 (approximately $40,000,000).
Amortization payments are payable semiannually in the amount of Quetzal 33,333,000 each and are scheduled to begin in March 2005. Interest is payable at an annual rate of 8.00% for the first
year of the loan and is subject to adjustment semiannually thereafter. The facility agreement contains financial covenants, including covenants to maintain minimum debt to EBITDA and debt service
coverage ratio, as well as negative covenants that restrict Comcel's ability to, among others things, pay dividends.

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In connection with the acquisition by Telemovil El Salvador of 30% of its own shares a debt of $51,517,000 is outstanding as of December 31, 2003. This
debt is guaranteed by MIC.



In 2003, Pakcom entered into a long-term financing agreement with National Bank of Pakistan for an amount of Rupees 1,250 million (approximately $21,834,000)
bearing interest at 4.1% repayable in 2007.

During
2003 Paktel entered into a Sale and Purchase Agreement of its existing and future receivables with SPV Limited, a special purpose vehicle incorporated in Pakistan. The total
receivables sold amount to Rupees 1,308 million (approximately $22,900,000) and their acquisition price amounts to Rupees 990 million (approximately $17,300,000). SPV Limited has financed this
acquisition by the issuance of Term Finance Certificates ("TFC") that have been underwritten by financial institutions for an aggregate amount of Rupees 840 million (approximately $14,700,000)
and by Pakcom for an amount of Rupees 150 million (approximately $2,600,000). As MIC bears the risks associated with this financing transaction, MIC has consolidated SPV Limited in its
financial statements. As of December 31, 2003, the outstanding amount of TFC was $15.6 million.

In
November 2002, Pakcom signed a syndicated finance agreement for an aggregate of Rupees 800 million (approximately $13,700,000). For this agreement, Faysal Bank Limited
acts as security agent and Standard Chartered Bank acts as facility agent. The facility is repayable in monthly installments until December 31, 2004 and bears interest at the State Bank of
Pakistan discount rate plus 1.75%, with a floor rate of 11.75%. As security for its obligations under the agreements, Pakcom has assigned certain receivables from PTCL and created a first charge by
way of hypothecation in favor of the security agent on certain of Pakcom's present fixed assets.



Celltel entered into a term facility agreement dated September 15, 2000, with ABN-Amro as arranger, pursuant to which Celltel borrowed Rupees
1,534,000,000 (approximately $20,000,000). This facility bears interest at the Sri Lanka treasury bill rate plus 3.00%. Payments of principal and interest are repayable in 13 quarterly installments
commencing two years from the date of the agreement. The agreement contains financial covenants, including covenants to maintain minimum debt to EBITDA, debt service coverage ratio and interest cover
ratio, as well as negative covenants that restrict Celltel's ability to, among other things, pay dividends. As security for its obligations under the agreement, the agreement provides for Celltel's
creation of mortgages over its assets.



In June 2003, MIC Tanzania entered into a syndicated term loan facility agreement with Standard Chartered Bank Tanzania Limited as arranger, pursuant to
which MIC Tanzania may borrow up to an aggregate of $15,000,000 ($6,000,000 million in U.S. dollars and $9,000,000 in Tanzania Shilling). This facility bears interest at, in the case of
advances under the facility in U.S. dollars, LIBOR plus 4.50% and, in the case of advances in Tanzania Shilling, at the Treasury Bill Rate plus 4.50%, provided that, in the case of advances under the
facility in Tanzania Shilling, the minimum applicable interest rate will be 12.00% per annum. As security for its obligations under the agreement, the agreement provides for a fixed and floating
charge over MIC Tanzania's assets.

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ITEM 6.    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.

Board of Directors

Directors

MIC's directors are as follows:

|Name                  |  | Position        |  | Year
Appointed |  | Date of
Expiration
of Term
|--------------------- |  | --------------- |  | -------------- |  | --------------------------
|E. Håkan Ledin        |  | Former Chairman |  | 1990           |  | May 2004                  
|Vigo Carlund          |  | Member          |  | 2002           |  | May 2004                  
|Ernest Cravatte       |  | Member          |  | 2003           |  | May 2004                  
|Lars-Johan Jarnheimer |  | Member          |  | 2001           |  | May 2004                  
|Daniel Johannesson    |  | Chairman        |  | 2003           |  | May 2004                  
|Raymond Kirsch        |  | Member          |  | 1994           |  | May 2004                  
|Michel Massart        |  | Member          |  | 2003           |  | May 2004                  
|Cristina Stenbeck     |  | Member          |  | 2003           |  | May 2004                  

E. Håkan Ledin, former Chairman of the Board of Directors, passed away peacefully at the age of 66 on March 8, 2004.
Mr. Ledin provided great services to MIC contributing to the success of the Group. He was President of Millicom International Holdings Limited, a subsidiary of Mil-Inc, from
1987 until December 1990, when Millicom International Holdings Limited became part of MIC and Mr. Ledin became an Executive Vice President of MIC. He became Vice Chairman in
May 1995 and was appointed Chairman in August 2002. Previously, he was Group Executive Vice President and a director of Telefonaktiebolaget LM Ericsson as well as Chairman and President
of Ericsson Inc. He became a director of MIC in May 1991. Mr. Ledin was also Vice Chairman of Tele2 AB.

Daniel Johannesson, age 61, has held a number of executive positions at major Swedish companies including Senior Executive of the
construction company Skanska, where he was responsible for their telecommunications and facilities management interests, and Chief Executive Officer of Industriförvaltnings AB Kinnevik
and national railway operator, SJ. On March 8, 2004, Mr. Johannesson was appointed as Chairman of the Board of Directors of MIC.

Vigo Carlund, age 57, non-executive member, has worked for the Kinnevik Group since 1968. He previously was Vice President of
Industriförvaltnings AB Kinnevik and became CEO in May 1999. He is also Chairman of Transcom WorldWide S.A., Metro International S.A. and Korsnas AB. He was appointed to the
Board of MIC in 2002 and is also a director of Tele2 AB.

Ernest Cravatte, age 54, non-executive member, is a practicing lawyer in Luxembourg and a former member of the Executive
Management of Banque Generale du Luxembourg. He has also held positions on various banking supervisory committees.

Lars-Johan Jarnheimer, age 44, non-executive member, was appointed to the Board in May 2001. He has been
President and CEO of Tele2 AB since March 1999, and previously was Vice President of Industriförvaltnings AB Kinnevik.

Raymond Kirsch, age 62, non-executive member, is the President and Chief Executive Officer of Banque et Caisse d'Epargne de
L'Etat Luxembourg. He became a director of MIC in May 1994.

Michel Massart, age 52, non-executive member, was appointed to the Board in May 2003. Up to June 2002, he was a
Partner of PricewaterhouseCoopers in Belgium, where he set up the corporate finance department in 1997, and was a former member of the Board of the Institute of Statutory Auditors. He is currently a
professor at Solvay Business School in Brussels, Belgium.

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Cristina Stenbeck, age 26, is Vice Chairman of the Board of Directors of Industriförvaltnings AB Kinnevik, Invik &
Co. and Metro International, and a member of the Board of Directors of Modern Times Group, Tele2 AB and Transcom WorldWide S.A.

Board Practices

Directors' Service Agreements.None of MIC's directors has entered into service agreements with MIC or its subsidiaries
providing for benefits upon termination of employment.

Audit Committee.MIC's directors have established an Audit Committee that convenes at least four times a year, comprising
Mr. Michel Massart, Mr. Ernest Cravatte and Mr. Raymond Kirsch, each of whom are directors of MIC. This committee has responsibility for planning and reviewing MIC's annual and
quarterly reports and accounts and the involvement of MIC's auditors in that process, focusing particularly on compliance with legal requirements and accounting standards, and ensuring that an
effective system of internal financial controls is maintained. The ultimate responsibility for reviewing and approving MIC's annual and quarterly reports and accounts remains with MIC's Board of
Directors.

Remuneration Committee.MIC's directors have established a Remuneration Committee comprised of Mr. Marc Beuls, MIC's
Chief Executive Officer, and previously Mr. E. Håkan Ledin, MIC's former Chairman. Since March 8, 2004, Mr. Johannesson took over as Chairman of the Board. This
committee reviews and makes recommendations to MIC's Board of Directors regarding its compensation policies and all forms of compensation to be provided to our executive officers and other employees.

Senior Management

|Name            |  | Position                             
|--------------- |  | -------------------------------------
|Marc Beuls      |  | President and Chief Executive Officer
|Mikael Grahne   |  | Chief Operating Officer              
|Bruno Nieuwland |  | Chief Financial Controller           
|Won-Suck Song   |  | Executive Vice PresidentOperations  
|Judy Tan        |  | Chief of FinanceGlobal Operations   

Marc Beuls, age 47, President and Chief Executive Officer, was promoted to his current position in January 1998 from his position
as Senior Vice President Finance. Mr. Beuls joined MIC in March 1992. Prior to joining MIC he held several positions with Generale Banque Belgium, both as branch manager and senior trade
finance manager for emerging markets. Mr. Beuls is also a non-executive director of Tele2 AB and a non-executive director at Banque Invik.

Mikael Grahne, age 51, joined MIC in February 2002, having previously been President of Seagram Latin America. Prior to this he
held various senior management positions at PepsiCo and at Procter & Gamble. Mr. Grahne has an MBA from the Swedish School of Economics in Helsinki.

Bruno Nieuwland, age 33, joined MIC in December 2003. He was previously a Senior Manager with Ernst & Young. He became a
chartered accountant in Luxembourg in 1998 and was a member of the quality control commission at the IRE (institute of chartered accountants in Luxembourg). He obtained a degree in finance at Solvay
Business School, Brussels.

Won-Suck Song, age 36, was appointed to his current position in October 2002. He started his career with the Kinnevik
Group in 1997, where he held the position of Chief Operating Officer of Metro International before being transferred in June 2001 to Tele2 AB as Executive Vice President.

Judy Tan, age 33, joined MIC in 1998 with responsibility for the Asian operations. She was appointed to her current position in
November 2002 with responsibility for all operating ventures. She

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qualified
as a Certified Public accountant with PricewaterhouseCoopers, Singapore and has an MBA from Imperial College, London.

Remuneration to the Board of Directors and senior executives

Principles

Remuneration of the President & Chief Executive Officer and other senior management comprises an annual base salary, bonus, stock options and other
benefits. Other senior management includes the Chief Operating Officer, the Executive Vice President-Operations, the Chief Financial Controller and the Chief of Finance-Global Operations. The bonus
and stock options programmes are based on actual performance (including individual and Company performance). Bonuses can range between 25% and 75% of the annual base salary. Options are granted once a
year by the Board of Directors. The remuneration of the CEO is approved by the Chairman of the Board of Directors, and the remuneration of senior executives is set by the CEO.

During
2003 the aggregate amount of compensation paid to the Chairman of the Board of Directors of MIC was $96,000 and the aggregate amount paid to other members of the Board of
Directors of MIC was $200,000. The President & Chief Executive Officer of MIC was paid an annual base salary of $1,169,508 in 2003. The aggregate remuneration to the other members of the senior
management of MIC during 2003 was $1,511,217 of which bonus amounted to $193,500 and other benefits $272,466. The bonus for 2003 for the President & Chief Executive Officer and the Chief
Operating Officer have not yet been defined and could reach up to 50% and 75%, respectively, of annual base salary. In addition to his base salary, the pension insurance cost of the President &
Chief Executive Officer for 2003 amounts to $1,636,000 of which $1,326,000 relates to adjustments for prior years. The estimated pension cost for 2003 amounts to $310,000. No pension arrangement
exists for any other member of the senior management. In addition to the above described compensation, a number of options were granted in 2003 to directors and senior management as described in the
table below.

Pension and severance payments

Annual contributions to the pension insurance of the CEO are based on a yearly contribution paid to a third party insurance company. The yearly contribution is
based on the projected entitlement at the time of retirement and is based on an average of the annual base salary of previous years and length of service with the Company.

If
employment of members of the senior management is terminated by MIC, severance payment of up to 12 months salary is payable.

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Options

The following options to purchase shares of MIC common stock with a par value of $1.50 each, issued to directors, officers and employees of MIC were outstanding
as of December 31, 2003.

|Date issued                                                                                                                      |  | Number of
options |  | Exercise price $ |  | Terms of option                                                                                                                                                                  
|-------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ---------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|May 1994, May 1995, May 1996, May 1997, January 1998, May 1998, August 1999, May 2000, December 2001, December 2002 and May 2003 |  | 2,749,708         |  | 3.3236.66       |  | Exercisable over a three-year period in equal installments. Options have an indefinite life.                                                                                     
|May 2003                                                                                                                         |  | 550,500           |  | 3.32             |  | Exercisable over a three-year period in equal installments. Options expire after six years from date of grant.                                                                   
|May 1998, August 1999, May 2000, June 2000, December 2001 and December 2002                                                      |  | 1,220,600         |  | 3.7531.88       |  | Exercisable over a five-year period (1/3 vested after three years, 2/3 vested after four years, 100% vested after five years). Options expire after six years from date of grant.
|                                                                                                                                 |  |                   |  |                  |  |                                                                                                                                                                                  
|Balance as of December 31, 2003                                                                                                  |  | 4,520,808         |  |                  |  |                                                                                                                                                                                  
|                                                                                                                                 |  |                   |  |                  |  |                                                                                                                                                                                  

Of
the above options, 1,880,852 were exercisable at December 31, 2003. During the year ended December 31, 2003, no options were exercised. At December 31, 2002,
1,956,204 (2001: 2,056,371) were exercisable. No options were exercised during 2002 (2001: 444). In 2003, 1,020,696 (2002: 1,706,139) options, were forfeited.

In
February 2003, an Extraordinary General Meeting of MIC passed a resolution approving a reverse share split whereby three existing shares with a par value of $2 each would be
exchanged for one share with a par value of $6 each. In February 2004, an Extraordinary General Meeting of MIC passed a resolution approving a share split whereby one then existing share with a
par value of $6 each would be exchanged for four new shares with a par value of $1.50 each. The number and exercise price of options referred to for periods prior to such date above have been restated
to reflect the share split.



The following table sets forth, as at December 31, 2003, the total amount of MIC common stock and options beneficially owned by the directors, the Chief
Executive Officer and the other members of senior management of MIC. Other senior management includes the Chief Operating Officer, the Executive Vice PresidentOperations, the Chief
Financial Controller and the Chief of FinanceGlobal Operations. Options are granted once a year by the Board of Directors and are approved by the

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Board.
The exercise price of the options equals the market price at date of grant. In May 2003, 947,992 options were granted at a market value of USD 3.32.

|                                        |  | Common Stock |     | Total number of
options(2) |  | Of which Options
granted in 2003
|--------------------------------------- |  | ------------ | --- | -------------------------- |  | --------------------------------
|Chairman of the Board of Directors      |  | 545,396      |     | 633,992                    |  | 34,000                          
|Other members of the Board of Directors |  | 5,566,992    | (1) | 368,656                    |  | 102,000                         
|CEO                                     |  | 65,144       |     | 1,706,660                  |  | 600,000                         
|Other members of the senior management  |  |             |     | 625,040                    |  | 211,992                         

---

Employees

On a proportional basis, Millicom employed an average of 1,917 employees in 2003, of which 622 were employed in Asia, 911 in Latin America, 336 in Africa and 48
in Europe. On a proportional basis, Millicom employed an average of 2,080 employees for the year ended December 31, 2002 (2001: 3,032; 2000: 3,515). Of these, in 2002, 680 were employed in
Asia, 981 in Latin America, 325 in Africa, 89 in Europe and 5 in the United States.

ITEM 7.    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Principal Shareholders

The following table sets forth certain information known to MIC as of December 31, 2003, unless indicated, with respect to beneficial ownership of the MIC
Common Stock, with a par value of $1.50 each (after the stock split in February 2004), by (i) each person who beneficially owns more than 5% of the MIC Common Stock and
(ii) significant related parties to MIC. Except as otherwise indicated, the holders listed below have sole voting and investment power with respect to all shares beneficially owned by them. The
holders listed below have the same voting rights as the holders of MIC 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 below 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 stock 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.
MIC is deemed to be controlled by Kinnevik B.V. by virtue of their ownership of 35.2% of MIC's outstanding common stock.

|Stockholder             |  | Amount of shares |  | Percentage |     
|----------------------- |  | ---------------- |  | ---------- | ----
|Kinnevik                |  | 23,375,160       |  | 35.2       | %(1)
|The 1980 Stenbeck Trust |  | 5,132,940        |  | 7.7        | %   
|Invik & Co. AB          |  | 1,253,888        |  | 1.9        | %   
|The 1985 Stenbeck Trust |  | 420,456          |  | 0.6        | %   

---

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On
December 15, 2003, Kinnevik announced that it had purchased $10,863,000 in aggregate principal amount of 2% Senior Convertible PIK Notes, which are convertible into an
aggregate of 4,042,046 shares of MIC common stock. As at that date, Kinnevik held an aggregate of $13,205,000 in principal amount of 2% Senior Convertible PIK Notes, which are convertible into an
aggregate of 4,913,488 shares of MIC common stock.

Related Party Transactions

In the past, MIC allowed its senior management to participate in its joint venture companies. In the future, management participation in our business will only be
through options granted to acquire MIC common stock. See also "Operating and Financial Review and ProspectsLiquidity and Capital ResourcesInvestments".



The Company's principal shareholder is Industriförvaltnings AB Kinnevik ("Kinnevik"). Kinnevik is a Swedish holding company with interests in the
telecommunications, media, publishing and paper industries. As of December 31, 2003, Kinnevik owned approximately 35.2% of MIC.

On
December 31, 1995 MIC acquired 17.7% of MACH from Kinnevik. The consideration, which was to have a minimum present value of $5,000,000 at December 31, 1995, consisted of
(i) an initial payment of $1,000,000 plus interest, at the ruling market rate, for the month of January 1996, (ii) seven additional payments for each of the financial years 1996
to 2002, calculated as 17.7% of MACH's pre-tax profit for the relevant year and payable in April of the following year, and (iii) a final payment payable in April 2003,
calculated as the higher of (a) the sum of the seven additional payments multiplied by a factor of 1.3 minus the initial payment or (b) the amount required to make the present value of
all payments at December 31, 1995 equal to $5,000,000. The final payment was made in common stock of MIC. In 2002 an amount of $3,958,000 (2001: $7,042,000) due to Kinnevik was included in the
balance sheet under the heading "Amounts due to shareholders". In addition, as of December 31, 2002, MIC owed $63,000 for additional charges. The balance was settled in 2003.

In
May 2002, MIC sold a 17% interest in MIC Systems BV, the parent company of MACH to Kinnevik BV for $17,000,000.

During
2002, Kinnevik purchased MIC 13.5% Notes (Notes 9, 18c and 29 in the notes to the consolidated financial statements) on the open market with a face value of $44,000,000. MIC then
exchanged these for $1,500,000 cash and 672,016 Tele2 AB series B shares at market prices realizing a gain of $28,676,000 on the transaction.

During
the course of 2002, MIC sold an additional 6,177,369 Tele2 AB series B shares at market prices to Kinnevik for a value of $104,295,000.

As
of December 31, 2003 Kinnevik held an aggregate of $13,205,000 in principal amount of 2% PIK Notes. These were converted in March 2004 into an aggregate of 4,913,488 shares of our
common stock.

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In November 2001, MIC sold 100% of its interests in FORA Telecom BV, its Russian Cellular telephone operations to Tele2 AB for a consideration of
$80 million in Tele2 AB series "B" shares plus a maximum equivalent of $30 million in cash or additional Tele2 AB series "B" shares, depending on the outcome of GSM license applications
for three of MIC's cellular telephone operations in Russia. The sale resulted in a $6,693,000 gain on the disposal in 2001 (Note 29 in the notes to the consolidated statements). During 2002,
MIC obtained the necessary GSM licenses referred to above and received the additional proceeds of $30 million in cash. In addition, certain loans for which MIC was liable were settled at less
than their carrying value. The gain realized in obtaining the licenses and settling the loans net of costs incurred in the acquisition of the licenses, amounted to $30,859,000 in 2002.



As of December 31, 1998, the Group, through its subsidiary MIC-USA inc. ("MIC-USA"), had a 100% temporary and restricted
shareholding in Great Universal. On December 31, 1999, MIC-USA transferred its 100% ownership and related rights in Great Universal to Great Universal LLC 1999 Trust for a
consideration of $5,027,000, corresponding to the net book value of MIC's investment in Great Universal. During 2002, MIC recorded an impairment loss for 100% of this asset due to uncertainty
concerning its recoverability (Notes 9 and 29 in the notes to the consolidated statements). The rights and obligations of MIC-USA toward Great Universal were assigned to Great Universal
LLC. Great Universal continues to indemnify MIC against certain contingent liabilities of Millicom. Great Universal is currently engaged in the communications, information technology, teleservices and
media industries primarily in the United States.

In
January 2000, MIC invested $10,000,000 in Modern Holdings in the form of promissory notes. In February 2000, those notes were converted into 1,293,095 shares of common
stock, representing 8.5% of the share capital of Modern Holdings. This investment is recorded as non-current available-for-sale security (Notes 9 and 29 in the
notes to the consolidated statements).

MIC
does not consolidate its investment in Great Universal and Modern Holdings since the restrictions on their ability to distribute dividends is considered a severe
long-term restriction that significantly impairs their ability to transfer funds to MIC. Further, due to the existence of warrants, enabling the warrant holders to obtain control over
Great Universal and Modern Holdings, MIC considers that it does not control these companies.



The Group maintains corporate bank accounts at Banque Invik through which it makes payments and receives monies in the normal course of business. As of
December 31, 2003, the Group had current accounts, time deposits and blocked deposits at Banque Invik.

MIC
charged $nil (2002: $nil; 2001: 280,000) to related parties for services rendered.

Compensations
for Directors' services are detailed in Note 21 of the notes to the consolidated financial statements.

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The following sales and purchases and outstanding balances occurred with companies affiliated to MIC. The services purchased and supplied covered fraud detection,
network and IT support, acquisition of assets and customer care systems.

|                         |  | Purchases in year |  | Amounts payable as of
December 31,
|------------------------ |  | ----------------- |  | ----------------------------------
|
|
|Applied Sales Management |  |                  |  | 110                               
|Applied Value            |  | 369               |  | 2,009                             
|Banque Invik             |  | 937               |  | 638                               
|Bassett                  |  | 451               |  | 669                               
|Ephibian                 |  | 24                |  | 38                                
|Foreign Value            |  | 730               |  |                                  
|Great Universal          |  |                  |  |                                  
|Lothar Systems           |  |                  |  | 10                                
|Netcom Consultants       |  | 352               |  | 157                               
|Praesidium               |  | 50                |  | 204                               
|Procure-it-right         |  | 1,384             |  | 839                               
|Search Value             |  | 159               |  | 489                               
|Shared Value             |  | 638               |  | 656                               
|Tele2 AB                 |  | 247               |  | 50                                
|YXK Systems              |  |                  |  | 28                                
|Total                    |  | 5,341             |  | 5,897                             

As
of December 31, 2003 and 2002, MIC had the following receivables from related parties:

|                       |  | 2003  |  | 2002 
|---------------------- |  | ----- |  | -----
|
|Kinnevik               |  | 154   |  | 1,976
|Lothar                 |  |      |  | 922  
|Metro                  |  | 247   |  | 734  
|Modern Holdings        |  | 1,690 |  | 1,825
|Modern Times Group     |  | 265   |  | 752  
|Netcom                 |  | 16    |  | 64   
|Shared Value           |  | 18    |  | 18   
|Stonebrook Enterprises |  | 156   |  | 156  
|Tele2 AB               |  | 359   |  | 359  
|Total                  |  | 2,905 |  | 6,806

In
the opinion of our management, the terms of the transactions described above are at least as favorable to us as could have been obtained from independent parties.

ITEM 8.    FINANCIAL INFORMATION

Financial Statements and Other Information

See Item 18 for the Company's Financial Statements.

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Legal Proceedings

We are currently party to litigation relating to certain operations, but in management's opinion these will not have a material negative impact on our financial
position or operations.

Dividend Policy

Holders of the MIC Common Stock are entitled to receive dividends ratably when, as and if declared by the Company's Board of Directors, subject to Luxembourg
legal reserve requirements. The Company has not paid any cash dividends on its common stock since inception. The Company anticipates that it
will retain any earnings for use in the operation and expansion of its business and does not anticipate paying any cash dividends on the MIC Common Stock in the foreseeable future. In addition, the
ability of the Company to make dividend payments or other payments on its common stock is limited by the Indenture for the Company's New Notes. Management will consider any tax consequences to the
Company before declaring a dividend.

ITEM 9.    THE OFFER AND LISTING

The principal trading market for the MIC Common Stock is the NASDAQ National Market.

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

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

|                             |  | High |       | Low
|---------------------------- |  | ---- | ----- | ---
|Year ended December 31, 1999 |  |      |       |    
|First Quarter                |  | $    | 29.62 |    
|Second Quarter               |  | $    | 30.00 |    
|Third Quarter                |  | $    | 23.72 |    
|Fourth Quarter               |  | $    | 48.37 |    
|Year ended December 31, 2000 |  |      |       |    
|First Quarter                |  | $    | 61.12 |    
|Second Quarter               |  | $    | 51.46 |    
|Third Quarter                |  | $    | 38.81 |    
|Fourth Quarter               |  | $    | 27.56 |    
|Year ended December 31, 2001 |  |      |       |    
|First Quarter                |  | $    | 25.69 |    
|Second Quarter               |  | $    | 23.59 |    
|Third Quarter                |  | $    | 18.73 |    
|Fourth Quarter               |  | $    | 9.26  |    
|Year ended December 31, 2002 |  |      |       |    
|First Quarter                |  | $    | 10.44 |    
|Second Quarter               |  | $    | 5.89  |    
|Third Quarter                |  | $    | 1.30  |    
|Fourth Quarter               |  | $    | 1.72  |    
|Year ended December 31, 2003 |  |      |       |    
|First Quarter                |  | $    | 2.25  |    
|Second Quarter               |  | $    | 7.13  |    
|Third Quarter                |  | $    | 12.16 |    
|October 2003                 |  | $    | 15.58 |    
|November 2003                |  | $    | 19.94 |    
|December 2003                |  | $    | 19.88 |    
|Year ended December 31, 2004 |  |      |       |    
|January 2004                 |  | $    | 20.52 |    
|February 2004                |  | $    | 22.44 |    
|March 2004                   |  | $    | 22.92 |    

On
April 23, 2004, the closing market price for MIC Common Stock was $27.80.

Our
shares are also traded on the Stockholmsbörsen and the Luxembourg Stock Exchange.

There
are currently no Luxembourg decrees or regulations restricting the import or export of capital affecting the remittance of dividends or other payments to holders of MIC Common
Stock who are non-residents of the Grand-Duchy of Luxembourg.

There
are no limitations relating only to non-residents of the Grand-Duchy of Luxembourg under Luxembourg law or the Articles of Incorporation of the Company on the right to
be a holder of, and to vote in respect of MIC Common Stock.

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Nasdaq Corporate Governance Exemption

Nasdaq granted an exemption to MIC with respect to the quorum requirement under Rule 4350(f), which requires each issuer to provide for a quorum as
specified in its by-laws for any meeting of the holders of common stock, which shall in no case be less than 331/3% of the outstanding shares of a 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 practices in Luxembourg.

ITEM 10.    ADDITIONAL INFORMATION

Memorandum and Articles of Association

Registration and Object

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

Article 3
of the articles of incorporation of the Company defines the purpose of the Company as follows: "the purposes for which the Company is formed are
to engage in all transactions pertaining directly or indirectly to the acquisition of participating interests in any business 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 the Company, article 13 of the articles of incorporation of the Company provide that the validity of the decision of the Company will not be affected by a conflict
of interest existing for a director. However, any such personal interest must be disclosed to the board of directors and the concerned director can not vote on the relevant issue. Such conflict of
interest must be reported to the next general meeting of shareholders.

CompensationThe decision on the annual remuneration of the directors
("tantièmes") is reserved by article 12 of the articles of incorporation to the general meeting of shareholders. Directors can
therefore not vote compensation to themselves. Yet, the Directors could vote on the employment contract terms of their own contract with the Company (including special bonuses there under) and, if the
Articles so permit (which they do for MIC) on the allotment of shares under a share option scheme.

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

Age limitThere is no age limit for being a director of the Company. Directors are appointed for a maximum of six years and
are re-eligible.

Share ownership requirementsDirectors need not be shareholders.

Shares

Rights attached to the sharesThe Company has only one class of shares, each share entitling
(i) to one vote at the general meeting of shareholders, (ii) to receiving dividends out of distributable profits when such distributions are decided and (iii) to share in any
surplus left after the payment of all the

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creditors
in the event of liquidation. There is a preferential subscription right under any Share or Rights issue for cash, unless the Directors restrict the exercise thereof.

Redemption of sharesThe articles of incorporation provide for the possibility and the terms of the repurchase by the Company
of its own shares, solely at the Company's initiative.

Sinking fundsThe Company's shares are not subject to any sinking fund.

Liability to further Capital CallsAll of the issued shares in the Company's capital are fully paid. Accordingly none of the
Company's shareholders are liable for further capital calls.

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

Changes to the Shareholders' Rights

In order to change the rights attached to the shares of the Company, a general meeting of shareholders must be duly convened and held before notary, as it implies
the amendment of the articles of incorporation of the Company. A quorum of presence of at least 50% is required (in a meeting held on a first call) and the decision must be taken by a majority of two
thirds of the shares present or represented. Any change to the obligations attached to shares may only be passed with the unanimous consent of all the shareholders.

Shareholders meetings

General meetings of shareholders are convened by convening notice published in the Luxembourg official Gazette and in a Luxembourg newspaper, twice at 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. According to article 17 of the articles of incorporation of the Company, the board of directors determines in the
convening notice the formalities to be observed by each shareholder for admission to the general meeting of shareholders. An annual general meeting of shareholders must be convened every year on the
date provided for in the articles of incorporation (article 18: the last Tuesday of May of each year). Other meetings can be convened as necessary.

Limitation on Securities Ownership

There are no limitations under Luxembourg law or the articles of incorporation on the rights for non-resident or foreign entities to own shares in the
Company.

Change of control

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

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Disclosure of Shareholder Ownership

There are no provisions of the articles of incorporation by which a certain ownership threshold must be disclosed. However, Luxembourg laws provide that any
entity or person holding more than certain thresholds (10%, 20%, 331/3%, 50% and 662/3%) of a company listed on the Luxembourg Stock Exchange must declare such
shareholding to the Luxembourg Stock Exchange and to the Company itself. Such disclosure is mandatory also in case of a decrease beyond such respective thresholds.

Material Contracts

In November 2003, the Company issued $550 million aggregate amount of 10% Senior Notes due 2013 (the "10% Notes") pursuant to an indenture dated
November 24, 2003 between the Company The Bank of New York (the "10% Notes Indenture").

The
10% Notes are senior, unsecured obligations of the Company. The 10% Notes bear interest at 10% per annum, payable semiannually in arrears on June 1 and December 1 of
each year, with a final maturity on December 1, 2013. The interest on the 10% Notes is payable in cash.

At
any time and from time to time on or after December 1, 2008, the Company may redeem the 10% Notes, in whole or in part, at a redemption price equal to the percentage of
principal amount set forth below plus accrued and unpaid interest to the redemption date.

12-month period commencing December 1 in Year

Percentage2008

105.000
%2009

103.333
%2010

101.667
%2011 and thereafter

100.000
%


At
any time and from time to time prior to December 1, 2006, the Company may redeem 10% Notes with the net cash proceeds received by it from any sale of its common stock at a
redemption price equal to 110% of the principal amount plus accrued and unpaid interest to the redemption date, in an aggregate principal amount for all such redemptions not to exceed 35% of the
original aggregate principal amount of the 10% Notes (including additional notes, if any, issued under the 10% Notes Indenture); provided that

The
10% Notes may also be redeemed at the Company's option in whole, but not in part, at any time at a price equal to the principal amount thereof, together with accrued and unpaid
interest, if any, and other amounts due to the date of redemption, if the Company (or its successor) becomes obligated to pay certain additional amounts as a result of any change in, or amendment to,
the laws (or any regulations or rulings promulgated thereunder) of Luxembourg (or such successor's jurisdiction) or their respective political subdivisions or taxing authorities, or any change in the
application or official interpretation of such laws, regulations or rulings, which change or amendment becomes effective after the issue date of the 10% Notes (or the date such successor assumes the
Company's obligations under the 10% Notes).

The
10% Notes Indenture contains certain covenants that, among others, restrict our ability to (i) incur additional debt; (ii) make certain payments, including dividends or
other distributions, with respect to our capital stock, or prepayments of subordinated debt; (iii) make certain investments or sell assets; (iv) create certain liens or engage in sale
and leaseback transactions; (v) provide guarantees for certain debt; (vi) enter into restrictions on the payment of dividends and other amounts; (vii) engage in

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certain
transactions with affiliates; (viii) incur indebtedness other than at the Company or operating subsidiary levels; (ix) consolidate, merge or transfer all or substantially all our
assets; and (x) enter into other lines of business.

Upon
the occurrence of a change of control triggering event, which is defined in the 10% Notes Indenture as a rating decline and change of ownership, holders of the 10% Notes may require
the Company to purchase all or a portion of the 10% Notes at a purchase price of 101% of the stated principal amount of the 10% Notes, plus accrued and unpaid interest, if any, on the 10% Notes to the
date of purchase.

Under
the 10% Notes Indenture, the Company may not incur indebtedness unless the "leverage ratio" would be less than 4 to 1. The leverage ratio is the ratio of the consolidated principal
amount of net debt outstanding to four times operating income. Even if the Company ceases to meet the leverage ratio requirement, it may incur debt under several "debt baskets" as set forth in the 10%
Notes Indenture.

On
August 7, 2003, Millicom Telecommunications S.A., MIC's wholly-owned subsidiary, issued for an aggregate value of SEK 2,555,994,000 (approximately $310 million)
Mandatory Exchangeable Notes (the "5% Mandatory Exchangeable Notes"), which are exchangeable into Tele2 AB series B shares. The 5% Mandatory Exchangeable Notes may be exchanged either
voluntarily at the option of the noteholders or mandatorily by Millicom Telecommunications S.A. as described below. The 5% Mandatory Exchangeable Notes will be exchangeable for an aggregate of up to
8,968,400 Tele2 AB series B shares which MIC beneficially owned through Millicom Telecommunications S.A. The number of Tele2 shares that Millicom Telecommunications S.A. is obligated to deliver
is based on a formula that takes into account the market price of the Tele2 shares prior to any exchange. Under the formula, Millicom Telecommunications S.A. could retain up to 30% of the increase in
value of the Tele2 shares over the designated reference price of SEK 285 per share. As a result, at August 6, 2006 or earlier if all of the 5% Mandatory Exchangeable Notes have been redeemed
and exchanged prior to that date, Millicom Telecommunications S.A. could own up to approximately 23% of the 8,968,400 Tele2 AB series B shares underlying the 5% Mandatory Exchangeable Notes.

The
5% Mandatory Exchangeable Notes may be exchanged voluntarily at the option of the noteholders at any time during the period commencing on September 17, 2003 and ending on the
25th trading day prior to August 7, 2006, which is expected to be July 11, 2006. In addition, the 5% Mandatory Exchangeable Notes may be exchanged voluntarily at the option of the
holder in the event of certain
changes in tax laws and in the event of a takeover offer in respect of Tele2 AB. Dividends, if any, paid by Tele2 AB would be attributed to the 5% Mandatory Exchangeable Notes holders.

Unless
otherwise previously redeemed and exchanged or purchased and cancelled, each 5% Mandatory Exchangeable Note will be mandatorily exchanged by Millicom Telecommunications S.A. on
August 7, 2006.

The
5% Mandatory Exchangeable Notes bear interest on the U.S. dollar equivalent amount of each note at a rate of 5% per annum payable semi-annually on February 7 and
August 7 of each year. The effective interest rate is 8.45%. As of December 31, 2003 the carrying amount of the 5% Mandatory Exchangeable Notes net of unamortized financing fees was
$327,635,000. In 2003, an exchange loss of $41,820,000 was recognized on the 5% Mandatory Exchangeable Notes.

As
part of the financing, MIC purchased U.S. treasury strips with a nominal value of $46,470,000 which will be used to settle the interest payments.

The
5% Mandatory Exchangeable Notes include an embedded derivative, which is valued separately. The embedded derivative, which reflects MIC's limited right to participate in the increase
in value of the Tele2 shares, is recorded at fair value, taking into account time and volatility factors. As of December 31, 2003, the fair value of the embedded derivative amounted to
$103,457,000, with the

96

---



variation
for the period from August 7, 2003 to December 31, 2003 amounting to $84,578,000 recorded under the caption "Fair value result on financial instruments".

Exchange Controls

There are currently no governmental laws, decrees, regulations or other legislation of Luxembourg that may affect (i) the import or export of capital
including the availability of cash and cash equivalents for use by the Company's group and (ii) the remittance of dividends, interests or other payments to non-resident holders of
the Company's securities other than those deriving from the U.S.-Luxembourg double taxation treaty.

Taxation

The following paragraphs describe very generally the tax laws of Luxembourg as they apply to investors in the Company, which is a Luxembourg corporation, and also
the taxation of investors who are citizens, residents or domiciliaries of the United States. The following is intended merely as a general summary of the principal tax consequences of the receipt,
holding and disposition of shares of MIC Common Stock, and is not intended as a substitute for professional tax advice that takes into account the particular circumstances relevant to a specific
investor. Accordingly, investors should consult their own professional advisors on the possible tax consequences of holding or disposing of shares of MIC Common Stock, under the laws of their
countries of citizenship, residence or domicile.

Luxembourg Taxation

Because the Company is a Luxembourg corporation, domestic Luxembourg law generally imposes a 20% withholding tax on dividends paid by the Company under certain
circumstances. Certain reduced rates of withholding tax, or exemptions from withholding tax, are available under provisions of domestic Luxembourg law and bilateral tax treaties entered into between
Luxembourg and various other countries. Investors should consult their tax advisors with respect to the possible availability of such reduced rates or exemptions.

United States Investors



97

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98

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99

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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.

100

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ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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 to which we are exposed is principally a function of our long-term debt. To alleviate this risk, we obtain both
fixed-rate and floating-rate debt.

The
table below summarizes, as at December 31, 2003, our fixed rate debt and floating rate debt.

|                    |  | Amounts due within |  
|------------------- |  | ------------------ | -
|
|
|Fixed rate:         |  |                    |  
|US dollar           |  | 45,019             |  
|Av Int rate         |  | 3.2                | %
|MTSA (SEK)          |  |                   |  
|Pakistan            |  | 8,944              |  
|Paraguay            |  | 3,551              |  
|Sri Lanka           |  | 876                |  
|Senegal             |  | 7,466              |  
|Local currency      |  | 20,837             |  
|Av Int rate         |  | 8.4                | %
|Total fixed rate    |  | 65,856             |  
|Floating rate:      |  |                    |  
|US dollar           |  | 38,823             |  
|Av Int rate         |  | 6.2                | %
|Guatemala           |  |                   |  
|Mauritius           |  | 2,163              |  
|Pakistan            |  | 4,984              |  
|Sri Lanka           |  | 7,661              |  
|Tanzania            |  | 709                |  
|Vietnam             |  | 12,468             |  
|Local currency      |  | 27,985             |  
|Av Int rate         |  | 7.7                | %
|Total floating rate |  | 66,808             |  
|Total               |  | 132,664            |  

101

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The table below summarizes, as at December 31, 2002, our fixed rate debt and floating rate debt.

|                      |  | Amounts due within |  
|--------------------- |  | ------------------ | -
|
|
|Fixed rate:           |  |                    |  
|US dollar             |  | 43,692             |  
|Average interest rate |  | 12.7               | %
|Colombia              |  | 389                |  
|Mauritius             |  | 105                |  
|Pakistan              |  | 18,764             |  
|Paraguay              |  | 1,169              |  
|Senegal               |  | 326                |  
|Local currency        |  | 20,753             |  
|Average interest rate |  | 11.8               | %
|Total fixed rate      |  | 64,445             |  
|Floating rate:        |  |                    |  
|US dollar             |  | 52,888             |  
|Average interest rate |  | 5.7                | %
|Colombia              |  | 7,190              |  
|Ghana                 |  | 451                |  
|Guatemala             |  | 4,548              |  
|Mauritius             |  | 2,433              |  
|Pakistan              |  | 15,176             |  
|Senegal               |  | 1,720              |  
|Sri Lanka             |  | 7,815              |  
|Sweden                |  |                   |  
|Local currency        |  | 39,333             |  
|Average interest rate |  | 12.2               | %
|Total floating rate   |  | 92,221             |  
|Total                 |  | 156,666            |  

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

Included
in the total for U.S. dollar fixed-rate balances in 2002 above is $985,700,000 (2001: $1,063,740,000) in respect of the book value of 13.5% Senior Subordinated Notes
and notes in Colombia for which the fair value as of December 31, 2002 is $488,133,000 (2001: $691,154,000). For all other amounts, the fair value is taken to be the book value as stated above.

Exchange Rate Risk

We are exposed to fluctuations of the U.S. dollar against certain other currencies. We publish our financial statements in U.S. dollars while a significant
proportion of our assets, liabilities, sales and costs are denominated in other currencies. We currently conduct business in 16 currencies.

We
seek to protect our reported earnings from falling in U.S. dollar terms, from currency depreciation, by periodically adjusting our prices in local currency terms to reflect any such
depreciation. In certain countries that experience very high inflation, we set our prices in direct relation to the U.S. dollar. However, there can be no assurance that a significant devaluation of a
currency against the U.S. dollar can be offset, in whole or in part, by a corresponding price increase, even over the long term. For example, the devaluation of the currency in Paraguay in 2002 had an
adverse effect on the results of our operations. For the years ended December 31, 2003, 2002 and 2001, we suffered

102

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exchange
losses of $45,602,000, $23,483,000 and $17,313,000 respectively. To some extent, the broad mix of currencies in which we conduct our businesses and the geographic spread of our operations
provides us with some measure of protection against specific exchange rate movements and reduces the overall sensitivity of our results to specific exchange rate fluctuations. We do not generally
hedge our foreign currency exposure as it is considered that the cost of purchasing financial instruments outweighs the benefits derived.

At
the venture level, we seek to reduce our foreign exchange exposure arising from transactions through a policy of matching, as far as possible, assets and liabilities. In some cases,
we may borrow in U.S. dollars either because it is advantageous for ventures to incur debt obligations in U.S. dollars or because dollar denominated borrowing is the only funding source available to a
venture. In these circumstances, we have currently decided to accept the inherent currency risk, principally because of the relatively high cost of buying, or inability to buy, forward cover in
currencies of the countries in which we operate. See Note 2 of the "Notes to the Consolidated Financial Statements".

The
following table summarizes our debt detailing the balances at December 31, 2003, that were denominated in U.S. dollars and that in other local currencies.

|               |  | Amounts due within
|-------------- |  | ------------------
|
|
|US dollar      |  | 83,842            
|MTSA (SEK)     |  |                  
|Guatemala      |  |                  
|Mauritius      |  | 2,163             
|Pakistan       |  | 13,928            
|Paraguay       |  | 3,551             
|Senegal        |  | 7,466             
|Sri Lanka      |  | 8,537             
|Tanzania       |  | 709               
|Vietnam        |  | 12,468            
|Local currency |  | 48,822            
|               |  |                   
|Total          |  | 132,664           
|               |  |                   

The following table summarizes our debt, detailing the balances at December 31, 2002, that were denominated in U.S. dollars and that in
other local currencies.

|                     |  | Amounts due within
|-------------------- |  | ------------------
|
|
|U.S. dollar          |  | 96,581            
|Colombia             |  | 7,579             
|Ghana                |  | 451               
|Guatemala            |  | 4,547             
|Mauritius            |  | 2,538             
|Pakistan             |  | 33,940            
|Paraguay             |  | 1,169             
|Senegal              |  | 2,046             
|Sri Lanka            |  | 7,815             
|Sweden               |  |                  
|Total local currency |  | 60,085            
|Total                |  | 156,666           

103

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ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

104

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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

As of December 31, 2003, the Company, under the supervision and with the participation of the Company's management, including the Chief Executive Officer,
the Chief Financial Controller and the Chief of FinanceGlobal Operations, performed an evaluation of the effectiveness of the Company's disclosure controls and procedures. The Company'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 Company's Chief Executive Officer, Chief Financial Controller and Chief of FinanceGlobal Operations concluded that the Company's
disclosure controls and procedures are effective at the reasonable assurance level for gathering, analyzing and disclosing the information the Company 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.

There
has been no change in the Company'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.

ITEM 16A.    AUDIT COMMITTEE FINANCIAL EXPERT

The Board of Directors has appointed Michel Massart as its Audit Committee financial expert.

ITEM 16B.    CODE OF ETHICS

Millicom has adopted a code of ethics applicable to its Chief Executive Officer, Chief Financial Controller and Chief of FinanceGlobal Operations and
to other Millicom employees. The text of this code is available upon written request to Millicom at 75 Route de Longwy, L-8080 Bertrange, Grand-Duchy of Luxembourg.

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, 2003 and 2002.

|                   |  | 2003      |  | 2002     
|------------------ |  | --------- |  | ---------
|Audit Fees         |  | 2,265,498 |  | 2,035,215
|Audit-Related Fees |  | 4,010     |  | 19,000   
|Tax Fees           |  | 90,952    |  | 63,454   
|All Other Fees     |  | 19,796    |  | 112,813  
|                   |  |           |  |          
|Total              |  | 2,380,256 |  | 2,230,482
|                   |  |           |  |          

105

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Audit-related
services consist principally of consultations related to financial accounting and reporting standards, including making recommendations to management regarding internal
controls and procedure relates to the maintenance of fixed asset registers and inventory procedures and the issuance of certifications of loan covenant compliance required by MIC'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 and consist principally of assistance provided
in 2002 in connection with a civil claim in a non-advocacy role.

Audit Committee Pre-approval Policies

Consistent with SEC policies regarding auditor independence, the Audit Committee has revised its policies and procedures relating to pre-approval of
audit and non-audit services. The policies and procedures now provide that no non-audit services can be rendered by MIC'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.

106

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PART III

ITEM 17.    FINANCIAL STATEMENTS

Not applicable.

ITEM 18.    FINANCIAL STATEMENTS

See pages F-1 through F-85.

ITEM 19.    EXHIBITS

107

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INDEX TO FINANCIAL STATEMENTS

|Audited Consolidated Financial Statements of Millicom and its Subsidiaries for the Years Ended December 31, 2003, 2002 and 2001 |  |    
|------------------------------------------------------------------------------------------------------------------------------- |  | ---
|Independent Auditor's Report                                                                                                    |  | F-2
|Consolidated Balance Sheets as of December 31, 2003 and 2002                                                                    |  | F-3
|Consolidated Statements of Profit and Loss for the Years ended December 31, 2003, 2002 and 2001                                 |  | F-5
|Consolidated Statements of Cash Flows for the Years ended December 31, 2003, 2002 and 2001                                      |  | F-6
|Consolidated Statements of Changes in Shareholders' Equity for the Years ended
December 31, 2003, 2002 and 2001                 |  | F-7
|Notes to the Consolidated Financial Statements including reconciliation to U.S. GAAP (Note 31)                                  |  | F-8

F-1

---



GRAPHIC

|                                                            |  | PricewaterhouseCoopers
Société à responsabilité limitée
Réviseur d'entreprises                  
|----------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------
|To the shareholders of Millicom International Cellular S.A. |  | 400, route d'Esch
B.P. 1443
L-1014 Luxembourg
Téléphone +352 494848-1
Facsimile +352 494848-2900

We
have audited the accompanying consolidated balance sheets of Millicom International Cellular S.A. and its subsidiaries (the "Company") as of December 31, 2003 and 2002, and the related
consolidated statements of profit and loss, changes in shareholders' equity and cash flows for the three years ended December 31, 2003, 2002 and 2001. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We
believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Millicom International Cellular S.A. and its subsidiaries as
of December 31, 2003 and 2002, and the results of their operations, changes in shareholders' equity and cash flows for each of the three years ended December 31, 2003, 2002 and 2001, in
conformity with International Financial Reporting Standards as published by the International Accounting Standards Board.

As
discussed in Note 2 to the financial statements, the Company changed its method of accounting under International Financial Reporting Standards for available-for-sale securities in 2003.

International
Financial Reporting Standards vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and
effect of such differences, after giving effect to the restatement described in Note 31, is presented in Note 31 to the consolidated financial statements.

|                                                       |  |                                                                                      
|------------------------------------------------------ |  | -------------------------------------------------------------------------------------
|                                                       |  |                                                                                      
|PricewaterhouseCoopers S.à r.l.
Réviseur d'entreprises |  | Luxembourg, March 31, 2004, except for Note 31 as to which the date is April 30, 2004

F-2

---





Millicom International Cellular S.A.        Consolidated balance sheets        As of December 31, 2003 and 2002

|                                       |                                | Notes |    | 2003      |         | 2002     
|-------------------------------------- | ------------------------------ | ----- | -- | --------- | ------- | ---------
|
|ASSETS                                 |                                |       |    |           |         |          
|NON-CURRENT ASSETS                     |                                |       |    |           |         |          
|Intangible assets                      |                                |       |    |           |         |          
|                                       | Goodwill, net                  |       | 4  |           | 49,578  |          
|                                       | Licenses, net                  |       | 5  |           | 30,889  |          
|                                       | Other intangible assets, net   |       | 6  |           | 5,148   |          
|Property, plant and equipment, net     |                                | 7     |    | 487,746   |         | 458,933  
|Financial assets                       |                                |       |    |           |         |          
|                                       | Investment in Tele2 AB shares  |       | 8  |           | 479,040 |          
|                                       | Investment in other securities |       | 9  |           | 25,397  |          
|                                       | Investments in associates      |       | 3  |           | 1,340   |          
|                                       | Pledged deposits               |       | 11 |           | 31,530  |          
|Deferred taxation                      |                                | 23    |    | 5,226     |         | 8,470    
|                                       |                                |       |    |           |         |          
|TOTAL NON-CURRENT ASSETS               |                                |       |    | 1,115,894 |         | 821,285  
|                                       |                                |       |    |           |         |          
|CURRENT ASSETS                         |                                |       |    |           |         |          
|Financial assets                       |                                |       |    |           |         |          
|                                       | Investment in Tele2 AB shares  |       | 8  |           |        |          
|                                       | Investment in other securities |       | 9  |           | 15,291  |          
|Inventories                            |                                | 12    |    | 10,941    |         | 6,962    
|Trade receivables, net                 |                                | 13    |    | 113,750   |         | 113,221  
|Amounts due from joint ventures        |                                | 3     |    | 13,137    |         | 14,053   
|Amounts due from other related parties |                                | 29    |    | 2,905     |         | 6,806    
|Prepayments and accrued income         |                                |       |    | 19,739    |         | 14,148   
|Other current assets                   |                                | 14    |    | 49,583    |         | 38,453   
|Time deposits                          |                                | 15    |    | 32,880    |         | 16,200   
|Cash and cash equivalents              |                                | 16    |    | 148,829   |         | 70,451   
|                                       |                                |       |    |           |         |          
|TOTAL CURRENT ASSETS                   |                                |       |    | 407,055   |         | 381,834  
|                                       |                                |       |    |           |         |          
|TOTAL ASSETS                           |                                |       |    | 1,522,949 |         | 1,203,119
|                                       |                                |       |    |           |         |          

The
accompanying notes are an integral part of these consolidated financial statements.

F-3

---



|                                           |                                                            | Notes |    | 2003      |          | 2002      |         
|------------------------------------------ | ---------------------------------------------------------- | ----- | -- | --------- | -------- | --------- | --------
|
|SHAREHOLDERS' EQUITY
AND LIABILITIES       |                                                            |       |    |           |          |           |         
|SHAREHOLDERS' EQUITY                       |                                                            | 17    |    |           |          |           |         
|                                           | Share capital and premium                                  |       |    |           | 239,876  |           | 281,989 
|                                           | Treasury stock                                             |       |    |           | (8,833   | )         | (54,521 
|                                           | 2% PIK Notesequity component                              |       |    |           | 16,006   |           |        
|                                           | Legal reserve                                              |       |    |           | 4,256    |           | 4,256   
|                                           | Retained losses brought forward                            |       |    |           | (446,110 | )         | (57,719 
|                                           | Net profit/(loss) for the year                             |       |    |           | 178,823  |           | (385,143
|                                           | Currency translation reserve                               |       |    |           | (69,198  | )         | (84,121 
|                                           |                                                            |       |    |           |          |           |         
|TOTAL SHAREHOLDERS' EQUITY                 |                                                            |       |    | (85,180   | )        | (295,259  | )       
|                                           |                                                            |       |    |           |          |           |         
|Minority interest                          |                                                            |       |    | 26,571    |          | 23,733    |         
|                                           |                                                            |       |    |           |          |           |         
|LIABILITIES                                |                                                            |       |    |           |          |           |         
|NON-CURRENT LIABILITIES                    |                                                            |       |    |           |          |           |         
|                                           | 13.5% Senior Subordinated Notes                            |       | 18 |           |         |           | 912,539 
|                                           | 10% Senior Notes                                           |       | 18 |           | 536,036  |           |        
|                                           | 2% PIK Notesdebt component                                |       | 18 |           | 50,923   |           |        
|                                           | 5% Mandatory Exchangeable Notesdebt component             |       | 18 |           | 327,635  |           |        
|                                           | Embedded derivative on the 5% Mandatory Exchangeable Notes |       | 18 |           | 103,457  |           |        
|                                           | Other debt and financing                                   |       | 18 |           | 126,150  |           | 159,370 
|                                           | Deferred taxation                                          |       | 23 |           | 33,944   |           | 26,874  
|                                           |                                                            |       |    |           |          |           |         
|TOTAL NON-CURRENT LIABILITIES              |                                                            |       |    | 1,178,145 |          | 1,098,783 |         
|                                           |                                                            |       |    |           |          |           |         
|CURRENT LIABILITIES                        |                                                            |       |    |           |          |           |         
|                                           | Other debt and financing                                   |       | 18 |           | 132,664  |           | 156,666 
|                                           | Trade payables                                             |       |    |           | 112,764  |           | 90,945  
|                                           | Amounts due to shareholders                                |       | 29 |           |         |           | 4,021   
|                                           | Amounts due to other related parties                       |       | 29 |           | 608      |           | 6,487   
|                                           | Accrued interest and other expenses                        |       |    |           | 44,673   |           | 42,745  
|                                           | Other current liabilities                                  |       | 19 |           | 112,704  |           | 74,998  
|                                           |                                                            |       |    |           |          |           |         
|TOTAL CURRENT LIABILITIES                  |                                                            |       |    | 403,413   |          | 375,862   |         
|                                           |                                                            |       |    |           |          |           |         
|TOTAL LIABILITIES                          |                                                            |       |    | 1,581,558 |          | 1,474,645 |         
|                                           |                                                            |       |    |           |          |           |         
|TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES |                                                            |       |    | 1,522,949 |          | 1,203,119 |         
|                                           |                                                            |       |    |           |          |           |         

The
accompanying notes are an integral part of these consolidated financial statements.

F-4

---





Millicom International Cellular S.A        Consolidated statements of profit and loss        for the years ended December 31, 2003, 2002 and 2001

|                                                               |  | Notes |  | 2003     |   | 2002     |   | 2001     |  
|-------------------------------------------------------------- |  | ----- |  | -------- | - | -------- | - | -------- | -
|
|Revenues                                                       |  | 20    |  | 647,104  |   | 605,186  |   | 644,570  |  
|Cost of sales                                                  |  | 20,22 |  | (258,002 | ) | (259,530 | ) | (274,591 | )
|                                                               |  |       |  |          |   |          |   |          |  
|GROSS PROFIT                                                   |  |       |  | 389,102  |   | 345,656  |   | 369,979  |  
|Sales and marketing                                            |  |       |  | (87,575  | ) | (80,941  | ) | (95,463  | )
|General and administrative expenses                            |  | 22    |  | (108,449 | ) | (186,491 | ) | (181,764 | )
|Gain from sale of subsidiaries and joint ventures, net         |  | 22    |  | 2,213    |   | 88,814   |   | 35,047   |  
|Other operating expenses                                       |  | 4, 22 |  | (32,776  | ) | (44,725  | ) | (35,013  | )
|                                                               |  |       |  |          |   |          |   |          |  
|OPERATING PROFIT                                               |  |       |  | 162,515  |   | 122,313  |   | 92,786   |  
|Gain (loss) and valuation movement on investment in securities |  | 8,9   |  | 246,760  |   | (299,963 | ) | (15,931  | )
|Interest expense                                               |  | 18    |  | (135,172 | ) | (185,959 | ) | (209,912 | )
|Interest income                                                |  |       |  | 4,836    |   | 12,726   |   | 22,768   |  
|Other financial income                                         |  | 18,23 |  | 96,748   |   | 42,247   |   | 11,596   |  
|Fair value result on financial instruments                     |  | 10,18 |  | (84,578  | ) | (7,858   | ) | (9,914   | )
|Exchange loss, net                                             |  | 18    |  | (45,602  | ) | (23,483  | ) | (17,313  | )
|Profit (loss) from associates                                  |  | 20    |  | 380      |   | 62       |   | (3,112   | )
|                                                               |  |       |  |          |   |          |   |          |  
|PROFIT (LOSS) BEFORE TAXES AND MINORITY INTEREST               |  |       |  | 245,887  |   | (339,915 | ) | (129,032 | )
|Charge for taxes                                               |  | 23    |  | (52,369  | ) | (22,734  | ) | (8,217   | )
|                                                               |  |       |  |          |   |          |   |          |  
|PROFIT (LOSS) BEFORE MINORITY INTEREST                         |  |       |  | 193,518  |   | (362,649 | ) | (137,249 | )
|Minority interest                                              |  |       |  | (14,695  | ) | (22,494  | ) | (804     | )
|                                                               |  |       |  |          |   |          |   |          |  
|NET PROFIT (LOSS) FOR THE YEAR                                 |  |       |  | 178,823  |   | (385,143 | ) | (138,053 | )
|                                                               |  |       |  |          |   |          |   |          |  
|Basic earnings (loss) per common share (US$) (i)               |  | 30    |  | 2.74     |   | (5.90    | ) | (2.12    | )
|                                                               |  |       |  |          |   |          |   |          |  
|Diluted earnings (loss) earnings per common share, (US$) (i)   |  | 30    |  | 2.26     |   | (5.90    | ) | (2.12    | )
|                                                               |  |       |  |          |   |          |   |          |  

---

The
accompanying notes are an integral part of these consolidated financial statements.

F-5

---



Millicom International Cellular S.A        Consolidated statements of cash flows        for the years ended December 31, 2003, 2002 and 2001

|                                                                                    |  | Notes |  | 2003     |   | 2002     |   | 2001     |  
|----------------------------------------------------------------------------------- |  | ----- |  | -------- | - | -------- | - | -------- | -
|
|Net cash provided by operating activities                                           |  | 24    |  | 184,360  |   | 72,581   |   | 103,969  |  
|                                                                                    |  |       |  |          |   |          |   |          |  
|Cash flow from investing activities                                                 |  |       |  |          |   |          |   |          |  
|Acquisition of subsidiaries and joint ventures, net of cash acquired                |  | 25    |  | 1,028    |   | (2,000   | ) | (22,978  | )
|Increase in investments in associates                                               |  |       |  |         |   |         |   | (29,213  | )
|Cash impact of change in consolidation method                                       |  |       |  | 112      |   |         |   | 470      |  
|Proceeds from the disposal of subsidiaries and joint ventures, net of cash disposed |  | 26    |  | 8,848    |   | 135,071  |   | 19,251   |  
|Purchase of licenses and other intangible assets                                    |  |       |  | (3,569   | ) | (5,205   | ) | (18,323  | )
|Purchase of investments in securities                                               |  | 9     |  | (45,328  | ) | (186     | ) | (1,728   | )
|Proceeds from the disposal of investments in securities                             |  | 8     |  | 33,291   |   | 167,082  |   | 125,195  |  
|Purchase of property, plant and equipment                                           |  |       |  | (86,452  | ) | (135,818 | ) | (192,177 | )
|Disposal of property, plant and equipment                                           |  |       |  | 3,296    |   | 307      |   | 16,873   |  
|Decrease/(Increase) in amounts due from joint ventures                              |  |       |  | 865      |   | (7,131   | ) | (35,372  | )
|Decrease/(Increase) in pledged deposits                                             |  |       |  | 10,116   |   | (16,506  | ) | (39,083  | )
|(Increase)/Decrease in time deposits                                                |  |       |  | (17,796  | ) | 6,051    |   | 10,011   |  
|                                                                                    |  |       |  |          |   |          |   |          |  
|Net cash provided (used) by investing activities                                    |  |       |  | (95,589  | ) | 141,665  |   | (167,074 | )
|                                                                                    |  |       |  |          |   |          |   |          |  
|Cash flow from financing activities                                                 |  |       |  |          |   |          |   |          |  
|Proceeds from the issuance of debt and other financing                              |  |       |  | 969,607  |   | 182,828  |   | 379,957  |  
|Repayment of debt and other financing                                               |  |       |  | (899,008 | ) | (363,584 | ) | (358,294 | )
|Cash outflows related to debt restructuring                                         |  |       |  | (68,068  | ) |         |   |         |  
|Payment of dividends to minority interests                                          |  |       |  | (12,541  | ) | (16,536  | ) |         |  
|Payments (to)/from shareholders                                                     |  |       |  | (1,628   | ) |         |   | 905      |  
|Net (purchase) sale of treasury stocks                                              |  |       |  |         |   | (2,488   | ) | 8        |  
|                                                                                    |  |       |  |          |   |          |   |          |  
|Net cash (used) provided by financing activities                                    |  |       |  | (11,638  | ) | (199,780 | ) | 22,576   |  
|                                                                                    |  |       |  |          |   |          |   |          |  
|Effect of exchange rate changes on cash balances                                    |  |       |  | 1,245    |   | (291     | ) | 1,884    |  
|                                                                                    |  |       |  |          |   |          |   |          |  
|Net increase (decrease) in cash and cash equivalents                                |  |       |  | 78,378   |   | 14,175   |   | (38,645  | )
|Cash and cash equivalents, beginning                                                |  |       |  | 70,451   |   | 56,276   |   | 94,921   |  
|                                                                                    |  |       |  |          |   |          |   |          |  
|Cash and cash equivalents, ending                                                   |  |       |  | 148,829  |   | 70,451   |   | 56,276   |  
|                                                                                    |  |       |  |          |   |          |   |          |  

The
accompanying notes are an integral part of these consolidated financial statements.

F-6

---





Millicom International Cellular S.A.        Consolidated statements of changes in shareholders' equity        for the years ended December 31, 2003, 2002 and 2001

|                                                               |  | Number
of shares
outstanding(iii) |   | Number of shares held in the
Group(iii) |   | Share capital |   | Share premium |  | Treasury stock |   | 2% PIK
Notes(ii) |   | Revaluation reserve |   | Accumulated
profit and loss account |   | Other
reserves(i) |  
|-------------------------------------------------------------- |  | --------------------------------- | - | --------------------------------------- | - | ------------- | - | ------------- |  | -------------- | - | ---------------- | - | ------------------- | - | ----------------------------------- | - | ----------------- | -
|
|Balance as of January 1, 2001                                  |  | 94,333                            |   | (29,181                                 | ) | 141,500       |   | 137,490       |  | (52,041        | ) |                 |   | 17,736              |   | 83,683                              |   | (32,441           | )
|Transfer to legal reserve                                      |  |                                  |   |                                        |   |              |   |              |  |               |   |                 |   |                    |   | (3,349                              | ) | 3,349             |  
|Shares issued/sold via the exercise of options during the year |  | 500                               |   | 1                                       |   | 749           |   | 2,250         |  | 8              |   |                 |   |                    |   |                                    |   |                  |  
|Loss for the year                                              |  |                                  |   |                                        |   |              |   |              |  |               |   |                 |   |                    |   | (138,053                            | ) |                  |  
|Movement in revaluation reserve                                |  |                                  |   |                                        |   |              |   |              |  |               |   |                 |   | (79,061             | ) |                                    |   |                  |  
|Movement in currency translation reserve                       |  |                                  |   |                                        |   |              |   |              |  |               |   |                 |   |                    |   |                                    |   | (12,926           | )
|                                                               |  |                                   |   |                                         |   |               |   |               |  |                |   |                  |   |                     |   |                                     |   |                   |  
|Balance as of December 31, 2001                                |  | 94,833                            |   | (29,180                                 | ) | 142,249       |   | 139,740       |  | (52,033        | ) |                 |   | (61,325             | ) | (57,719                             | ) | (42,018           | )
|Loss for the year                                              |  |                                  |   |                                        |   |              |   |              |  |               |   |                 |   |                    |   | (385,143                            | ) |                  |  
|Shares purchased during the year                               |  |                                  |   | (515                                    | ) |              |   |              |  | (2,488         | ) |                 |   |                    |   |                                    |   |                  |  
|Prolonged decrease in market value of Tele2 AB shares          |  |                                  |   |                                        |   |              |   |              |  |               |   |                 |   | 61,325              |   |                                    |   |                  |  
|Movement in currency translation reserve                       |  |                                  |   |                                        |   |              |   |              |  |               |   |                 |   |                    |   |                                    |   | (37,847           | )
|                                                               |  |                                   |   |                                         |   |               |   |               |  |                |   |                  |   |                     |   |                                     |   |                   |  
|Balance as of December 31, 2002                                |  | 94,833                            |   | (29,695                                 | ) | 142,249       |   | 139,740       |  | (54,521        | ) |                 |   |                    |   | (442,862                            | ) | (79,865           | )
|Effect of consolidation of El Salvador                         |  |                                  |   |                                        |   |              |   |              |  |               |   |                 |   |                    |   | (3,248                              | ) |                  |  
|Profit for the year                                            |  |                                  |   |                                        |   |              |   |              |  |               |   |                 |   |                    |   | 178,823                             |   |                  |  
|Issuance of 2% PIK Notes  equity component                    |  |                                  |   |                                        |   |              |   |              |  |               |   | 16,248           |   |                    |   |                                    |   |                  |  
|Disposal/Cancellation of treasury stock                        |  | (28,863                           | ) | 29,040                                  |   | (43,294       | ) |              |  | 45,688         |   |                 |   |                    |   |                                    |   |                  |  
|Conversion of 2% PIK Notes                                     |  | 350                               |   |                                        |   | 524           |   | 657           |  |               |   | (242             | ) |                    |   |                                    |   |                  |  
|Movement in currency translation reserve                       |  |                                  |   |                                        |   |              |   |              |  |               |   |                 |   |                    |   |                                    |   | 14,923            |  
|                                                               |  |                                   |   |                                         |   |               |   |               |  |                |   |                  |   |                     |   |                                     |   |                   |  
|Balance as of December 31, 2003                                |  | 66,320                            |   | (655                                    | ) | 99,479        |   | 140,397       |  | (8,833         | ) | 16,006           |   |                    |   | (267,287                            | ) | (64,942           | )
|                                                               |  |                                   |   |                                         |   |               |   |               |  |                |   |                  |   |                     |   |                                     |   |                   |  

---

The accompanying notes are an integral part of these consolidated financial statements.

F-7

---





Millicom International Cellular S.A.        Notes to the consolidated financial statements        As of December 31, 2003, 2002 and 2001

1. ORGANIZATION

Millicom International Cellular S.A. (the "Company"), a Luxembourg Société Anonyme, and its subsidiaries, joint ventures and
associates (the "Group" or "MIC") is a global operator of cellular telephone services in the world's emerging markets. As of December 31, 2003, MIC has interests in 16 cellular systems in 15
countries, focusing on emerging markets in Asia, Latin America and Africa. The Company's shares are traded on the NASDAQ National Market under the symbol MICC and on the Luxembourg stock exchange. The
Company has its registered office at 75, Route de Longwy, L-8080, Bertrange, Grand-Duchy of Luxembourg.

MIC's
cellular telephone interests operate through strategic entities operating in major geographic regions of the world (Note 3). MIC's cellular telephone interests in Asia
include operations in Cambodia, Lao, Pakistan, Sri Lanka and Vietnam. MIC's interests in Latin America include operations in Bolivia, El Salvador, Guatemala, Honduras and Paraguay. MIC's interests in
Africa include operations in Ghana, Mauritius, Senegal, Sierra Leone and Tanzania.

In
2003, MIC sold its interest in its operation in Colombia. In 2002, MIC disposed of MIC Systems, including MACH, its GSM clearing-house, and disposed of its operation in the
Philippines. In 2001, MIC disposed of FORA Telecom, its Russian segment (Note 22).

The
Group was formed in December 1990 when Industriförvaltnings AB Kinnevik ("Kinnevik"), a company established in Sweden, and Millicom Incorporated ("Millicom"), a
corporation established in the United States of America, contributed their respective interests in international cellular joint ventures to form the Group. During 1992, the Group was restructured
under a new ultimate parent company, maintaining the same name. On December 31, 1993, Millicom was merged ("the Merger") into a wholly owned subsidiary of MIC, MIC-USA Inc.
("MIC-USA") a Delaware corporation, and the outstanding shares of Millicom's common stock were exchanged for approximately 46.5% of MIC's common stock outstanding at that time.

The
Board of Directors has approved these financial statements on February, 25 2004 for issuance.

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES

Basis of preparation

The consolidated financial statements of the Group are presented in U.S. dollars and have been prepared in accordance with International Financial Reporting
Standards ("IFRS") as published by the International Accounting Standards Board. The consolidated financial statements have been prepared under the historical cost convention as modified by the
revaluation of certain financial assets and liabilities. These consolidated financial statements are not prepared for the purposes of statutory filing.

The
Group has experienced significant losses during the last two years and has negative shareholders' equity of $85,180,000 as of December 31, 2003. The Group has substantial
outstanding debt, significant debt service obligations and capital requirements. Management of the Group has taken certain measures to restructure the operations of the Group and reduce the extent of
its obligations. This has included the disposal of certain businesses and investments during 2003 and 2002 (see Note 22). Further, the Group has made an exchange offer to holders of the 13.5%
Senior Subordinated Notes (see Note 18). Management expects that the Group will generate sufficient cash from operations to meet its obligations as they come due and the financial statements
have been prepared on the basis that the Group is a going concern.

F-8

---



The
preparation of financial statements in conformity with generally accepted accounting principles requires the use of 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 those estimates.

Changes in accounting policies

The consolidated financial statements are prepared in accordance with consolidation and accounting policies consistent with the consolidated financial statements
as of December 31, 2002, except for the accounting policy with respect to the unrealised gains and losses of available-for-sale securities. Prior to January 1,
2003 these gains or losses were recorded within shareholders' equity under a caption "revaluation reserve". When the securities were sold, impaired or there was a significant and prolonged decline in
the fair value below acquisition cost, the accumulated fair value adjustments were included in the consolidated statements of profit and loss as gains and losses on investment securities.

As
from January 1, 2003 management determined that it was more appropriate to record the change in fair value of available-for-sale securities in the
consolidated statements of profit and loss. As discussed in Note 18, the 5% Mandatory Exchangeable Notes are mandatorily exchangeable into shares of Tele2 AB, which MIC records as
available-for-sale securities. Management believes that the issuance of the 5% Mandatory Exchangeable Notes and the investment in the Tele2 AB shares are related transactions. Therefore, recording the
change in fair value of the Tele2 AB shares and the derivative embedded in the 5% Mandatory Exchangeable Notes (Note 18) together in the Company's financial statements, best reflects the
economic substance of the transaction. Because the change in fair value of the embedded derivative is recorded in MIC's statement of profit and loss, the Board of Directors decided to change the
accounting policy for fair value adjustments of available-for-sale securities and to record these adjustments in the consolidated statement of profit and loss as from
January 1, 2003. MIC adopted the allowed alternative treatment for change in accounting policy as defined in IAS 8"Net Profit or Loss for the Period, Fundamental Errors
and Changes in Accounting Policies", which requires any adjustment resulting from retrospective application of the change in accounting policy to be included in the
determination of the net profit of loss for the current period. Because MIC recorded an impairment loss in the statement of profit and loss based on the value of available for sale securities as of
December 31, 2002, only the change in value from January 1 to December 31, 2003 has been recorded to reflect the change in accounting principle at December 31, 2003. Had
MIC applied the same accounting principle in prior years the retained losses and losses for the years ended December 31, 2002 and 2001 would have been as follows:

2002

2001US$ '000

US$ '000Net loss as reported for the year

(385,143
)
(138,053
)Effect of change in accounting policy with respect to the fair value adjustments of available-for-sale securities

61,325

(79,061
)Net loss as adjusted for the year

(323,818
)
(217,114
)


F-9

---



The
reconciliation between retained profits (losses) as previously reported and retained losses as adjusted is as follows:

2002

2001US$ '000

US$ '000Retained (losses) profits as reported as of January 1

(57,719
)
80,334Effect of change in accounting policy with respect to the fair value adjustments of available-for-sale securities

(61,325
)
17,736Retained (losses) profits as restated as of January 1

(119,044
)
98,070Net loss as adjusted for the year

(323,818
)
(217,114
)Retained losses as restated as of the end of the year

(442,862
)
(119,044
)


The
consolidated financial statements are prepared in accordance with the following significant consolidation and accounting policies:

a) Group accounting



Subsidiaries, which are those entities (including Special Purpose Entities) in which the Group has an interest of more than one half of the voting rights or
otherwise has power to govern the financial and operating policies, are consolidated.

The
existence and effect of potential voting rights that are presently exercisable or presently convertible are considered when assessing whether the Group controls another entity.

Subsidiaries
are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. The purchase method of
accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date
of acquisition plus costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the net assets of the subsidiary acquired is recorded as goodwill. See
Note 2(b) for the accounting policy on goodwill. Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated; unrealized losses are also
eliminated unless cost cannot be recovered. Where necessary,
accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.



Entities that are jointly controlled are consolidated using the proportional method which combines the Group's assets, liabilities, income and expenses with the
Group's share of the assets, liabilities, income and expenses of the joint ventures in which the Group has an interest.

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 from the joint venture 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.



Investments in associates are accounted for using the equity method of accounting. Under this method the Company's share of the post-acquisition
profits or losses of associates is recognized in the

F-10

---



consolidated
statements of profit and loss. The cumulative post-acquisition movements are adjusted against the cost of the investment. Associates are entities over which the Group
generally has between 20% and 50% of the voting rights, or over which the Group has significant influence, but which it does not control. 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. The Group's investment in associates includes goodwill (net of accumulated amortization) on acquisition. When the Group's share of losses in an associate equals or exceeds its interest in
the associate, the Group does not recognize further losses, unless the Group has incurred obligations or made payments on behalf of the associates.

b) Goodwill

The excess of cost of an acquisition over the Group's share in the fair value of the net identifiable assets of the acquired subsidiary, joint venture or
associate at the date of transaction is recorded as Goodwill and recognized as an asset in the balance sheet. Goodwill is amortized using the straight-line method over its estimated useful
life but not longer than 20 years. Goodwill on associates is included in their carrying value in the caption "Investments in associates".

At
each balance sheet date the Group assesses whether there is any indication of impairment of its recorded goodwill. If such indications exist an analysis is performed to assess whether
the carrying amount of goodwill is fully recoverable. A write-down is made if the carrying amount exceeds the recoverable amount.

Negative
goodwill represents the excess of the fair value of the Group's share of the net assets acquired over the cost of acquisition. Negative goodwill is presented in the same balance
sheet classifications as goodwill. To the extent that negative goodwill relates to expectations of future losses and expenses that are identified in the Group's plan for the acquisition and can be
measured reliably, but which do not represent identifiable liabilities, that portion of negative goodwill is recognized in the income statement when the future losses and expenses are recognized. Any
remaining negative goodwill, not exceeding the fair values of the identifiable non-monetary assets acquired, is recognized in the consolidated statements of profit and loss over the
remaining weighted average useful life of the identifiable acquired depreciable/amortizable assets; negative goodwill in excess of the fair values of those assets is recognized in the consolidated
statements of profit and loss immediately.

c) Licenses

The carrying value of licenses for the right to provide mobile cellular, wireless and other telephone services as well as related ancillary services held by joint
ventures and subsidiaries is disclosed in Note 5.

The
Group operates in an industry that is subject to changes in competition, regulation, technology and subscriber base evolution. In addition, the terms of the licenses, which have been
awarded for various periods, are subject to periodic review for, amongst other things, rate making, frequency allocation and technical standards. Licenses are initially measured at cost and are
amortized using the straight-line basis over periods of five to 20 years depending on the term of the license. Licenses held, subject to certain conditions, are renewable and are
generally non-exclusive. MIC does not currently expect any of the Group's telephone operations to be required to cease due to license reviews and renewals. Under the terms of the
respective licenses, the joint ventures and subsidiaries are entitled to enter into interconnection agreements with operators of both landline and other cellular systems.

d) Software development costs

The Group capitalizes internal software development costs. The capitalization of these costs begins when a software package's technological feasibility has been
established and the costs can be measured

F-11

---



reliably
and ends when the software package is completed and ready for use. On completion of each software package, such costs are amortized on a straight-line basis over three to five
years with a periodic evaluation as to their ultimate realization.

e) Property, plant and equipment

Property, plant and equipment is stated at cost and depreciated over the estimated useful life of the asset using the straight-line method. All
repairs and maintenance expenditures are expensed as they occur.

Maximum
estimated useful lives are:

Buildings

40 years or life of lease if lowerNetworks

five to ten yearsOther

two to seven years


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 amortized.

Costs
directly associated with the establishment of new networks primarily relate to engineering and design work for the installation of the network and systems integral to its
operation.

The
cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of
performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.

The
expected costs of retirement of assets on leased sites are recorded as a liability and included in the cost of the assets and depreciated over the useful life of the assets.

f) Inventories

Inventories consist of cellular telephone equipment and related accessories, which are classified as trading inventory, and network equipment spares, which are
classified as non-trading inventory. Inventory is stated at the lower of cost and net realisable value, with cost determined on a first-in, first-out basis.

g) Time and pledged deposits

Time deposits represent cash deposits with banks that earn interest at market rates.

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

h) Cash and cash equivalents

Highly liquid investments with an original maturity of three months or less are considered to be cash equivalents.

Cash
and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call
with banks and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are included within other debt and financing in current
liabilities on the balance sheet.

F-12

---



i) Foreign currency translation



The presentation currency of the Group is the U.S. dollar. The Company is located in Luxembourg and its subsidiaries, joint ventures and associates operate in
different currencies. The measurement currency of the Company is the U.S. dollar because of the significant influence of the U.S. dollar on its operations. The measurement currency of each subsidiary,
joint venture and associate, where these are foreign entities, reflects the economic substance of the underlying events and circumstances of these entities and is determined in accordance with the
requirements of SIC 19 "Reporting CurrencyMeasurement and Presentation of Financial Statements under IAS 21 and IAS 29".



In the financial statements of Group entities, transactions denominated in currencies other than the measurement currency are recorded in the measurement currency
at the actual exchange rate existing at the date of the transaction. Monetary assets and liabilities denominated in currencies other than the measurement currency are reported at the exchange rates
prevailing at the year-end. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the consolidated
statements of profit and loss.

For
the purposes of consolidating joint ventures and subsidiaries with measurement currencies other than U.S. dollars, the balance sheets are translated using the closing exchange rate.
Profit and loss accounts are translated at the average exchange rate during the year. Foreign exchange gains and losses arising from the translation of financial statements are recorded as a separate
component of shareholders' equity under the caption "Currency translation reserve".

The
following is a table of the principal currency translation rates to the U.S. dollar as of December 31, 2003 and 2002 and the average rates for the year ended
December 31, 2003.

|Country      |  | Currency  |  | 2003
Average rate |  | 2003
Year-end rate |  | 2002
Year-end rate
|------------ |  | --------- |  | ----------------- |  | ------------------ |  | ------------------
|Argentina    |  | Pesos     |  | 2.98              |  | 2.93               |  | 3.36              
|El Salvador  |  | Colon     |  | 8.75              |  | 8.75               |  | 8.75              
|Ghana        |  | Cedi      |  | 8,596.92          |  | 8,850.00           |  | 8,400.00          
|Guatemala    |  | Quetzal   |  | 7.93              |  | 8.02               |  | 7.64              
|Honduras     |  | Lempira   |  | 17.32             |  | 17.74              |  | 16.92             
|Laos         |  | Kip       |  | 10,682.31         |  | 10,599.00          |  | 10,600.00         
|Luxembourg   |  | Euro      |  | 0.88              |  | 0.79               |  | 0.95              
|Mauritius    |  | Rupee     |  | 28.07             |  | 26.20              |  | 29.30             
|Pakistan     |  | Rupee     |  | 57.74             |  | 57.25              |  | 58.25             
|Paraguay     |  | Guarani   |  | 6,520.58          |  | 6,100.00           |  | 7,150.00          
|Phillipines  |  | Pesos     |  | 54.29             |  | 55.54              |  | 53.60             
|Senegal      |  | CFA franc |  | 580.76            |  | 520.04             |  | 625.76            
|Sierra Leone |  | Leone     |  | 2,266.18          |  | 2,450.00           |  | 1,970.00          
|Sri Lanka    |  | Rupee     |  | 96.57             |  | 96.95              |  | 96.73             
|Sweden       |  | Kroner    |  | 8.08              |  | 7.19               |  | 8.69              
|Tanzania     |  | Shilling  |  | 1,033.27          |  | 1,057.54           |  | 963.00            

Unrealized
gains and losses arising from changes in foreign currency exchange rates are not cash flows. However, 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 period.

F-13

---







MIC 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, MIC may borrow in U.S. dollars because it is either advantageous for joint ventures and subsidiaries to incur debt obligations in U.S. dollars or because U.S. dollar-denominated borrowing
is the only funding source available to a joint venture or subsidiary. In these circumstances, MIC 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 in the currencies of the countries in which the Group operates.

j) Revenue recognition

The Group revenue sources in the consolidated statements of profit and loss comprise the following:



These recurring revenues consist of monthly subscription fees, airtime usage fees, interconnection fees, roaming fees, revenue from the provision of data clearing
services (until November 2002, when MIC disposed of MACH, Note 22) and other telecommunications services such as data services and short message 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.



Initial connection fees are recognized when charged, i.e. upon initial signing of the contract with customers.



These revenues consist of the sale of handsets and accessories. Revenues from these sales are recognized at the time that the item is delivered to the customer.

k) Prepaid cards

Prepaid cards allow the forward purchase of a specified amount of airtime by customers. 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.

l) 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 channel, 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 (Note 2 e).

m) Customer acquisition costs

Specific customer acquisition costs, including handset subsidies and free phone promotions, are charged to sales and marketing when the subscriber is activated.
Advertising costs are charged to sales and marketing when incurred and amount to $22,932,000 for the year ended December 31, 2003 (2002: $24,914,000; 2001: $31,376,000).

F-14

---



n) Leases

Operating lease rentals are charged to the statements of profit and loss on a straight-line basis over the life of the lease.

Leases
of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the
inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance
charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the
finance cost is charged to the statements of profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The
property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term.

o) Taxation

The companies of the Group are subject to taxation in the countries in which they operate. Corporate tax, including deferred taxation where appropriate, is
applied at the applicable current rates on their taxable profits. Deferred income taxes are determined using the liability method whereby the future expected consequences of temporary differences
between the tax bases of assets and liabilities and their reported amounts in the financial statements are recognized as deferred tax assets and liabilities. Currently enacted tax rates are used in
the determination of deferred income tax.

Deferred
tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred
income tax is provided on temporary differences arising on investments in subsidiaries, joint ventures and associates, except where the timing of the reversal of the temporary
difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

p) Earnings (loss) per common share

Basic earnings (loss) per common share are based on the profit (loss) for the year divided by the weighted average number of common shares outstanding during the
year taking into account, stock splits up to the date of approval of the financial statements. Diluted earnings (loss) per share is calculated by dividing the net income attributable to ordinary
shareholders by the sum of the weighted average number of common shares outstanding and the weighted average number of shares, which would be issued on the conversion of all the dilutive potential
common shares into common shares. The Company has two categories of dilutive potential ordinary shares: convertible debt and share options.

q) Amounts due from joint ventures

In the ordinary course of business, the Company advances cash to fund operations of the joint ventures. During consolidation of the Group's financial statements,
part of these advances are eliminated based on the Company's ownership percentage in each joint venture. The remaining amount represents the partner's share of the joint venture's payable to the
Company and is recorded under the caption "Amounts due from joint ventures".

r) Financial instruments

A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another
enterprise.

F-15

---



After
initial recognition, the Group revalues financial assets held as available-for-sale and derivatives at fair value.

Fair
value is defined as the amount at which the instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm's length transaction, other than
in a forced or liquidation sale. Fair values are obtained from quoted market prices, discounted cash flow models and option-pricing models using management's estimates as appropriate.



The Group classified its investments in debt and equity securities into the following categories: held-to-maturity and
available-for-sale. The classification is dependent on the purpose for which the investments were acquired. Management determines the classification of its investments at the
time of the purchase and re-evaluates such designation on a regular basis. Investments with a fixed maturity that management has the intent and ability to hold to maturity are classified
as held-to-maturity and are included in non-current assets, except for maturities within 12 months from the balance sheet date, which are classified as
current assets. Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as
available-for-sale; and are included in non-current assets unless management has the express intention of holding the investment for less than 12 months from
the balance sheet date or unless they will need to be sold to raise operating capital, in which case they are included in current assets.

Available-for-sale
securities are reported at fair value. Prior to January 1, 2003, net unrealized gains or losses were recorded within shareholders'
equity under a caption "Revaluation reserve". When the securities were sold, impaired or there was a significant and prolonged decline in the fair value below acquisition cost, the accumulated fair
value adjustments were included in the consolidated statements of profit and loss as gains and losses on investment securities. As from January 1, 2003, management determined that it was
appropriate to record the change in fair market value of available-for-sale securities in the consolidated statements of profit and loss. Accordingly, the Board of Directors
decided to change the accounting policy for fair value adjustments of available-for-sale securities and to record these adjustments in the consolidated statements of profit and
loss as from January, 1, 2003. MIC adopted the allowed alternative treatment for change in accounting policy as defined in IAS 8 "Net profit or Loss for the Period, Fundamental Errors and Changes in
Accounting Policies' which requires any adjustment resulting from retrospective application of the change in accounting policy to be included in the determination of the net profit or loss for the
current period (Note 2Changes in accounting policies).

The
Group determines the fair value of its available-for-sale securities based on quoted market prices if available. The fair value of non-marketable
securities is based on management's best estimate of the amount at which the securities could be sold in a current transaction.

Unquoted
available-for-sale equity investments are reviewed for impairment losses every balance sheet date and whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount is assessed by reference to the net present value of expected future cash
flows. The discount rate applied is based upon current market assessments of the time value of money and the risks specific to the investment. When the level of information available to calculate the
net present value of expected future cash flows makes this exercise unworkable, management use different valuation techniques to estimate whether there is objective evidence of impairment and to
determine the likely amount of impairment, if any.

Held-to-maturity
investments are carried at amortized cost using the effective yield method.

F-16

---





The fair value of the other current financial assets and liabilities due within one year approximate the carrying value disclosed in the financial statements due
to the short-term nature on which these transactions settle. Current assets, on which provisions are necessary, are netted against that provision to reflect the estimated amount that will
be settled.



Borrowings are initially recognized at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost using the
effective yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statements of profit and loss as interest charge or income
over the period of the borrowings.

Gains
or losses on restructuring of borrowings are recorded in "Other financial income".

Other
debt and financing is primarily comprised of bank loans bearing market rates of interest that vary on a regular basis.

When
convertible bonds are issued, the fair value of the liability portion is determined using a market interest rate for an equivalent non-convertible bond; this amount is
recorded as a non-current liability on the amortized cost basis until extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the conversion
option, which is recognized and included in shareholders' equity; the value of the conversion option is not changed in subsequent periods.



International Accounting Standard No.39 "Financial Instruments: Recognition and Measurement" requires that all financial assets and financial liabilities,
including derivatives, be recognized on the balance sheet. Derivatives are initially recorded at cost and then re-measured to fair value through the consolidated statements of profit and
loss under the caption "Fair value result on financial instruments". Upon adoption of IAS 39 on January 1, 2001, the Company recorded a cumulative adjustment related to these derivatives in
shareholders' equity for an amount of $45,264,000.

A
derivative embedded in a financial instrument, such as the embedded derivative on the 5% Mandatory Exchangeable Notes in Tele2 AB series B shares (Note 18), is treated as
a separate derivative when (i) its economic risks and characteristics are not closely related to those of the host contract, (ii) a separate instrument with the same terms as the
embedded derivative would qualify as a derivative, (iii) the combined instrument (derivative and host contract) is not carried at fair value with unrealized gains and losses reported in the
profit and loss.



Trade receivables are carried at original invoice amount less provision made for impairment of these receivables. A provision for impairment of trade receivables
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. The amount of the provision is the difference
between the carrying amount and the recoverable amount, being the present value of expected cash flows, discounted at the market rate of interest for similar borrowers.

F-17

---



s) Risk management



The Group has incurred significant indebtedness but evaluates its ability to meet its obligations on an ongoing basis. Based on these evaluations, the Group
devises strategies to manage its liquidity risk, including the designation of certain assets as available-for-sale.



Financial instruments that potentially subject the Group to concentrations of credit risk are primarily cash and cash equivalents, time and pledge deposits,
letters of credit, available-for-sale securities and accounts receivable. The counter-parties to the agreements relating to the Group's cash and cash equivalents, time
deposits, pledge deposits and available-for-sale securities are significant financial institutions. Management does not believe there is a significant risk of
non-performance by these counter-parties. Accounts receivable are derived from the provision of telecom services to a large number of customers, including businesses and individuals as
well as local telecommunications
companies and the related concentration of credit risk is therefore limited. The Group maintains a provision for impairment of trade receivables based upon the expected collectability of all trade
accounts receivable.

t) Impairment of non-financial assets

The recoverability of the Group's assets, including its intangible assets, is subject to the future profitability of the Group's operations and the evolution of
the business in accordance with its plans. In evaluating the recoverability of its assets, the value and future benefits of the Group's operations are periodically reviewed by management based on
technological, regulatory and market conditions. When certain operational and financial factors indicate an impairment of value, the Group evaluates the carrying value of property, plant and equipment
as well as other assets including licenses and goodwill, in relation to the operating performance, and future cash flows of the underlying assets. When indicated, the impairment losses are measured
based on the difference between the estimated recoverable amount and the carrying amount of the asset. Management's estimates of recoverable amounts for the individual asset or, if not possible, the
cash-generating unit, are based on prices of similar assets, to the extent available in the circumstances, and the result of valuation techniques. These include net present values of
estimated future cash flows and valuations based on market transactions in similar circumstances. For new product launches 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. In 2003, 2002 and 2001, management recorded an impairment loss on certain assets (Note 22).

u) Segment reporting

Business segments provide products or services that are subject to risks and returns that are different from those of other business segments. Geographical
segments provide products or services within a particular economic environment that is subject to risks and returns that are different from those of components operating in other economic
environments.

v) Comparatives

Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.

F-18

---



As
from January 1, 2003, the amortization of the licenses acquired other than by business combinations are recorded under "General and administrative expenses". The related
amounts for 2002 and 2001, respectively $10,091,000 and $8,852,000, have been reclassified accordingly from "Cost of sales" to "General and administrative expenses".

w) Equity compensation benefits

Share options are granted to Directors, management and key employees. Options are granted at the market price of the shares on the date of the grant and are
exercisable at that price. Options are exercisable in tranches beginning either one year or three years from the date of grant and have either an indefinite term or a contractual option term of
maximum six years. When the options are exercised, the proceeds received net of any transaction costs are credited to share capital (par value) and share premium. The Group does not make a charge to
staff costs in connection with share options.

x) Share capital

Common shares are classified as equity. The portion of a convertible bond representing the value of the conversion option at the time of issue is included in
equity (see Note 2 r).

Where
the Company or its subsidiaries purchases the Company's equity share capital, the consideration paid including any attributable incremental external costs net of income taxes is
deducted from total shareholders' equity as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders'
equity.

y) Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources
will be required to settle the obligation, and a reliable estimate of the amount can be made.

z) New and revised accounting standards

During 2003 and up to the date of approval of these financial statements, the International Accounting Standards Board ("IASB") released 15 revised standards,
including revised IAS 32, IAS 39 and 13 other standards in its "Improvements to International Accounting Standards" publication as well as International Financial Reporting Standard 2 "Share based
payments". MIC is currently assessing the impact of these new and revised standards, which will come into force on January 1, 2005.

F-19

---



3.  SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES

a) Subsidiaries

The Group has the following significant subsidiaries:

Holding
December 31,
2003

Holding
December 31,
2002Name of the company

Country

% of
ownership
interest

% of
ownership
interestMIC AsiaMillicom Lao Co. Ltd.(i)

Lao People's Democratic Republic

78.0

78.0Pakcom Limited

Pakistan

61.3

61.3Paktel Limited

Pakistan

98.9

98.9Celltel Lanka Limited

Sri Lanka

99.9

99.9Comvik International (Vietnam) AB(ii)

Vietnam

80.0

80.0MIC Latin AmericaTelefonica Celular de Bolivia SA

Bolivia

100.0

100.0Celcaribe SA(iii)

Colombia



95.4Telemovil El Salvador SA(iv)

El Salvador

70.0

70.0Telefonica Celular del Paraguay SA

Paraguay

96.0

96.0MIC AfricaMillicom (Ghana) Limited

Ghana

100.0

100.0Sentel GSM

Senegal

75.0

75.0Millicom Sierra Leone Limited

Sierra Leone

70.0

70.0OtherMillicom Peru SA

Peru

100.0

100.0UnallocatedMillicom International Operations SA

Luxembourg

100.0

100.0MIC-USA Inc

United States

100.0

100.0Millicom Holding BV

Netherlands

100.0

100.0Millicom International Operations BV

Netherlands

100.0

100.0Millicom Telecommunications BV

Netherlands

100.0

100.0Millicom Telecommunications SA

Luxembourg

100.0

100.0MIC Latin America BV

Netherlands

100.0

100.0Millicom International BV

Netherlands

100.0

100.0


---

F-20

---





b) Joint ventures

The Group has the following significant joint venture companies, which have been proportionally consolidated:

Holding
December 31,
2003

Holding
December 31,
2002Name of the company

Country

% of
ownership
interest

% of
ownership
interestMIC AsiaCam GSM Company Limited

Cambodia

58.4

58.4Royal Telecam International Limited

Cambodia

57.0

57.0MIC Latin AmericaComunicaciones Celulares SA

Guatemala

55.0

55.0Telefonica Celular

Honduras

50.0

50.0MIC AfricaEmtel Limited(i)

Mauritius

50.0

50.0MIC Tanzania Limited

Tanzania

59.4

57.0OtherMillicom Argentina SA

Argentina

65.0

65.0


---

MIC
determined 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 the
above ventures.

F-21

---



The
following amounts have been consolidated into the Group accounts representing the Group's share of assets, liabilities, income and expenses in the above joint ventures, excluding
divested operations.

2003

2002

2001US$ '000

US$ '000

US$ '000Revenues

208,067

186,935

180,704Total operating expenses

(144,609
)
(141,422
)
(135,763
)Operating profit

63,458

45,513

44,941Property, plant and equipment, net

124,509

134,439

125,893Licenses, net

7,079

401

451Other intangible assets, net

2,176

2,352

2,361Total non-current assets

138,685

138,079

131,140Current assets

77,539

71,237

58,841Amounts due from joint ventures to MIC

(13,137
)
(14,053
)
(14,827
)Liabilities due after more than one year

(42,577
)
(40,358
)
(35,334
)Liabilities due within one year

(74,473
)
(65,875
)
(82,804
)Cash flow:Cash provided by operating activities

86,019

46,791

34,251Cash flow from investing activities

(29,149
)
(30,879
)
(32,103
)Cash flow from financing activities

(6,760
)
(21,146
)
(13,350
)


c) Associates

The movements in associates were as follows:

2003

2002US$ '000

US$ '000Opening balance

1,013

52,858Share of results(iii)

380

62Exchange differences

(53
)
34Transfers(i)(ii)



(51,941
)Closing balance

1,340

1,013


---

F-22

---



As
at December 31, 2003 and 2002, the principal associated company, which is unlisted, was Navega S.A. This company is 45% owned by MIC's joint venture in Guatemala.

4.  GOODWILL

The movements in goodwill, including negative goodwill, were as follows:

2003

2002US$ '000

US$ '000CostOpening balance

35,562

70,431Additions(i)

46,101

2,268Write-downs (Note 22)(ii)(iii)



(36,308
)Disposals

(9,712
)
(829
)Closing balance

71,951

35,562AmortizationOpening balance

(25,390
)
(17,856
)Charge for the year(iii)

(6,695
)
(7,865
)Disposals

9,712

331Closing balance

(22,373
)
(25,390
)Net book valueClosing balance

49,578

10,172Opening balance

10,172

52,575


---

US$ '000Net present value of Acquisition price

67,371Fair value of 30% of net assets acquired

(21,270
)Goodwill

46,101


F-23

---



The
movements in negative goodwill, included in the above figures, were as follows:

2003

2002US$ '000

US$ '000CostOpening balance

(11,384
)
(11,483
)Disposals



99Closing balance

(11,384
)
(11,384
)AmortizationOpening balance

3,441

2,147Income for the year

1,391

1,393Disposals



(99
)Closing balance

4,832

3,441Net book valueClosing balance

(6,552
)
(7,943
)Opening balance

(7,943
)
(9,336
)


5.  LICENSES

Licenses comprise the amortized cost of purchased fixed fee licenses and other licenses held by joint ventures and subsidiaries (Note 2c). The movements in
licenses were as follows:

Total
2003

Total
2002US$ '000

US$ '000CostOpening balance

184,832

284,519Additions

1,137

3,962Write-downs for the year (Note 22)(i)(iii)

(3,073
)
(46,678
)Effect of change in ownership percentage/disposals

(95,174
)
(54,940
)Transfers

6,121

404Exchange rate movements

826

(2,435
)Change in consolidation method(ii)

1,622

Closing balance

96,291

184,832AmortizationOpening balance

(100,361
)
(119,978
)Charge for the year(iii)

(6,122
)
(16,726
)Effect of change in ownership percentage/disposals

43,701

36,125Transfers

(1,461
)
120Exchange rate movements

(813
)
98Change in consolidation method(ii)

(346
)
Closing balance

(65,402
)
(100,361
)Net book valueClosing balance

30,889

84,471Opening balance

84,471

164,541


---

F-24

---





During
the year, certain items have been reclassified in the balance sheet, these are shown above as transfers.

The
estimated aggregate amortization expense for amortizable intangible assets for each of the five succeeding fiscal years is shown in the table below:

Estimated amortization expense

US$ '000For the year ended December 31, 2004

7,267For the year ended December 31, 2005

5,854For the year ended December 31, 2006

3,688For the year ended December 31, 2007

2,657For the year ended December 31, 2008

2,072


6.  OTHER INTANGIBLE ASSETS, NET

The movements in other intangible assets were as follows:

Software
development
costs

Other

Total
2003

Total
2002US$ '000

US$ '000

US$ '000

US$ '000Opening balance, net

2,708

2,211

4,919

15,685Additions

1,144

1,288

2,432

4,631Disposals



(782
)
(782
)
(4,479
)Amortization for the year(i)

(884
)
(485
)
(1,369
)
(6,212
)Effect of change in ownership percentage

(9
)
(156
)
(165
)
(3,333
)Transfers







(856
)Exchange rate movements

135

(22
)
113

(517
)Closing balance, net

3,094

2,054

5,148

4,919


---

During
the year, certain items have been reclassified in the balance sheet, these are shown above as transfers.

F-25

---



7.  PROPERTY, PLANT AND EQUIPMENT

The movements in 2003 were as follows:

Land and
Buildings

Networks

Construction
in progress

Other

Total
2003US$ '000

US$ '000

US$ '000

US$ '000

US$ '000CostOpening balance

19,140

724,169

24,150

104,468

871,927Additions

1,208

31,374

62,542

8,704

103,828Disposals

(16
)
(7,296
)
(2,638
)
(6,904
)
(16,854
)Transfers(i)

1,368

40,605

(49,915
)
1,821

(6,121
)Write-down of assets



(2,518
)




(2,518
)Exchange rate movements

1,287

15,210

1,071

2,412

19,980Effect of change in ownership percentage/disposals

(85
)
(68,065
)
(1,275
)
(10,931
)
(80,356
)Change in consolidation method(ii)

960

110,089

2,613

30,062

143,724Closing balance

23,862

843,568

36,548

129,632

1,033,610DepreciationOpening balance

(4,903
)
(344,335
)


(63,756
)
(412,994
)Charge for the year

(1,733
)
(93,554
)


(19,096
)
(114,383
)Disposals

10

7,296



4,764

12,070Transfers







1,461

1,461Exchange rate movements

(311
)
(7,989
)


(1,370
)
(9,670
)Effect of change in ownership percentage/disposals

4

40,405



7,852

48,261Change in consolidation method

(304
)
(44,038
)


(26,267
)
(70,609
)Closing balance

(7,237
)
(442,215
)


(96,412
)
(545,864
)Net book valueClosing balance

16,625

401,353

36,548

33,220

487,746Opening balance

14,237

379,834

24,150

40,712

458,933Leased assets included In the above



919





919


---

F-26

---



The
movements in 2002 were as follows:

Land and
buildings

Networks

Construction
in progress

Other

Total
2002US$ '000

US$ '000

US$ '000

US$ '000

US$ '000CostOpening balance

20,778

676,243

56,763

118,691

872,475Additions

1,556

65,476

27,005

3,737

97,774Disposals

(1,194
)
(355
)
(9,781
)
(15,267
)
(26,597
)Transfers

672

33,951

(44,838
)
9,111

(1,104
)Write-down of assets



(6,833
)




(6,833
)Exchange rate movements

(2,054
)
(32,594
)
(3,211
)
(3,940
)
(41,799
)Effect of change in ownership percentage

(618
)
(11,719
)
(1,788
)
(7,864
)
(21,989
)Closing balance

19,140

724,169

24,150

104,468

871,927DepreciationOpening balance

(5,630
)
(288,065
)


(66,544
)
(360,239
)Charge for the year

(1,215
)
(87,988
)


(19,312
)
(108,515
)Disposals

1,283

8,858



16,448

26,589Transfers



459



(1,035
)
(576
)Exchange rate movements

358

16,994



1,813

19,165Effect of change in ownership percentage

301

5,407



4,874

10,582Closing balance

(4,903
)
(344,335
)


(63,756
)
(412,994
)Net book valueClosing balance

14,237

379,834

24,150

40,712

458,933Opening balance

15,148

388,178

56,763

52,147

512,236Leased assets included in the above

1,139





125

1,264


During
the year, certain items have been reclassified in the balance sheet, these are shown above as transfers.

8.  INVESTMENT IN TELE 2 AB SHARES

As of December 31, 2003 and 2002, MIC had the following investments in Tele2 AB ("Tele2") shares:

2003

2002US$ '000

US$ '000Non-current available-for-sale securities

479,040

164,031Current available-for-sale securities



101,540479,040

265,571


F-27

---



Transactions in Tele2 shares have been summarized in the table below:

Number of Shares heldTele2 series
A shares

Tele2 series
B shares

Ownership
%

Revaluation
reserve

Gain / (loss)

TotalUS$ '000

US$ '000

US$ '000Balance as of January 1, 2001

5,384,316

14,422,888

13.70
%
17,736



800,070Sale of shares



(3,513,000
)
(3.60
)%


(15,931
)
(141,126
)Exchange of Shares for FORA assets (Note 22)



2,461,449

2.63
%




79,557Change in fair value







(79,061
)


(79,061
)Balance as of December 31, 2001

5,384,316

13,371,337

12.73
%
(61,325
)


659,440Sale of shares



(8,743,110
)
(5.94
)%


(168,818
)
(336,056
)Exchange of A shares for B shares

(5,384,316
)
5,384,316







Change in fair value









(57,813
)
(57,813
)Prolonged decline in value transferred to profit and loss







61,325

(61,325
)
Balance as of December 31, 2002



10,012,543

6.79
%




265,571Sale of shares



(1,044,129
)
(0.71
)%




(33,291
)Change in fair value









246,760

246,760Balance as of December 31, 2003



8,968,414

6.08
%




479,040


Tele2
is the leading profitable alternative pan-European telecommunications company offering fixed and mobile telephony, data network and Internet services under the brand
names Tele2, Tango and Comviq to 22.3 million people in 23 countries. Tele2 is listed on the Stockholm Stock Exchange and the NASDAQ National Market.

In
2001, the Group classified its investment in Tele2 as non-current as it considered it to be a strategic investment. However, the Group sold certain of these shares during
the course of 2002 in order to meet liquidity needs and therefore re-classified the portion of its holding that was not pledged against financing (Note 18) as a current asset in the
consolidated balance sheet as of December 31, 2002. Following the issuance of the 5% Mandatory Exchangeable Notes due 2006 (Note 18), MIC reclassified its investment in Tele2 from
current to non-current assets.

The
Tele2 AB series B shares underlying the 5% Mandatory Exchangeable Notes have been lent by Millicom Telecommunications S.A. to Deutsche Bank AG London pursuant to a securities
lending arrangement. Deutsche Bank AG London may sell or on-lend such Tele2 shares under the securities lending agreement. Deutsche Bank AG London is contractually required to deliver to
Millicom Telecommunications S.A. such Tele2 shares upon requisite notice to Deutsche Bank AG London by Millicom Telecommunications S.A., if (1) Millicom Telecommunications S.A. requires such
Tele2 shares to satisfy its obligations from time to time to deliver Tele2 shares upon exchange of the 5% Mandatory Exchangeable Notes by the noteholders or (2) specified bankruptcy-related
events with respect to Deutsche Bank AG London or defaults in the performance by Deutsche Bank AG London by Millicom Telecomunnications S.A. of its obligations under the securities lending agreement
have occurred. Millicom Telecommunications S.A. is obligated to deliver Tele2 shares upon exchange of the 5% Mandatory Exchangeable Notes even in the event of a failure of Deutsche Bank AG London to

F-28

---



redeliver
to Millicom Telecommunications S.A. the Tele2 shares. Millicom Telecommunications S.A.'s obligation in respect of the delivery of those shares has not been guaranteed by the Group.

9.  INVESTMENT IN OTHER SECURITIES

As of December 31, 2003 and 2002, MIC had the following investments in other securities:

2003

2002US$ '000

US$ '000Non-currentAvailable-for-saleEl Salvador(i)



52,858Other investments(iii)

3,120

3,497Held-to-maturityU.S. Treasury strips(ii)

22,277

25,397

56,355CurrentHeld-to-maturityU.S. Treasury strips(ii)

15,291

15,291




(i) El Salvador

As of December 31, 2002 the Group no longer had control or significant influence over Telemovil, its cellular operation in El Salvador and the Group's
investment was therefore accounted for as an available-for-sale financial asset in 2002. The shares in this investment are not quoted on a public market and management was not
able to obtain reliable financial information. It was therefore concluded that estimating a fair value in these conditions was inappropriate. Consequently the investment was being carried at the
carrying amount as of December 31, 2001. On September 15, 2003, MIC resolved the shareholders dispute with the minority shareholders in Telemovil and as a result, recommenced
consolidating Telemovil as from that date (Note 3).

(ii) U.S. Treasury strips

On August 7, 2003, $45,294,000 of the net proceeds of the 5% Mandatory Exchangeable Notes was used to purchase U.S. Treasury strips, with a nominal amount
of $46,470,000 to provide for payment of the interest under the 5% Mandatory Exchangeable Notes. On November 15, 2003, $7,726,000 of the U.S. Treasury strips matured with the proceeds of
$7,745,000 being recorded in "Pledged deposits" until the first interest payment date in February 2004.

F-29

---



As
of December 31, 2003, the outstanding U.S. Treasury strips, which have effective interest rates ranging from 0.9% to 2.1%, have the following maturity dates:

US$ '000Non-currentMay 15, 2006

7,307November 15, 2005

7,434May 15, 2005

7,53622,277CurrentNovember 15, 2004

7,613May 15, 2004

7,67815,291Total

37,568


(iii) Other investments in available-for-sale securities

In January 2000, MIC invested $10,000,000 in Modern Holdings Inc. ("Modern Holdings"), formerly known as XSource Corporation (Note 29) in the
form of promissory notes. In February 2000, those notes were converted into 1,293,095 shares of common stock, representing 8.5% of the share capital of Modern Holdings. As of
December 31, 2003 and 2002 the shares of Modern Holdings are not quoted on a public market. In 2002, following a restructuring of Modern Holdings and an independent valuation, MIC recognized an
impairment loss of $7,050,000 on its investment in Modern Holdings. The carrying value of this investment is $2,950,000 as of December 31, 2003 (2002: $2,950,000). In 2003, management
determined that no change in fair value should be recorded. In addition, the Group holds other available-for-sale securities for a total fair value of $170,000 as of
December 31, 2003 (2002: $547,000).

During
the course of 2002, MIC recorded an impairment loss of $5,027,000 on its investment in Great Universal due to uncertainty concerning its recoverability.

As
indicated in Note 29, MIC does not consolidate its investment in Great Universal and Modern Holdings since the restrictions on their ability to distribute dividends is
considered a severe long-term restriction that significantly impairs their ability to transfer funds to MIC. Further, due to the existence of warrants, enabling the warrant holders to
obtain control over Great Universal and Modern Holdings, MIC considers that it does not control these companies.

10.  DERIVATIVES ARISING FROM BUSINESS COMBINATIONS

MIC or its partners have agreements to purchase or sell interests in certain operations according to fixed conditions. These agreements qualify as derivatives
under the prescribed accounting treatment in IAS 39. Details of the agreements are described as follows:

Colombiaholders of the Celcaribe Ordinary Share Trust Certificates ("Certificates") (Note 18) had an option to put
their certificates to the Company at an exercise price providing the holders with an internal rate of return of 15%. These put rights were cancelled in December 2002 when MIC entered into a
conditional agreement to sell its interest in Celcaribe S.A., whereby holders of the Certificates were required, under the provision of a "drag-along" clause, to sell their Certificates to
the buyer on the same terms and conditions as MIC. Accordingly, the fair value of the option was reduced to $nil as at December 31, 2002. The disposal of Celcaribe S.A. was declared effective
on February 13, 2003. The change in fair value of the option during the period starting January 1, 2002 to the date of

F-30

---



the
conditional sale agreement for an amount of $6,684,000 (2001: $6,176,000) was recorded in the statement of profit and loss under the caption "Fair value result on financial instruments" leading to
a liability of $21,098,000. The reversal of the liability was recorded in the statement of profit and loss under the caption "Other operating expenses".

El SalvadorAs of December 31, 2003 and 2002, there were no remaining rights or obligations by the Company to
repurchase shares as a result of the exercising of outstanding options during 2001. The settlement of the financial asset and liability resulted in a charge of $3,348,000 recorded in "Fair value
result on financial instruments" in 2001.

Express Telecommunications Co. IncAs part of the sale agreement for Express Telecommunications Co. Inc. ("Extelcom"),
MIC's operation in the Philippines, signed in
December 2002, MIC was granted, for the price of $1, the option to purchase 47.9% of the issued share capital of Extelcom at various prices up to ten years after issuance. The exercise price is
$1,000,000 if exercised within 12 months of the sale agreement increasing by an additional $1,000,000 for each year afterwards. If exercised between five and ten years after the option is
issued, the purchase price is $8,000,000. Due to the history of losses incurred by the operation and based on the financial statements of Extelcom as of December 31, 2003, management considers
that the option has nil value. The option is not exercisable in part. As of December 31, 2003, the option has not been exercised.

VietnamIn July 2002, the option granted per the shareholders' agreement to CIV's minority shareholder, which gave
right to purchase an additional 10% equity interest in CIV, was exercised at a price of $24,000. As a result the Company reversed the liability of $23,125,000 (see Note 22), resulting from the
measurement at fair value of the option until the date of exercise, by crediting the caption "Gain from sale of subsidiaries and joint ventures, net" in the statement of profit and loss. The change in
fair value to the date of exercise was $1,174,000 in 2002 and $390,000 in 2001 and was recorded as a "Fair value result on financial instruments" in the consolidated statements of profit and loss.

GhanaIn June 2002, MIC issued a call option to a former shareholder. The option allows the holder to reacquire the 30%
equity stake which he sold to MIC in 2002. The option is exercisable from June 2005 to June 2007 at an exercise price of $190,000. As of December 31, 2003, the fair value of the
option is nil (2002: nil).

11.  PLEDGED DEPOSITS

Pledged deposits represent interest bearing collateral for certain debts of Group companies (Note 18).

2003

2002US$ '000

US$ '000Pledged deposits

31,530

37,762Offset against borrowings



(4,841
)31,530

32,921


The
effective interest rate on pledged deposits as at December 31, 2003, was 1.75% (2002: 2.6%).

F-31

---



12.  INVENTORIES

The Group carries the following inventories, measured at lower of cost or net realizable value:

2003

2002US$ '000

US$ '000Trading inventories

8,754

5,589Non-trading inventories

2,187

1,373Total inventories

10,941

6,962


13.  TRADE RECEIVABLES, NET

The movements in trade receivables were as follows:

2003

2002US$ '000

US$ '000Trade receivables, grossOpening balance

140,785

162,697(Reductions)/additions, net

2,804

2,983Write-offs

(3,328
)
(4,065
)Effect of change in ownership percentage/disposals

(18,051
)
(11,442
)Change in consolidation method

23,963

Exchange rate movement

3,776

(9,388
)Closing balance

149,949

140,785Provision for doubtful receivablesOpening balance

(27,564
)
(26,619
)Impairment charge

(8,090
)
(6,624
)Write-offs

3,328

4,065Effect of change in ownership percentage/disposals

4,639

635Change in consolidation method

(7,996
)
Exchange rate movement

(516
)
979Closing balance

(36,199
)
(27,564
)Trade receivables, netClosing balance

113,750

113,221Opening balance

113,221

136,078


Included
in the net trade receivables balance above is $83,870,000 (2002: $82,356,000) related to amounts due from national telecommunication companies in respect of interconnection.
These amounts are expected to be recovered within one year.

F-32

---



14.  OTHER CURRENT ASSETS

Other current assets are comprised as follows:

2003

2002US$ '000

US$ '000Taxes receivable

6,416

9,758Receivable from VMS, net(i)

16,940

11,503Advances paid to suppliers

12,061

4,460Other current assets

14,166

12,73249,583

38,453


---

15.  TIME DEPOSITS

Time deposits as of December 31, 2003 of $32,880,000 (2002: $16,200,000) represent cash deposits with banks which earn market rates of interest and have
original maturity periods of between three and twelve months.

As
of December 31, 2003, the effective interest rate on short-term bank deposits was approximately 3.4% (2002: 4.6%).

16.  CASH AND CASH EQUIVALENTS

Cash and cash equivalents are comprised as follows:

2003

2002US$ '000

US$ '000Cash and cash equivalents in US dollars

86,871

42,252Cash and cash equivalents in other currencies

61,958

28,199Total cash and cash equivalents

148,829

70,451


17.  SHAREHOLDERS' EQUITY

On February 16, 2004 an extraordinary general meeting of shareholders approved a stock split of the issued shares of the Company, by which each share with
a par value of $6 was split into four new ordinary shares with a par value of $1.50 each. The stock split became effective on February 20, 2004. All figures in this note have been updated to
reflect the stock split for all years presented.

a) Share capital and premium

The authorized share capital of the Company totals 133,333,200 registered shares. At December 31, 2003, the total subscribed and fully paid-in
share capital and premium amounts to $239,876,270 (2002: $281,989,458) consisting of 66,319,940 (2002: 94,832,972) registered common shares at a par value of $1.50 (2002: $1.50) each.

As
a result of the Merger (Note 1), 26,553,770 shares of MIC's common stock were issued to former Millicom stockholders on December 31, 1993. In February 1994, under
the terms of the Merger Agreement, 1,231,628 interim additional merger shares were issued to former Millicom stockholders and 282,485 shares of MIC's common stock were issued to Great Universal. Under
the terms of the Merger Agreement, the former Millicom shareholders also had the non-transferable contingent right to

F-33

---



receive
a maximum of 1,077,396 final additional merger shares of common stock based on the payment of certain tax liabilities of Millicom (the "Tax Liabilities").

In
October 2001, the Group determined that the Tax Liabilities amounted to $7,023,000. At the time of the Merger, the Group had recorded a provision of $13,544,000 for the Tax
Liabilities, resulting in a difference of $6,521,000. That difference was settled by the final issuance of 499,361 shares and a realized gain of $3,521,000 (Note 23), corresponding to the
difference between the issuance price and the share price as of the date of the transaction.

In
2003 MIC issued convertible notes (see c) 2% PIK Notes below) which if converted into MIC's common shares would convert into 23,289,348 shares of MIC's common shares.

b) Treasury stock

As a result of the Merger, 28,862,794 shares of MIC's common shares, previously held by Millicom, were held by subsidiaries of MIC-USA, and accounted
for as treasury stock for consolidated reporting purposes. In February 2003, an Extraordinary General Meeting of MIC passed a resolution approving the reduction of $43,294,192 of the share
capital of the Company by means of the cancellation of the 28,862,794 shares with a par value of $1.50 each.

In
2003, nil (2002: 515,133; 2001: nil) own shares were acquired by the Company. Those acquired were accounted for as treasury stock. In 2003, nil (2002: nil; 2001: 444) shares were
issued from treasury stock under share option plans.

In
2003, MIC used 177,428 from its holding of treasury stock to Kinnevik International AB as final payment on the partial acquisition of MACH in 1995 (Note 29).

As
of December 31, 2003, the total number of treasury shares held was 654,852 (2002: 29,695,072) MIC shares.

c) 2% PIK Notesequity component

In May 2003, MIC announced the closure of the exchange offer for its 13.5% Senior Subordinated Notes. As a result of the exchange, MIC issued $63,531,000
of MIC's 2% Senior Convertible PIK (payment-in-kind) Notes due 2006 ("2% PIK Notes") (Note 18). MIC's 2% PIK Notes are convertible at any time at the holder's option
into MIC common stock at a conversion price of $2.69 per share (price after stock split). MIC has apportioned part of the value of these notes to equity and part to debt (Note 18). The value
allocated to equity as at December 31, 2003, was $16,006,000.

In
2003, MIC issued 349,760 common shares to holders of 2% PIK Notes who converted their 2% PIK Notes. If the remaining principal amount of the 2% PIK Notes were converted into MIC's
common shares, they would convert into 23,289,348 shares of MIC common shares, which would constitute approximately 26% of the then issued and outstanding common shares.

d) Legal and consolidation reserves

On an annual basis, if the Company reports a net profit for the year, 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. A consolidation reserve is required for consolidated
profits that are not available for distribution.

See
Note 18 for other restrictions relating to dividend payments.

F-34

---



e) Options outstanding

The following table summarizes information about stock options outstanding at December 31, 2003, which have been issued to Directors, management, officers
and employees of the Group. Shares issued when stock options are exercised benefit from the same rights as common shares. The Company has elected to not record the expense associated with the issuance
of stock options as permitted under IFRS. The market price of the Company's shares as at January 1, 2003 and December 31, 2003 was respectively $1.37 and $17.50.

Options Outstanding

Options ExercisableRange
of
Exercise Prices $

Number
outstanding at
Dec. 31, 2003

Weighted
Average Exercise
Price $

Number
exercisable at
Dec. 31, 2003

Weighted
Average Exercise
Price $3.32 - 3.75

2,091,240

3.48

88,889

3.759.00

721,068

9.00

222,221

9.0016.78 - 20.34

659,715

18.75

630,828

18.6828.50 - 29.745

283,984

29.28

283,984

29.2831.875 - 36.66

764,801

33.33

654,930

33.573.32 - 36.66

4,520,808

13.26

1,880,852

23.61


The
following table summarizes the terms of options outstanding as of December 31, 2003:

|Date issued                                                                                                                      |  | Number of
options |  | Exercise price
$ |  | Terms of option                                                                                                                                                                  
|-------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ---------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|May 1994, May 1995, May 1996, May 1997, January 1998, May 1998, August 1999, May 2000, December 2001, December 2002 and May 2003 |  | 2,749,708         |  | 3.32 - 36.66     |  | Exercisable over a three-year period in equal installments. Options have an indefinite life.                                                                                     
|May 2003                                                                                                                         |  | 550,500           |  | 3.32             |  | Exercisable over a three-year period in equal installments. Options expire after six years from date of grant.                                                                   
|May 1998, August 1999, May 2000, June 2000, December 2001 and December 2002                                                      |  | 1,220,600         |  | 3.75 - 31.88     |  | Exercisable over a five-year period (1/3 vested after three years, 2/3 vested after four years, 100% vested after five years). Options expire after six years from date of grant.

F-35

---



A
summary of the Company's stock options as of December 31, 2003, 2002 and 2001, and changes during the years then ended is as follows:

2003

2002

2001Number of options

Weighted
average
exercise
price $

Number
of
options

Weighted
average
exercise
price $

Number
of
options

Weighted
average
exercise
price $Outstanding at beginning of year

4,221,004

18.63

5,127,143

22.80

4,189,629

27.67Granted

1,320,500

3.32

800,000

3.75

1,353,867

9.00Exercised









(444
)
16.78Forfeited

(1,020,696
)
22.64

(1,706,139
)
24.18

(415,909
)
27.11Outstanding at end of year

4,520,808

13.26

4,221,004

18.63

5,127,143

22.80Exercisable at end of year

1,880,852

23.61

1,956,204

25.40

2,056,371

27.68


Other
options in subsidiary companies, outstanding at December 31, 2003, have been issued to officers and employees of the Group as follows:

Millicom Argentina S.A.An option plan was established on December 15, 2000 for certain employees and officers to
purchase a total of 10% of the share capital of Millicom Argentina S.A. The strike price of these options is calculated as the corresponding share of MIC's historic total investment in the relevant
operation. These options are exercisable in tranches until December 31, 2005. As of December 31, 2001, 8.8% of the share capital had been issued under the option plan. The right to
exercise options over 8.2% of the share capital was cancelled. As of December 31, 2003, none of the remaining options were exercised.

Millicom International BVAn option plan was established on December 15, 2000 for certain employees and officers to
purchase a total of 1.7% of the share capital of Millicom International BV. The strike price of these options is calculated as the corresponding share of MIC's historic total investment in the
relevant operation. These options are exercisable in tranches until December 31, 2005 and were all issued in 2000. During 2002 the right to exercise options over 0.7% of the share capital was
cancelled. As of December 31, 2003, none of the remaining options were exercised.

F-36

---



18.  BORROWINGS

Borrowings comprise:



2003

2002US$ '000

US$ '000Corporate debt at amortized cost13.5% Senior Subordinated Notes(c)



912,53910% Senior Notes(d)

536,036

2% PIK Notesdebt component(e)

50,923

5% Mandatory Exchangeable Notes(f)

327,635

914,594

912,539Other debt and financing:Secured equipment financing facilities

8,484

15,709Secured bank financing facilities

173,553

207,941Total long-term other debt and financing

182,037

223,650Less: portion payable within one year

(55,887
)
(64,280
)Total other debt and financing due after more than one year

126,150

159,370




2003

2002US$ '000

US$ '000Other debt and financing:Secured equipment financing facilities

3,848

11,200Secured bank financing facilities

72,929

81,186Total short term other debt and financing

76,777

92,386Portion of long-term debt payable within one year

55,887

64,280Total other debt and financing due within one year

132,664

156,666


a) Company borrowings

Borrowings mainly comprise notes, including corporate debt, term loans and revolving credit facilities in various countries and are mainly denominated in U.S.
dollars. Average interest on these facilities is approximately 7.3% (2002: 12.5%, 2001: 12.9%). Average interest on short-term borrowings is approximately 6.8% (2002: 10.2%, 2001: 10.3%).
Also included in debt and other financing is $160,000 (2002: $456,000) in respect of finance leases (Note 28).

As
of December 31, 2003, group companies had outstanding standby letters of credit and guarantees of $29,187,000 and $124,410,000 respectively (2002: $25,303,000 and $106,606,000)
securing debt and commitments of other group companies. Accordingly, the Group's share of this debt is recorded in the balance sheet under the caption "Other debt and financing" and is described in
this note below.

In
the normal course of business, MIC Group Companies have issued corporate guarantees to secure the obligations of some operations under bank, lease and supplier's financing agreements
for other group companies. The table below describes, for each operation, the outstanding amount under the guarantees and the remaining terms of the guarantees. Amounts identified as bank guarantees
are recorded in the Consolidated balance sheet under the caption "Other debt and financing".

F-37

---



|                  |  | Bank and other financing
Guarantees
(2) |  | Terms as at
December 31, 2003 |  | Maximum
exposure |  | Lease
guarantees |  | Terms as at
December 31, 2003 |  | Maximum
exposures |  | Suppliers'
guarantee
(3) |  | Terms as at
December 31, 2003 |  | Maximum
exposure |  | Total
Outstanding |  | Total
Exposure |  | MIC
Liabitlity
|----------------- |  | --------------------------------------- |  | ----------------------------- |  | ---------------- |  | ---------------- |  | ----------------------------- |  | ----------------- |  | ------------------------ |  | ----------------------------- |  | ---------------- |  | ----------------- |  | -------------- |  | --------------
|
|MIC Latin America |  |                                         |  |                               |  |                  |  |                  |  |                               |  |                   |  |                          |  |                               |  |                  |  |                   |  |               
|Argentina         |  | 107                                     |  | Due within 1 year             |  | 5,100            |  | 57               |  | Due within 1 year             |  | 850               |  |                          |  |                               |  |                  |  | 164               |  | 5,950          |  | 164           
|Bolivia           |  | 29,865                                  |  | 0-2 years                     |  | 47,261           |  |                  |  |                               |  |                   |  |                          |  |                               |  |                  |  | 29,865            |  | 47,261         |  | 35,487        
|Paraguay          |  | 125                                     |  | Due within 1 year             |  | 125              |  |                  |  |                               |  |                   |  |                          |  |                               |  |                  |  | 125               |  | 125            |  | 9,963         
|Peru              |  | 75                                      |  | Due within 1 year             |  | 320              |  |                  |  |                               |  |                   |  | 600                      |  | more than 5 years             |  | 600              |  | 675               |  | 920            |  | 675           
|El Salvador(1)    |  | 54,017                                  |  | more than 5 years             |  | 61,517           |  |                  |  |                               |  |                   |  |                          |  |                               |  |                  |  | 54,017            |  | 61,517         |  | 75,714        
|Guatemala         |  | 762                                     |  | more than 5 years             |  | 762              |  |                  |  |                               |  |                   |  |                          |  |                               |  |                  |  | 762               |  | 762            |  | 21,945        
|MIC Asia          |  |                                         |  |                               |  |                  |  |                  |  |                               |  |                   |  |                          |  |                               |  |                  |  |                   |  |                |  |               
|Pakistan          |  | 12,743                                  |  | more than 5 years             |  | 19,816           |  |                  |  |                               |  |                   |  | 15,612                   |  | 0-3 years                     |  | 22,855           |  | 28,355            |  | 42,671         |  | 45,745        
|Cambodia          |  | 3,731                                   |  | 0-2 years                     |  | 13,923           |  |                  |  |                               |  |                   |  | 4,657                    |  | 0-2 years                     |  | 4,657            |  | 8,388             |  | 18,580         |  | 8,388         
|Sri Lanka         |  | 10,020                                  |  | more than 5 years             |  | 23,168           |  |                  |  |                               |  |                   |  | 1,010                    |  | 3-4 years                     |  | 1,010            |  | 11,030            |  | 24,178         |  | 16,548        
|Vietnam           |  | 12,139                                  |  | more than 5 years             |  | 12,139           |  |                  |  |                               |  |                   |  |                          |  |                               |  |                  |  | 12,139            |  | 12,139         |  | 12,468        
|Lao PDR           |  | 826                                     |  | 2-3 years                     |  | 1,653            |  |                  |  |                               |  |                   |  |                          |  |                               |  |                  |  | 826               |  | 1,653          |  | 5,435         
|Total guarantees  |  | 124,410                                 |  |                               |  | 185,784          |  | 57               |  |                               |  | 850               |  | 21,879                   |  |                               |  | 29,122           |  | 146,346           |  | 215,756        |  | 232,532       

---

Additional guarantees are as follows: 1) MIC has guaranteed the payment by Telemovil of $70,000,000 to its minority shareholders, as
described in Note 3(a); 2) MIC's subsidiary MIOBV guarantees MIC's 2% PIK Notes, as described below.

The
Group's share of the carrying amount of total pledged assets held by operating entities securing Group debt is $178,739,000 (2002: $97,204,000). The book value of pledged assets held
by non-operating entities at December 31, 2003 is $479,040,000 (2002: $164,031,000). The Group has pledged 8,968,400 Tele2 AB series B shares (2002: 6,184,293). As of
December 31, 2003, the Group had $31,530,000 (2002: $37,762,000) of pledged deposits against borrowings. The Group's share of total debt secured by either pledged assets, letters of credit or
Company guarantees is $644,651,000 (2002: $189,395,000).

The
total interest charged in the year is $135,172,000 (2002: $185,959,000, 2001: $209,912,000).

b) Debt restructuring

In 2003, MIC implemented a restructuring plan to reduce its indebtedness and debt service obligations. As of December 31, 2002, MIC had total consolidated
indebtedness of $1.23 billion, which required a substantial amount of cash from operations to service its debt. MIC has also divested selected assets (MIC divested
MIC Systems (including MACH), certain Tele2 AB shares, its operation in the Philippines, its operation in Colombia and Liberty Broadband Limited).

In
May 2003, $776 million or 85%, of the outstanding amount of MIC's Senior Subordinated 13.5% Notes due 2006 (the "Old Notes") had been tendered in MIC's private exchange
offer. Holders of the tendered Old Notes also consented to certain amendments to the indenture covering the Old Notes.

Upon
closure of the exchange offer referred to above, MIC issued $562 million of MIC's 11% Senior Notes due 2006 (the "11% Senior Notes") and $64 million of MIC's 2% Senior
Convertible PIK (payment-in-kind) Notes due 2006 ("2% PIK Notes") in exchange for the $776 million of Old Notes tendered. In addition, MIC also paid to holders of the
Old Notes, who consented to the amendments of the Old Notes' indenture, $50 per $1,000 of Old Notes so consented (excluding affiliates of MIC), or approximately $38 million in aggregate. MIC's
2% PIK Notes are convertible at any time at the holder's option into MIC common stock at a conversion price of $2.69 per share (price after stock split). The debt exchange resulted in a gain of
$96,748,000. This gain is recorded under the caption "Other financial income".

F-38

---



On August 7, 2003, MIC's subsidiary, Millicom Telecommunications S.A., issued for an aggregate value of SEK 2,555,994,000 (the equivalent of approximately $310 million)
mandatory exchangeable notes, which are mandatorily exchangeable into shares of Tele2 AB (the "5% Mandatory Exchangeable Notes"). On August 15, 2003 and September 30, 2003, MIC
repurchased in private transactions $57 million and redeemed $110 million, respectively, in aggregate principal amount of the 11% Senior Notes. In August 2003, MIC also repaid the
outstanding amount of the Toronto Dominion facility of $64 million.

On
November 7, 2003, MIC commenced a cash tender offer and consent solicitation relating to all of the $395 million outstanding principal amount of the 11% Senior Notes,
which expired on December 8, 2003.

On
November 24, 2003, MIC issued $550 million principal amount of 10% Senior Notes due 2013 (the "10% Senior Notes") and issued a notice of redemption in respect of the
total remaining outstanding amount of Old Notes. MIC used approximately $273 million of the proceeds of the offering of the 10% Senior Notes to acquire the outstanding amount of 11% Senior
Notes tendered on or prior to December 8, 2003. MIC issued a notice of redemption with respect to the total remaining outstanding amount of 11% Senior Notes on December 5, 2003, with a
redemption date of December 10, 2003. MIC used $143.8 million of the proceeds from the 10% Senior Notes to redeem in full the remaining outstanding amount of 11% Senior Notes. Finally
MIC redeemed the Old Notes in their entirety on December 29, 2003.

c) Senior Subordinated 13.5% Notes

On June 4, 1996, the Company raised $483,433,000 (after deducting discount and estimated expenses) through a private offering of Senior Subordinated 13.5%
Notes due 2006 (the "Old Notes"). The Old Notes were issued at 52.075% of their principal amount of $962,000,000 and the purchase discount on the Old Notes accretes from issuance at an effective
interest rate of 14.4%. Cash interest began to accrue on the Old Notes on June 1, 2001 at a rate of 13.5% per annum, payable semi-annually in arrears on June 1 and
December 1, until maturity on June 1, 2006.

During
2002, the Company re-purchased Old Notes for a value of $44,000,000 at market prices at the time, realizing a gain of $28,676,000 recorded in the consolidated
statement of profit and loss under the heading "Other financial income". As of December 31, 2002, the outstanding balance of
the Old Notes was $918,000,000 and the unamortized portion of deferred financing fees was $5,461,000 (2001: $7,399,000).

The
fair value of the Old Notes at December 31, 2002, which was determined from their market value, was $440,066,000.

The
Old Notes have been exchanged or repaid in 2003 (see b above).

d) 10% Senior Notes

On November 24, 2003, MIC 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, beginning on June 1, 2004. Interest has been
accrued from November 24, 2003 at an effective interest rate of 10.7%.

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

F-39

---



Other
than out of the proceeds of certain public equity offerings prior to December 1, 2006, or for certain tax reasons, MIC may not redeem the 10% Senior Notes prior to
December 1, 2008. On or after December 1, 2008, MIC may redeem all or a portion of the 10% Senior Notes at prices ranging from 105% to 100%.

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

The
indenture contains certain covenants that, among other things, limit MIC's ability to incur additional indebtedness, make certain payments, including dividends or other
distributions, with respect to MIC's share capital and the share capital of MIC's subsidiaries, make certain investments, prepay
subordinated debt, create certain liens, engage in certain transactions with affiliates, engage in certain asset sales, consolidate, merge or transfer all or substantially all MIC's assets and enter
into other lines of business. Certain of these covenants will no longer apply if the 10% Senior Notes are rated above a certain level by the rating agencies or if MIC meets certain financial criteria
after three years following their issuance date.

As
of December 31, 2003, the carrying amount of the 10% Senior Notes is $536,036,000.

e) 2% PIK Notesdebt component

The 2% PIK Notes mature on June 1, 2006. The 2% PIK Notes bear interest at a rate of 2%, payable at the option of MIC, in either additional 2% PIK Notes or
in cash, semi-annually in arrears on June 1 and December 1. The difference between the initial carrying amount of the debt component of the 2% PIK Notes and its nominal
amount accretes at an effective interest rate of 11%.

The
2% PIK Notes are convertible at any time, at the option of the holder, into MIC common stock at a conversion price of $2.69 (price after stock split) per share of common stock. At
the maturity of the 2% PIK Notes, MIC may, at its option, pay all or a portion of the then outstanding principal amount in cash or in shares of its common stock. MIC may redeem the 2% PIK Notes at any
time, in whole or in part, prior to June 1, 2004, at a price equal to 102.25% of their principal amount, and thereafter at a price equal to their principal amount. The 2% PIK Notes are senior
unsecured obligations and rank senior in right of payment to all MIC's subordinated indebtedness. The 2% PIK Notes are unconditionally and irrevocably guaranteed by Millicom International Operations
B.V.

As
of December 31, 2003, the debt component of the 2% PIK Notes amounted to $50,923,000.

f) 5% Mandatory Exchangeable Notes

On August 7, 2003, Millicom Telecommunications S.A., MIC's wholly-owned subsidiary, issued for an aggregate value of SEK 2,555,994,000 (approximately
$310 million) Mandatory Exchangeable Notes (the "5% Mandatory Exchangeable Notes"), which are exchangeable into Tele2 AB series B shares. The 5% Mandatory Exchangeable Notes may be
exchanged either voluntarily at the option of the noteholders or mandatorily by Millicom Telecommunications S.A. as described below. The 5% Mandatory Exchangeable Notes will be exchangeable for an
aggregate of up to 8,968,400 Tele2 AB series B shares (Note 8) which MIC beneficially owned through Millicom Telecommunications S.A. The number of Tele2 shares that Millicom
Telecommunications S.A. is obligated to deliver is based on a formula that takes into account the market price of the Tele2 shares prior to any exchange. Under the formula, Millicom Telecommunications
S.A. could retain up to 30% of the increase in value of the Tele2 shares over the designated reference price of SEK 285 per share. As a result, at August 6, 2006 or earlier if all of the 5%
Mandatory Exchangeable Notes have been redeemed and exchanged prior to that date, Millicom Telecommunications S.A. could own up to approximately 23% of the 8,968,400 Tele2 AB series B shares
underlying the 5% Mandatory Exchangeable Notes.

F-40

---



The
5% Mandatory Exchangeable Notes may be exchanged voluntarily at the option of the noteholders at any time during the period commencing on September 17, 2003 and ending on the
25th trading day prior to August 7, 2006, which is expected to be July 11, 2006. In addition, the 5% Mandatory Exchangeable Notes may be exchanged voluntarily at the option of the holder
in the event of certain changes in tax laws and in the event of a takeover offer in respect of Tele2 AB. Dividends, if any, paid by Tele2 AB would be attributed to the 5% Mandatory Exchangeable Notes
holders.

Unless
otherwise previously redeemed and exchanged or purchased and cancelled, each 5% Mandatory Exchangeable Note will be mandatorily exchanged by Millicom Telecommunications S.A. on
August 7, 2006.

The
5% Mandatory Exchangeable Notes bear interest on the U.S. dollar equivalent amount of each note at a rate of 5% per annum payable semi-annually on February 7 and
August 7 of each year. The effective interest rate is 8.45%. As of December 31, 2003 the carrying amount of the 5% Mandatory Exchangeable Notes net of unamortized financing fees was
$327,635,000. In 2003, an exchange loss of $41,820,000 was recognized on the 5% Mandatory Exchangeable Notes.

As
part of the financing, MIC purchased U.S. treasury strips with a nominal value of $46,470,000 which will be used to settle the interest payments (Note 9).

The
5% Mandatory Exchangeable Notes include an embedded derivative, which is valued separately. The embedded derivative, which reflects MIC's limited right to participate in the increase
in value of the Tele2 shares, is recorded at fair value, taking into account time and volatility factors. As of December 31, 2003, the fair value of the embedded derivative amounted to
$103,457,000, with the variation for the period from August 7, 2003 to December 31, 2003 amounting to $84,578,000 recorded under the caption "Fair value result on financial instruments".

g) Other debt and financing

MIC's share of total other debt and financing analyzed by country is as follows:

2003

2002US$ '000

US$ '000Bolivia(i)

35,487

46,660Colombia(ii)



78,819El Salvador(iii)

75,714

Guatemala(iv)

21,945

28,817Pakistan(v,vi)

45,745

45,373Paraguay

9,963

8,517Senegal

17,585

8,078Sri Lanka(vii)

16,548

23,325Tanzania(viii)

7,819

2,565Vietnam

12,468

6,493Other

15,180

17,212less: pledged deposits



(4,841
)Total

258,454

261,018Corporate

360

55,018Total other debt and financing

258,814

316,036Of which:due after more than 1 year

126,150

159,370due within 1 year

132,664

156,666258,814

316,036


F-41

---



In
December 2001, the Group entered into an equity swap transaction with Toronto-Dominion Bank for a maximum facility amount of SEK 1,855 million ($175 million as of
December 31, 2001). In exchange for the facility, the Group pledged Tele2 AB series B shares. The number of shares pledged was adjusted on a monthly basis based on the market value of
these Tele2 shares. The facility's interest rate was calculated using the STIBOR one-month rate plus 2%, payable on a monthly basis, with a final maturity in November 2004. As of
December 31, 2002 $54,638,000 was outstanding under this facility collateralized by 6,184,293 Tele2 AB series B shares. This transaction was accounted for as a borrowing and the related
Tele2 AB series B shares were recorded as pledged securities under the caption "Investment in Tele2 AB shares" in non-current asset. In 2003, the outstanding amount due under this
agreement was fully repaid (see b).

As
of December 31, 2003, MIC was in breach of loan covenants for a total debt of $28,765,000 (2002: $22,459,000), which is classified as current debt on the balance sheet. None of
the above facilities have been called by the banks concerned. In the opinion of management, the outcome of discussions to resolve these breaches will not materially impact the ability of the companies
concerned to maintain adequate funding arrangements to support and develop future operations.

Significant
individual financing facilities are described below (amounts disclosed exclude effect of proportional consolidation):



F-42

---





In June 2003, MIC Tanzania entered into a syndicated term loan facility agreement with Standard Chartered Bank Tanzania Limited as arranger, pursuant to
which MIC Tanzania borrowed an aggregate of $15,000,000 ($6,000,000 in U.S. dollars and $9,000,000 in Tanzania Shillings). This facility bears interest for the advances in U.S. dollars at LIBOR plus
4.50% and for the advances in Tanzanian Shillings at the Treasury Bill Rate plus 4.50%, with a minimum applicable interest rate of 12% per annum. As of December 31, 2003, $13,173,000 of this
facility was outstanding.

F-43

---



h) Fair value of financial liabilities

The fair value of the financial liabilities disclosed above has not been determined due to constraints of timeliness and costs. However all relevant information
about the principal characteristics of these liabilities that are pertinent to their respective fair value have been disclosed individually.

i) Analysis of borrowings by maturity

The total amount repayable at December 31, 2003 and 2002 is as follows:

Corporate
2003

Operations
2003

Total
2003

Corporate
2002

Operations
2002

Total
2002US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000Due within:1 year

360

132,304

132,664



156,666

156,6661 - 2 years



51,622

51,622

57,536

65,435

122,9712 - 3 years

418,129

35,889

454,018

380

19,768

20,1483 - 4 years



13,964

13,964

918,000

10,666

928,6664 - 5 years



1,601

1,601



6,676

6,676Due after 5 years

550,000

23,074

573,074



1,807

1,807Total repayable

968,489

258,454

1,226,943

975,916

261,018

1,236,934Unamortized difference between carrying amount and nominal amount

(53,535
)


(53,535
)
(8,359
)


(8,359
)Total debt, net

914,954

258,454

1,173,408

967,557

261,018

1,228,575Of which subordinated(i)







918,000

67,700

985,700


---

19.  OTHER CURRENT LIABILITIES

Other current liabilities are comprised as follows:

2003

2002US$ '000

US$ '000Taxes payable

47,280

25,530Deferred revenue

31,915

19,569Subscriber deposits

5,265

6,463Other current liabilities

28,244

23,436112,704

74,998


F-44

---



20.  ANALYSIS OF GROUP REVENUES AND COST OF REVENUES, SEGMENTAL REPORTING

The Group mainly operates in one reportable industry segment, telecommunications services. The Group's revenues comprise the following:

2003

2002

2001US$ '000

US$ '000

US$ '000Provision of telecom services

621,728

581,321

600,315Connection revenues

10,212

7,982

9,567Equipment revenues

15,164

15,883

34,688Total revenues

647,104

605,186

644,570


The
Group's cost of sales comprise the following:

2003

2002

2001US$ '000

US$ '000

US$ '000Costs from the provision of telecom services

(229,169
)
(227,154
)
(220,850
)Connection costs

(5,680
)
(5,600
)
(6,019
)Equipment costs

(23,153
)
(26,776
)
(47,722
)Total cost of sales

(258,002
)
(259,530
)
(274,591
)


The
segmental reporting by strategic operating entity is prepared on a geographical basis and reflects the measures of segmental profit and loss and financial position reviewed by
management. The strategic segments are defined in Notes 1 and 3. As mentioned in Note 3, MIC reclassified in 2003 its interest in Mauritius from the segment MIC Asia to the segment MIC Africa.
The segmental information for 2002 and 2001 is restated below accordingly.

Other
than financing arrangements, there are no significant transactions between the segments. For the purposes of this presentation, corporate expenses are recorded in Unallocated.

2003

2002

2001US$ '000

US$ '000

US$ '000MIC AsiaRevenues

280,956

223,740

201,744of which divested



1,113

5,878Depreciation and amortization

(64,762
)
(50,770
)
(47,624
)of which divested



(4,812
)
(3,870
)Operating profit

91,162

70,536

52,777of which divested



(5,601
)
(4,048
)Non-cash (expenses) income

(409
)
199

(1,559
)of which divested



199

(1,380
)Profit before minority interest

68,768

45,640

25,868of which divested



(13,318
)
(11,450
)Assets

273,605

273,611of which divested



Capital expenditure

57,757

39,991of which divested



4Liabilities

(228,436
)
(188,233
)of which divested






F-45

---



2003

2002

2001US$ '000

US$ '000

US$ '000MIC Latin AmericaRevenues

270,664

277,554

315,321Of which divested

5,926

50,506

45,889Depreciation and amortization

(47,004
)
(57,656
)
(70,577
)Of which divested

(2,058
)
(16,441
)
(16,989
)Operating profit (loss)

84,890

(10,867
)
63,424Of which divested

(256
)
(35,294
)
(2,178
)Profit from associates

380

62

Non-cash income (expenses)

3,827

(84,563
)
(1,422
)Profit (loss) before minority interest

60,354

(1,648
)
9,897Of which divested

(2,218
)
(40,498
)
(18,239
)Assets

410,483

451,997Of which divested



110,711Capital expenditure

22,057

33,379Of which divested



2,555Liabilities

(281,783
)
(205,192
)Of which divested



(7,919
)


2003

2002

2001US$ '000

US$ '000

US$ '000MIC AfricaRevenues

84,858

62,011

53,214Depreciation and amortization

(13,855
)
(10,129
)
(9,936
)of which divested



(20
)
(15
)Operating profit

17,006

2,172

3,266of which divested



(392
)
(311
)Non-cash expenses

(4,239
)
(745
)
(15
)Profit (loss) before minority interest

6,600

(5,351
)
(5,243
)of which divested



(500
)
(378
)Assets

119,630

102,972Capital expenditure

24,002

16,248of which divested



12Liabilities

(123,386
)
(110,257
)


F-46

---



2003

2002

2001US$ '000

US$ '000

US$ '000OtherRevenues

10,626

15,671

11,945of which divested

250

3,620

3,511Depreciation and amortization

(2,516
)
(8,088
)
(5,707
)of which divested

(29
)
(1,169
)
(2,671
)Operating loss

(3,622
)
(18,366
)
(11,124
)of which divested

158

(11,992
)
(8,024
)Non-cash expenses

(3,184
)
(12,545
)
(20,108
)of which divested



(6,833
)
(20,074
)Loss before minority interest

(3,699
)
(24,483
)
(16,634
)of which divested

95

(14,489
)
(12,031
)Assets

9,648

15,604of which divested



1,217Capital expenditure

12

7,217of which divested



1,743Liabilities

(11,085
)
(14,485
)of which divested



(1,487
)


2003

2002

2001US$ '000

US$ '000

US$ '000MIC Systems (divested in 2002)Revenues



28,186

26,300Depreciation and amortization



(6,814
)
(4,588
)Operating profit



7,275

5,864Non-cash expenses



(53
)
(211
)Profit before minority interest



3,892

3,124Capital expenditure



774




2003

2002

2001US$ '000

US$ '000

US$ '000FORA Telecom (divested 2001)Revenues





37,716Depreciation and amortization





(8,126
)Operating profit





1,061Non-cash expenses





(408
)Loss before minority interest





(9,844
)


F-47

---



2003

2002

2001US$ '000

US$ '000

US$ '000Unallocated itemsRevenues



41

15Depreciation and amortization

(432
)
(5,861
)
(7,633
)Operating (loss) profit

(26,921
)
71,563

(22,482
)of which divested



(1,410
)
(440
)Loss from associates





(3,112
)Non-cash (expenses) income

(1,854
)
(464
)
655Profit (loss) before minority interest

61,495

(380,699
)
(144,417
)(i)of which divested



(6,914
)
(1,009
)Assets

3,608,671

1,857,632of which divested



Capital expenditure



165Liabilities

(2,350,741
)
(2,365,170
)of which divested






---

2003

2002

2001US$ '000

US$ '000

US$ '000INTER-SEGMENT ELIMINATIONSRevenues



(2,017
)
(1,685
)Assets

(2,899,088
)
(1,498,697
)Liabilities

1,413,873

1,408,692


2003

2002

2001US$ '000

US$ '000

US$ '000TOTALRevenues

647,104

605,186

644,570Of which divested

6,176

83,425

119,294Depreciation and amortization

(128,569
)
(139,318
)
(154,191
)Of which divested

(2,087
)
(29,256
)
(36,259
)Operating profit

162,515

122,313

92,786Of which divested

(98
)
(47,414
)
(8,076
)Profit (loss) from associates

380

62

(3,112
)Non-cash expenses

(5,859
)
(98,171
)
(23,068
)of which divested



(6,687
)
(22,073
)Profit (loss) before minority interest

193,518

(362,649
)
(137,249
)of which divested

(2,123
)
(71,827
)
(49,827
)Assets

1,522,949

1,203,119of which divested



111,928Capital expenditure

103,828

97,774of which divested



5,088Liabilities

(1,581,558
)
(1,474,645
)of which divested



(9,406
)


Non-cash
expenses other than depreciation and amortization comprise write-downs of assets disclosed in Note 22.

F-48

---



21.   PERSONNEL CHARGES

The following personnel charges are included in sales and marketing expenses, general and administrative expenses and other operating expenses:

|                   |                            | 2003   |        | 2002   |        | 2001  
|------------------ | -------------------------- | ------ | ------ | ------ | ------ | ------
|
|Wages and salaries |                            |        |        |        |        |       
|                   | Sales and marketing        |        | 6,784  |        | 8,761  |       
|                   | General and administrative |        | 19,320 |        | 23,961 |       
|                   | Other operating expenses   |        | 5,285  |        | 10,609 |       
|                   |                            |        |        |        |        |       
|                   |                            | 31,389 |        | 43,331 |        | 53,454
|                   |                            |        |        |        |        |       
|Social security    |                            |        |        |        |        |       
|                   | Sales and marketing        |        | 499    |        | 948    |       
|                   | General and administrative |        | 2,168  |        | 3,809  |       
|                   | Other operating expenses   |        | 120    |        | 111    |       
|                   |                            |        |        |        |        |       
|                   |                            | 2,787  |        | 4,868  |        | 6,335 
|                   |                            |        |        |        |        |       
|                   |                            |        |        |        |        |       
|                   |                            | 34,176 |        | 48,199 |        | 59,789
|                   |                            |        |        |        |        |       

The
average number of permanent employees on a proportional basis during 2003 was 1,917 (2002: 2,080; 2001: 3,032). Directors received payments of $296,000 (2002: $1,711,000; 2001:
$1,840,000) in respect of their services to the Group. The Group does not have any material pension or post retirement plan arrangements.

Stock-based
compensation offered to officers and employees are disclosed in Note 17.

22.   DISPOSAL AND WRITE-DOWN OF ASSETS, NET

a) Write-down of assets, net

2003Goodwill (i)

Licenses (ii)

Equipment (iii)

Other

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000MIC Asia







409

409MIC Latin America





(1,579
)
(2,248
)
(3,827
)MIC Africa





4,097

142

4,239Unallocated







1,854

1,854Other



3,073



111

3,184

3,073

2,518

268

5,859


---

During
2003, MIC entered into discussions concerning the sale of its high-speed wireless data operation in Peru. Following these discussions, MIC has recognized an impairment
charge of $3,073,000 in the carrying value of the license in Peru (Note 5).

F-49

---



Due
to revised anticipated lower revenues from non-digital equipment, MIC recognized an impairment loss of $4,097,000 over certain network equipment in MIC Africa in 2003. In
addition MIC reversed an impairment loss in MIC Latin America for an amount of $1,579,000.

2002Goodwill (i)

Licenses (ii)

Equipment (iii)

Other

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000MIC Asia







(199
)
(199
)MIC Latin America

35,723

41,733



7,107

84,563MIC Africa







745

745MIC Systems







53

53Unallocated







464

464Other

585

4,945

6,833

182

12,54536,308

46,678

6,833

8,352

98,171


---

During
2002, MIC entered into discussions concerning the sale of Celcaribe, its cellular operation in Colombia. Following the signing of a sale and purchase agreement in
December 2002, management recognized an impairment loss corresponding to the difference between the recoverable amount and the carrying value of its intangibles in Celcaribe. Other impairments
have also been identified and recorded as disclosed in the table above by reporting segment.

2001Goodwill (i)

Licenses (ii)

Other

TotalUS$ '000

US$ '000

US$ '000

US$ '000MIC Asia

1,030

350

179

1,559FORA Telecom

622

146

(360
)
408MIC Latin America





1,422

1,422MIC Africa





15

15MIC Systems





211

211Unallocated





(655
)
(655
)Other



20,074

34

20,1081,652

20,570

846

23,068


---

During
2001, management identified an impairment of its license to operate high-speed wireless data services in the UK due to initial market conditions that have delayed
profitable asset deployment. Therefore, an impairment loss was measured as the difference between the recoverable amount, determined by reference to discounted cash flows and the carrying value of the
license at the measurement date, resulting in a write-down of $20,074,000. Other impairments have also been identified and recorded as disclosed in the table above by reporting segment.

F-50

---



b) Gain (loss) from sale of subsidiaries and joint ventures, net



In February 2003, MIC completed the sale of Celcaribe, its cellular operation in Colombia, realizing total proceeds of $10,932,000 and a net gain of
$3,305,000.

Following
the sale of a number of operations in 2002 and based on certain contractual provisions the Group recorded a net decrease in sales prices of $1,092,000.



Following the sale of the Company's interest in FORA Telecom BV in 2001 and after subsequently obtaining in 2002 certain GSM licenses, MIC received additional
proceeds of $30 million in cash. In addition, certain loans for which MIC was liable were settled at less than their carrying value. The gain realized in obtaining the licenses and settling the
loans, net of costs incurred was $30,859,000 in 2002.

In
July 2002, MIC's minority shareholder in its cellular operation in Vietnam exercised his option to purchase 10% of the share capital of that operation. MIC recognized a gain of
$16,603,000 in 2002 (Note 10).

In
September 2002, MIC sold its interest in its cellular operation in the Democratic Republic of Congo recognizing a loss of $21,000.

In
September 2002, the Group sold its 100% interest in Liberty Broadband Ltd. recognizing a loss of $10,294,000.

In
May 2002, MIC sold 17% of its interest in MIC Systems BV, the direct parent company of MACH SA, for $17,000,000 to Kinnevik BV. Further, in November 2002, MIC Systems BV
sold its 100% interest in Mach SA for a sum of Euro 95 million, approximately $97,000,000. These two transactions resulted in the recognition of a gain of $87,655,000 for the Group.

In
December 2002, the Group completed the sale of its cellular operation in the Philippines for a nominal sum, recognizing a loss of $35,988,000.



In September 2001, the Company sold its 24.5% investment in SkyCell Communications Limited, the Indian cellular company operating in Chennai (formerly
known as Madras), to Bharti Tele-Ventures Limited. The sale resulted in a $28,354,000 gain on the disposal.

In
November 2001, MIC sold 100% of its interest in FORA Telecom BV, its Russian Cellular telephone operations, to Tele2 AB for a consideration of $80 million of Tele2 AB
series "B' shares, (corresponding to 2,461,449 Tele2 AB series "B' shares), plus a maximum of $30 million in cash or additional Tele2 AB series "B' shares, depending on the outcome of GSM
license applications for three of MIC's cellular telephone operations in Russia. Upon execution of the sale agreement, MIC agreed to assign deposits held for loans by Banque Invik and to waive all
intercompany balances between the segment and the Group. The disposal resulted in a $6,693,000 non-cash gain recognized in 2001.

c) Disclosure on discontinuing operations

In May 2002 the Group publicly announced its intention to sell the MIC Systems group of companies. These operations were sold on November 15, 2002
and are reported in these financial

F-51

---



statements
as a discontinuing operation. The sales, results, cash flows and net assets of the MIC Systems operations were as follows:

From January 01,
2002 to
November 15,
2002

Year ended
December 31,
2001US$ '000

US$ '000Sales

27,723

25,921Operating costs

(20,911
)
(20,423
)Profit from operations

6,812

5,498Finance cost

(1,969
)
(1,521
)Profit before tax

4,843

3,977Tax

(1,414
)
(1,219
)Profit after tax

3,429

2,758Operating cash flows

(1,088
)
6,181Investing cash flows

4,499

(5,361
)Financing cash flows

(281
)
(4
)Total cash flows

3,130

816


At November 15
2002

At December 31,
2001US$ '000

US$ '000Property, plant and equipment

2,293

2,297Other non-current assets

6,255

5,477Current assets

26,167

11,309Total assets

34,715

19,083Total liabilities

(8,099
)
(6,748
)Net assets

26,616

12,335The gain on disposal was determined as follows:Net assets sold

26,616Proceeds from sale

114,271Gain on disposal

87,655Tax thereon

After-tax gain on disposal

87,655The net cash inflow on sale is determined as follows:Proceeds from sale

114,271Less: cash and cash equivalents in subsidiary sold

(4,125
)Net cash inflow on sale

110,146


F-52

---



23.  TAXES

Group taxes are 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 2003, 2002 or
2001.

The
effective tax burden on profitable operations is approximately 27% (2002: 25%, 2001: 19%). Currently profitable operations are in jurisdictions with tax rates of 15% to 41% (2002:
13% to 35%, 2001: 8% to 40%). The utilization of tax loss carryforwards or holidays had an impact of decreasing the effective tax rate on profitable operations by approximately 1% in 2003 (2002: 1%,
2001: 1%). The operations currently incurring losses operate in tax jurisdictions with rates ranging from 25% to 27% (2002: 25% to 35%, 2001: 25% to 35%).

A
reconciliation between the weighted average statutory rate and the effective weighted average tax rate applicable to profitable operations is as follows:

2003

2002

2001%

%

%Weighted average statutory rate

28

26

22Investment incentive program (Paraguay)





(2
)Utilization of tax loss carry forwards

(1
)
(1
)
(1
)Weighted average effective rate

27

25

19


The
charge for income taxes 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):

2003

2002

2001US$ '000

US$ '000

US$ '000Current income tax charge

38,369

21,143

25,577Deferred income tax charge (income)

14,000

1,591

(17,360
)Charge for taxes

52,369

22,734

8,217


F-53

---



The
tax effects of significant items comprising the Group's net deferred income tax liability as of December 31, 2003 and 2002 are as follows:

2003

2002US$ '000

US$ '000Deferred income tax liabilities:Differences between book and tax basis of assets and liabilities

(37,630
)
(26,874
)Deferred income tax assets:Tax credit carryforwards

2,734

2,734Other temporary differences

926

3,510Provision for doubtful debtors

424

2,226Net operating and other loss carryforwards

1,142

Net deferred income tax assets

5,226

8,470Net deferred income tax liability

(32,404
)
(18,404
)Amount included in balance sheet as non-current deferred tax liability

(33,944
)
(26,874
)Amount included in balance sheet as non-current deferred tax asset

5,226

8,470


Deferred
income tax liabilities reflect temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax
purposes. Deferred income tax assets are comprised of tax credit carryforwards and operating losses in joint ventures and subsidiaries.

The
Company has not recorded deferred income tax liabilities applicable to undistributed earnings of foreign joint ventures and subsidiaries that will be reinvested in foreign
operations. Undistributed earnings amounted to $338,052,000 at December 31, 2003 (2002: $279,883,000, 2001: $325,264,000).

Net
operating and other loss carryforwards amounting to $10,849,000 (2002: $189,080,000, 2001: $108,069,000) are present in the Group. These have expiry periods depending on their
jurisdiction of greater than one year. $2,479,000 (2002: $177,271,000, 2001: $107,394,000) of these net operating and other loss carryforwards are not anticipated to be used within expiry periods.

In
October 2001, the Company determined that the Tax Liabilities, as defined by the Merger Agreement, amounted to $7,023,000. At the time of the Merger, the Group recorded a
provision of $13,544,000 as a deferred tax liability for the Tax Liabilities, resulting in a difference of $6,521,000 that was settled by the final issuance of 374,521 shares and a realized gain of
$3,521,000 (Note 17) corresponding to the difference between the issuance price and the share price as of the date of the transaction. This gain is recorded under the caption "Other financial
income" in the statement of profit and loss.

Concurrently,
the Group reversed a deferred tax provision of $12,274,000. Such amount has been recorded as a deduction to the tax provision for the year ended December 31, 2001 as
a deferred tax income.

F-54

---



24.  CASH FLOW FROM OPERATING ACTIVITIES

2003

2002

2001US$ '000

US$ '000

US$ '000Profit (loss) after taxes for the year

178,823

(385,143
)
(138,053
)Adjustments for non-cash items:Depreciation and amortization

128,569

139,318

154,191Interest accretion on borrowings (effective rate)

9,727

1,938

50,685Write-down of assets

5,859

78,167

23,998Gain on exchange and disposal of assets

(2,213
)
(88,814
)
(35,047
)(Gain) loss and valuation movement on investment securities

(246,760
)
299,963

15,931Fair value result on financial instruments

84,578

7,858

9,914(Profit) loss from operations in associated companies

(380
)
(62
)
3,112Exchange loss on 5% Mandatory Exchangeable Notes

41,820



Increase in the provision for doubtful receivables

5,794

2,558

9,531Minority interest

14,695

22,494

804Other non-cash gain

(533
)


Other financial income

(96,748
)
(42,247
)
(11,596
)Adjustment to reconcile working capital:Decrease/(increase) in trade debtors, prepaid and other current assets

16,463

5,790

(34,701
)(Increase) decrease in inventories

(1,387
)
5,386

3,277(Decrease) increase in trade and other payables

1,039

31,230

58,347Increase (decrease) in accrued interest

2,828

(8,841
)
2,435Increase (decrease) in accrued taxation

27,720

2,986

(8,859
)Reclassification to financing activitiesEarly redemption penalties on debt restructuring

14,466



Net cash provided by operating activities

184,360

72,581

103,969


Interest
paid during the year amounted to $135,346,000 (2002: $197,297,000, 2001: $208,029,000). Taxes paid amounted to $20,305,000 (2002: $21,582,000, 2001: $22,671,000).

F-55

---



25.  ACQUISITION OF SUBSIDIARIES AND JOINT VENTURES

The Group has, from time to time, acquired or increased its share in certain subsidiaries and joint ventures. The fair value of the assets acquired and
liabilities assumed during the year were as follows:

2003

2002

2001US$ '000

US$ '000

US$ '000Property, plant and equipment

22,464



11,430Goodwill

46,101

2,268

8,091Intangible assets

468



12,851Current assets

29,186

390

3,742Amounts due in more than one year

(70,501
)


(1,691
)Amounts due within one year

(11,177
)


(7,902
)Minority interest



(658
)
(3,150
)16,541

2,000

23,371Non cash gain

(533
)


Total purchase price paid in cash

16,008

2,000

23,371Less: Cash acquired

(17,028
)


(393
)Cash paid (received) for acquisitions net of cash acquired

(1,020
)
2,000

22,978


In
2003, MIC increased its holding in its operation in Tanzania from 57% to 59.4%. In 2002, the Company increased its ownership in Celcaribe throughout the year to arrive at an ownership
percentage of 95.4% as of December 31, 2002 (Note 9). In addition, in November 2002, MIC purchased the remaining 30% interest in Millicom (Ghana) Limited. Both operations were
fully consolidated at December 31, 2002 and 2001.

In
2003, MIC regained control and started reconsolidating Telemovil its operation in El Salvador (Note 3).

F-56

---



26.  DISPOSAL OF SUBSIDIARIES AND JOINT VENTURES

The Group has, from time to time, disposed of or reduced its share in certain subsidiaries and joint ventures. The impact of the change in consolidation method
and the fair value of the assets disposed of and liabilities assigned during the year were as follows:

2003

2002

2001US$ '000

US$ '000

US$ '000Property, plant and equipment

33,496

11,396

36,419Intangible assets

51,342

26,332

9,503Pledged deposits

(997
)
30,989

Current assets

15,300

72,553

60,596Amounts due in more than one year

(33,752
)
(2,125
)
(2,526
)Amounts due within one year

(56,240
)
(86,899
)
(38,352
)Disposal of minority interest



5,594

(75
)9,149

57,840

65,565Profit on sale

2,213

57,955

35,047Total sale price, in cash and cash equivalents

11,362

115,795

100,612Add: Additional proceeds on sale of FORA less expenses incurred



27,547

Less: Cash disposed

(2,514
)
(8,271
)
(1,803
)Available-for-sale securities received





(79,558
)Cash flow on disposal net of cash

8,848

135,071

19,251


The
results, assets and liabilities of divested operations are summarized in Note 20.

27.  NON-CASH INVESTING AND FINANCING ACTIVITIES

2003

2002

2001US$ '000

US$ '000

US$ '000Investing activities:Revaluation of marketable securities

246,760

(57,813
)
(79,061
)Acquisition of El Salvador

51,371



Change in consolidation method





25,464Disposal of joint ventures





(72,865
)Acquisition of available-for-sale securities





79,557Financing activities:Redemption of debt

(150,350
)
(42,247
)
Issuance of capital

1,181



2,999


28.  COMMITMENTS AND CONTINGENCIES

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, 2003, MIC's consolidated share of these matters that have not been provided totaled $32,419,000 of which $1,471,000 relate to joint ventures. Management is of the opinion that
while it is impossible to ascertain the ultimate legal and financial liability with respect to these contingencies, the ultimate outcome of these contingencies is not anticipated to have a material
effect on the Group's financial position and operations.

F-57

---



Tele2 AB series B shares

The Tele2 AB series B shares underlying the 5% Mandatory Exchangeable Notes have been lent to Deutsche Bank AG London pursuant to a securities lending
arrangement. Millicom Telecommunications S.A. is obligated to deliver Tele2 AB series B shares upon exchange of the 5% Mandatory Exchangeable Notes even in the event of a failure of Deutsche
Bank AG London to redeliver to Millicom Telecommunications S.A. Tele2 AB series B shares.

MACH

In November 2002, MIC completed the sale of Multinational Automated Clearing House S.A. ("MACH"). Following examination of the books and records of MACH
subsequent to purchase, the buyers have claimed a reduction in the purchase price to reflect a claimed lower balance sheet value, as per the terms of the purchase agreement. MIC's management is
currently examining this claim and does not expect there to be a significant impact on the Group's consolidated financial statements.

Debt pledges and guarantees

Details of debt pledges and guarantees are contained in Note 18.

Operational environment

MIC has operations in emerging markets, namely Asia, 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, MIC is involved in discussions regarding taxation, interconnect and tariffing arrangements, which can have a significant impact on the
long-term economic viability
of its operations. In management's opinion, the current status and anticipated evolution of the regulatory, political, technological and economic environments as well as its business arrangements with
third parties in countries in which MIC has operations will not materially negatively impact MIC's financial position or operations.

Lease commitments



The Group has the following annual operating lease commitments as of December 31, 2003 and 2002.

2003

2002US$ '000

US$ '000Operating lease commitmentsWithin:

one year

310

246Between:one - two years

231

228two - three years

186

199three - four years

143

167four - five years

94

128After:

five years

125

196Total

1,089

1,164


Operating
lease expense was approximately $1,015,000 in 2003 (2002: $5,018,000, 2001: $3,466,000).

F-58

---





Future minimum payments on the finance leases are as follows:

2003

2002US$ '000

US$ '000Finance lease repaymentsWithin:

one year

137

290Between:

one - two years

22

138two - three years

1

26three - four years



2four - five years



After:

five years



Total

160

456


The
finance leases are comprised mainly of lease agreements relating to vehicles used by the Group.

Capital commitments

The Company and its subsidiaries and joint ventures have a fixed commitment to purchase network equipment, land and buildings and other fixed assets for a value
of $39,472,000 (2002: $11,867,000) of which $10,779,000 (2002: $1,232,000) relates to joint ventures, from a number of suppliers within one year.

As
part of the 2000, 2002 and 2003 amendments (Note 3) Comvik International (Vietnam) AB still needs to disburse approximately $28.4 million before the end of the revenue
sharing agreement in 2005.

Dividends

The ability of the Company to make dividend payments is subject to, among other things, the terms of the indebtedness, local legal restrictions and the ability to
repatriate funds from MIC's various joint ventures.

29.  RELATED PARTY TRANSACTIONS



The Company's principal shareholder is Industriförvaltnings AB Kinnevik ("Kinnevik"). Kinnevik is a Swedish holding company with interests in the
telecommunications, media, publishing and paper industries. As of December 31, 2003, Kinnevik owned approximately 35.2% of MIC.

On
December 31, 1995 MIC acquired 17.7% of MACH from Kinnevik. The consideration, which was to have a minimum present value of $5,000,000 at December 31, 1995, consisted of
(i) an initial payment of $1,000,000 plus interest, at the ruling market rate, for the month of January 1996, (ii) seven additional payments for each of the financial years 1996
to 2002, calculated as 17.7% of MACH's pre-tax profit for the relevant year and payable in April of the following year, and (iii) a final payment payable in April 2003,
calculated as the higher of (a) the sum of the seven additional payments multiplied by a factor of 1.3 minus the initial payment or (b) the amount required to make the present value of
all payments at December 31, 1995 equal to $5,000,000. The final payment was made in common stock of MIC. In 2002 an amount of $3,958,000 (2001: $7,042,000) due to Kinnevik was included in the
balance sheet under the heading "Amounts due to shareholders". In addition, as of December 31, 2002, MIC owed $63,000 for additional charges. The balance was settled in 2003.

F-59

---



In
May 2002, MIC sold a 17% interest in MIC Systems BV, the parent company of MACH to Kinnevik BV for $17,000,000.

During
2002, Kinnevik purchased MIC 13.5% Notes (note 17) on the open market with a face value of $44,000,000. MIC then exchanged these for $1,500,000 cash and 672,016 Tele2 AB
series B shares at market prices.

During
the course of 2002, MIC sold an additional 6,177,369 Tele2 AB series B shares at market prices to Kinnevik for a value of $104,295,000.

As
of December 31, 2003 Kinnevik holds an aggregate of $13,205,000 in principal amount of the 2% Notes, which are convertible into an aggregate of 4,913,488 shares of our common
stock.



In November 2001, MIC sold 100% of its interests in FORA Telecom BV, its Russian Cellular telephone operations to Tele2 AB for a consideration of
$80 million in Tele2 AB series "B' shares plus a maximum equivalent of $30 million in cash or additional Tele2 AB series "B" shares, depending on the outcome of GSM license applications
for three of MIC's cellular telephone operations in Russia. The sale resulted in a $6,693,000 gain on the disposal in 2001 (Note 22). During 2002, MIC obtained the necessary GSM licenses
referred to above and received the additional proceeds of $30 million in cash. In addition, certain loans for which MIC was liable were settled at less than their carrying value. The gain
realized in obtaining the licenses and settling the loans net of costs incurred in the acquisition of the licenses, amounted to $30,859,000 in 2002.



As of December 31, 1998, the Group, through its subsidiary MIC-USA inc. ("MIC-USA"), had a 100% temporary and restricted
shareholding in Great Universal. On December 31, 1999, MIC-USA transferred its 100% ownership and related rights in Great Universal to Great Universal LLC 1999 Trust for a
consideration of $5,027,000, corresponding to the net book value of MIC's investment in Great Universal. During 2002, MIC recorded an impairment loss for 100% of this asset due to uncertainty
concerning its recoverability (Note 9). The rights and obligations of MIC-USA toward Great Universal were assigned to Great Universal LLC. Great Universal continues to indemnify MIC
against certain contingent liabilities of Millicom. Great Universal is currently engaged in the communications, information technology, teleservices and media industries primarily in the United
States.

In
January 2000, MIC invested $10,000,000 in Modern Holdings in the form of promissory notes. In February 2000, those notes were converted into 1,293,095 shares of common
stock, representing 8.5% of the share capital of Modern Holdings. This investment is recorded as non-current available-for-sale security (note 9).

MIC
does not consolidate its investment in Great Universal and Modern Holdings since the restrictions on their ability to distribute dividends is considered a severe
long-term restriction that significantly impairs their ability to transfer funds to MIC. Further, due to the existence of warrants, enabling the warrant holders to obtain control over
Great Universal and Modern Holdings, MIC considers that it does not control these companies.



The Group maintains corporate bank accounts at Banque Invik through which it makes payments and receives monies in the normal course of business. As of
December 31, 2003, the Group had current accounts, time deposits and blocked deposits at Banque Invik.

F-60

---



MIC
charged $nil (2002: $nil; 2001: 280,000) to related parties for services rendered.

Compensations
for Directors' services are detailed in Note 21.



The following sales and purchases and outstanding balances occurred with companies affiliated to MIC. The services purchased and supplied covered fraud detection,
network and IT support, acquisition of assets and customer care systems.

MIC
had the following payables to related parties and made purchases from related parties as follows:

Purchases in year

Amount payable as of December 31,2003

2002

2001

2003

2002US$ '000

US$ '000

US$ '000

US$ '000

US$ '000Applied Sales Management



110

100



Applied Value

369

2,009

484

24

252Banque Invik

937

638

438

348

44Bassett

451

669

1,222

40

23Ephibian

24

38



14

Foreign Value

730







Great Universal









25Lothar Systems



10

1,601



288Netcom Consultants

352

157

554



9Praesidium

50

204

70



Procure-it-right

1,384

839

962

72

100Search Value

159

489

189

38

Shared Value

638

656

477

41

23Tele2 AB

247

50

25

31

5,723YXK Systems



28





5,341

5,897

6,122

608

6,487


As
of December 31, 2003 and 2002, MIC had the following receivables from related parties:

2003

2002US$ '000

US$ '000Kinnevik

154

1,976Lothar



922Metro

247

734Modern Holdings

1,690

1,825Modern Times Group

265

752Netcom

16

64Shared Value

18

18Stonebrook Enterprises

156

156Tele2 AB

359

3592,905

6,806


F-61

---



30.  EARNINGS (LOSS) PER COMMON SHARE

Earnings (loss) per common share are comprised as follows:

2003

2002

2001Net profit (loss) attributable to shareholders (US$'000)

178,823

(385,143
)
(138,053
)Weighted average number of shares outstanding during the year (in '000)

65,312

65,272

65,256Basic (loss) earnings per share (US$)

2.74

(5.90
)
(2.12
)Net profit (loss) attributable to shareholders (US$'000)

178,823

(385,143
)
(138,053
)Interest expense on convertible debt (US$'000)

3,476



Net profit (loss) used to determine diluted earnings per share (US$'000)

182,299

(385,143
)
(138,053
)Weighted average number of shares outstanding during the year (in '000)

65,312

65,272

65,256Adjustments forAssumed conversion of convertible debt (in '000)(i)

15,186



Share options (in '000)(ii)

2



Weighted average number of shares and potential dilutive shares outstanding during the year (in '000)

80,500

65,272

65,256Diluted earnings (loss) per common share (US$)

2.26

(5.90
)
(2.12
)


---

31.  RECONCILIATION TO U.S. GAAP

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS"). If the consolidated
financial statements had been prepared under accounting principles generally accepted in the United States of America ("U.S. GAAP") the following principal differences would arise:



F-62

---







2003

2002

2001US$ '000

US$ '000

US$ '000Discontinued share of losses



(416
)
119Additional losses in excess of investment value

(1,052
)
(3,805
)
(2,126
)Increase in gain on sale of FORA joint ventures





18,710(1,052
)
(4,221
)
16,703






F-63

---





Pro forma under IFRS

2003

2002US$ '000
(Unaudited)

US$ '000
(Unaudited)Total revenues

727,989

703,760Net profit (loss)

188,741

(379,483
)Basic net profit (loss) per share

2.89

(5.81
)Diluted net profit (loss) per share

2.39

(5.81
)Shares used to compute basic profit (loss) per share

65,312

65,272Shares used to compute diluted profit (loss) per share

80,500

65,272






F-64

---





2003

2002

2001US$ '000

US$ '000

US$ '000Fair value result of financial instruments:El Salvadoran call option





8,533Vietnamese call option



(295
)
(2,125
)Reduction of gain on sale of Vietnamese subsidiary



(16,522
)


(16,817
)
6,408






F-65

---











F-66

---





2003

2002

2001US$ '000

US$ '000

US$ '000Adjustments to impairment / (reversal of impairment) recorded for IFRS

(1,579
)
2,234

Additional impairment for U.S. GAAP

(2,011
)
(2,571
)
Increased depreciation charge

(223
)
(936
)
(1,373
)Decreased gain on sale of FORA assets





(5,216
)Total adjustment to profit/(loss) in year

(3,813
)
(1,273
)
(6,589
)




F-67

---







2001US$ '000Reported loss under U.S. GAAP

(172,126
)Reversal of goodwill amortization

9,483Reversal of negative goodwill amortization

(1,393
)Adjusted net loss under U.S. GAAP

(164,036
)




2001Basic and diluted loss per shareReported basic loss per share under U.S. GAAP

$
(2.64
)Reversal of goodwill amortization

$
0.15Reversal of negative goodwill amortization

$
(0.02
)Adjusted basic loss per share under U.S. GAAP

$
(2.51
)Weighted average number of shares outstanding in the year (in '000)


65,256




F-68

---





Adjustments to
profit for the
year ended
December 31, 2003
(restated)US$ '000Amortization of BCF on the 2% PIK Notes

(4,257
)Increase in gain realized on the debt exchange

16,002Adjustment to interest expenses on the 2% PIK Notes

4,579Amortization of incremental deferred costs

(14,726
)1,598


F-69

---







2003US$ '000Net loss in accordance with U.S. GAAP as previously reported


(65,655
)Adjustment to depreciation charge on the BCF


10,695Restated net loss in accordance with U.S. GAAP


(54,960
)Net loss per share data:Basic and diluted net loss per share as previously reported

$
(1.01
)Effect of adjustment reported above

$
0.17Restated basic and diluted net loss per share

$
(0.84
)Weighted average number of shares outstanding in the year ('000)


65,312Shareholders' equity in accordance with U.S. GAAP as previously reported


(76,701
)Adjustment to depreciation charge on the BCF


10,695Restated shareholders' equity in accordance with U.S. GAAP


(66,006
)




Net profit (loss) from component qualifying as discontinued operations:

|                                               |  | Year ended December 31,
|---------------------------------------------- |  | -----------------------
|
|
|Colombian operations                           |  | 1,189                  
|Peruvian operations                            |  | (5,642                 
|MIC Systems                                    |  | (2,597                 
|Liberty Broadband Ltd.                         |  |                       
|                                               |  |                        
|Net loss reported from discontinued operations |  | (7,050                 
|                                               |  |                        

F-70

---





2003*

2002*

2001*US$ '000

US$ '000

US$ '000Revenues from continuing operations

425,241

331,007

344,102Cost of sales from continuing operations

(176,605
)
(137,772
)
(141,610
)Operating expenses from continuing operations

(147,232
)
(167,534
)
(157,851
)Operating profit from continuing operations

101,404

20,337

79,688Loss reported from continuing operations

(47,910
)
(327,959
)
(121,574
)




Under IFRS

Revenue

Operating
profit/(loss)

Total assets

Maximum
exposure to
lossUS$ '000

US$ '000

US$ '000

US$ '000Cam GSM

70,334

12,414

68,215

20,580Telecam

9,434

1,085

8,262

2,000Millicom Argentina S.A.

3,506

(225
)
2,775

14,886Comunicaciones Celulares S.A.

142,700

53,197

160,629

46,056Telefonica Celular

95,716

45,959

79,220

28,563Emtel Limited

24,004

6,904

29,138

4,291




F-71

---





F-72

---





Reconciliation of Net Profit (loss) for the year:

The above items give rise to the following differences in net profit (loss) recorded under U.S. GAAP:

|                                                                                        |                                                                                                     | Item |    | 2003*   |          | 2002*    |         | 2001*    |        
|--------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ---- | -- | ------- | -------- | -------- | ------- | -------- | -------
|
|Net profit (loss) for the year reported under IFRS                                      |                                                                                                     |      |    | 178,823 |          | (385,143 | )       | (138,053 | )      
|Items decreasing (increasing) reported loss or (decreasing) increasing reported profit: |                                                                                                     |      |    |         |          |          |         |          |        
|                                                                                        | Application of equity method of accounting                                                          |      | 2  |         | (1,052   | )        | (4,221  | )        | 16,703 
|                                                                                        | Application of equity method of accounting for Telemovil El Salvador                                |      | 3  |         | 5,830    |          | 7,887   |          | 2,640  
|                                                                                        | Adjustments to initial step-up in the value of licenses                                             |      | 4  |         | 2,273    |          | 2,273   |          | 2,273  
|                                                                                        | Valuation of stock options                                                                          |      | 5  |         |         |          | (16,817 | )        | 6,408  
|                                                                                        | Compensation cost for stock options granted to employees                                            |      | 6  |         | (1,157   | )        | 1,308   |          | 5,315  
|                                                                                        | Recognition of connection fees and related costs                                                    |      | 7  |         | (2,994   | )        | (337    | )        | 502    
|                                                                                        | Adjustments to impairment of tangible and intangible assets                                         |      | 8  |         | (3,813   | )        | (1,273  | )        | (6,589 
|                                                                                        | Reversal of goodwill amortization                                                                   |      | 10 |         | 6,695    |          | 7,865   |          |       
|                                                                                        | Additional goodwill impairment                                                                      |      | 10 |         |         |          | (3,136  | )        |       
|                                                                                        | Reclassification to shareholders' equity of fair value adjustments on available-for-sale securities |      | 12 |         | (241,163 | )        |        |          |       
|                                                                                        | Impairment of securities, other than temporary                                                      |      | 12 |         |         |          | 61,325  |          | (61,325
|                                                                                        | Adjustments related to debt exchange                                                                |      | 13 |         | 1,598    |          |        |          |       
|                                                                                        |                                                                                                     |      |    |         |          |          |         |          |        
|Loss after taxes before cumulative effect of change in accounting principle             |                                                                                                     |      |    | (54,960 | )        | (330,269 | )       | (172,126 | )      
|                                                                                        |                                                                                                     |      |    |         |          |          |         |          |        
|Cumulative effect of change in accounting principle                                     |                                                                                                     | 10   |    |        |          | 9,336    |         |         |        
|                                                                                        |                                                                                                     |      |    |         |          |          |         |          |        
|Net loss under U.S. GAAP                                                                |                                                                                                     |      |    | (54,960 | )        | (320,933 | )       | (172,126 | )      
|                                                                                        |                                                                                                     |      |    |         |          |          |         |          |        

---

|Presented as:                                                                                |                                                    |    |  |         |        |          |         |          |        
|-------------------------------------------------------------------------------------------- | -------------------------------------------------- | -- |  | ------- | ------ | -------- | ------- | -------- | -------
|Net loss from continuing operations                                                          |                                                    |    |  | (47,910 | )      | (327,959 | )       | (121,574 | )      
|Discontinued operations:                                                                     |                                                    | 14 |  |         |        |          |         |          |        
|                                                                                             | Loss from discontinued operations, net of taxes(a) |    |  |         | (7,758 | )        | (79,671 | )        | (50,552
|                                                                                             | Gain on disposal, net of taxes(a)                  |    |  |         | 708    |          | 77,361  |          |       
|                                                                                             |                                                    |    |  |         |        |          |         |          |        
|Loss from discontinued operations                                                            |                                                    |    |  | (7,050  | )      | (2,310   | )       | (50,552  | )      
|Loss after taxes, before cumulative effect of change in accounting principle under U.S. GAAP |                                                    |    |  | (54,960 | )      | (330,269 | )       | (172,126 | )      
|Cumulative effect of change in accounting principle(a)                                       |                                                    | 10 |  |        |        | 9,336    |         |         |        
|                                                                                             |                                                    |    |  |         |        |          |         |          |        
|Net loss under U.S.GAAP                                                                      |                                                    |    |  | (54,960 | )      | (320,933 | )       | (172,126 | )      
|                                                                                             |                                                    |    |  |         |        |          |         |          |        

|                                                                                              |                                                               | 2003* |        | 2002* |   | 2001*  |      
|--------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ----- | ------ | ----- | - | ------ | -----
|Basic and diluted loss per common share                                                       |                                                               |       |        |       |   |        |      
|Loss per common share under U.S. GAAP:                                                        |                                                               |       |        |       |   |        |      
|                                                                                              | from continuing operations                                   |       | $      | (0.73 | ) | $      | (5.02
|                                                                                              | from discontinuing operations                                |       | $      | (0.11 | ) | $      | (0.04
|Loss per common share after taxes, before cumulative effect of change in accounting principle |                                                               | $     | (0.84  | )     | $ | (5.06  | )    
|                                                                                              | Impact of cumulative effect of change in accounting principle |       |        |      |   | $      | 0.14 
|Basic and diluted loss per common share under U.S. GAAP                                       |                                                               | $     | (0.84  | )     | $ | (4.92  | )    
|                                                                                              |                                                               |       |        |       |   |        |      
|Weighted average number of shares outstanding in the year (in '000)                           |                                                               |       | 65,312 |       |   | 65,272 |      
|                                                                                              |                                                               |       |        |       |   |        |      

---

F-73

---



Impact of consolidation of Great Universal and Modern Holdings

As explained in U.S. GAAP adjustment item No. 16, above, both Great Universal ("GU") and Modern Holdings ("Modern") should be consolidated. Presented in
the table below are the main line items of MIC's consolidated income statement for the years ended December 31, 2003, 2002 and 2001 that would be materially impacted had GU and Modern been
consolidated:

|                                                                                                                                                                |  | 2003*    |   | 2002*    |   | 2001*    |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | - | -------- | - | -------- | -
|
|Consolidated revenues from continuing operations under U.S. GAAP before the effect of the consolidation of Great Universal and Modern                           |  | 425,241  |   | 331,007  |   | 344,102  |  
|Impact of consolidation                                                                                                                                         |  | 36,865   |   | 32,912   |   | 42,185   |  
|                                                                                                                                                                |  |          |   |          |   |          |  
|Consolidated revenues from continuing operations under U.S. GAAP after the effect of the consolidation of Great Universal and Modern                            |  | 462,106  |   | 363,919  |   | 386,287  |  
|                                                                                                                                                                |  |          |   |          |   |          |  
|Consolidated cost of sales from continuing operations under U.S. GAAP before the effect of the consolidation of Great Universal and Modern                      |  | (176,605 | ) | (137,772 | ) | (141,610 | )
|Impact of consolidation                                                                                                                                         |  | (21,236  | ) | (21,664  | ) | (20,100  | )
|                                                                                                                                                                |  |          |   |          |   |          |  
|Consolidated cost of sales from continuing operations under U.S. GAAP after the effect of the consolidation of Great Universal and Modern                       |  | (197,841 | ) | (159,436 | ) | (161,710 | )
|                                                                                                                                                                |  |          |   |          |   |          |  
|Consolidated operating expenses from continuing operations under U.S. GAAP before the effect of the consolidation of Great Universal and Modern                 |  | (147,232 | ) | (167,534 | ) | (157,851 | )
|Impact of consolidation                                                                                                                                         |  | (15,178  | ) | (15,210  | ) | (21,443  | )
|                                                                                                                                                                |  |          |   |          |   |          |  
|Consolidated operating expenses from continuing operations under U.S. GAAP after the effect of the consolidation of Great Universal and Modern                  |  | (162,410 | ) | (182,744 | ) | (179,294 | )
|                                                                                                                                                                |  |          |   |          |   |          |  
|Consolidated operating profit from continuing operations under U.S. GAAP before the effect of the consolidation of Great Universal and Modern                   |  | 101,404  |   | 20,377   |   | 79,688   |  
|Impact of consolidation                                                                                                                                         |  | 2,536    |   | (3,961   | ) | 643      |  
|                                                                                                                                                                |  |          |   |          |   |          |  
|Consolidated operating profit from continuing operations under U.S. GAAP after the effect of the consolidation of Great Universal and Modern                    |  | 103,940  |   | 16,376   |   | 80,331   |  
|                                                                                                                                                                |  |          |   |          |   |          |  
|Net loss from continuing operations under U.S. GAAP before the effect of the consolidation of Great Universal and Modern                                        |  | (47,910  | ) | (327,959 | ) | (121,574 | )
|Impact of consolidation                                                                                                                                         |  | (4,029   | ) | (7,872   | ) | 13,002   |  
|                                                                                                                                                                |  |          |   |          |   |          |  
|Net loss from continuing operations under U.S. GAAP after the effect of the consolidation of Great Universal and Modern                                         |  | (51,939  | ) | (335,831 | ) | (108,572 | )
|                                                                                                                                                                |  |          |   |          |   |          |  
|Net loss under U.S. GAAP after the effect of cumulative change in accounting principle and before the effect of the consolidation of Great Universal and Modern |  | (54,960  | ) | (320,933 | ) | (172,126 | )
|Impact of consolidation                                                                                                                                         |  | 4,603    |   | (1,630   | ) | 5,322    |  
|                                                                                                                                                                |  |          |   |          |   |          |  
|Net loss under U.S. GAAP after the effect of cumulative change in accounting principle and after the effect of the consolidation of Great Universal and Modern  |  | (50,357  | ) | (322,563 | ) | (166,804 | )
|                                                                                                                                                                |  |          |   |          |   |          |  

---

The following disposals by GU and Modern have been classified as discontinued operations and have been excluded from continuing operations in the
table above:



F-74

---





Balance Sheet Reconciliation:

The following significant balance sheet differences arise under U.S. GAAP in 2003:

|Balance sheet as of December 31, 2003                                                     |                                                            | Item                     |       | Per Balance
Sheet Group |         | Proportional
Consolidation
Adjustment
(Items 1 & 2) |         | Other
Adjustments* |        | Held for sale
assets and
liabilities
(Item 14) |        | Under
U.S. GAAP
Group* |        
|----------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ------------------------ | ----- | ----------------------- | ------- | --------------------------------------------------- | ------- | ------------------ | ------ | ---------------------------------------------- | ------ | ---------------------- | -------
|
|Assets                                                                                    |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Non-Current Assets                                                                        |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Intangible assets                                                                         |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|                                                                                          | Goodwill, net                                              |                          | 3, 10 |                         | 49,578  |                                                     |        |                    | 40,365 |                                                |       |                        | 89,943 
|                                                                                          | Licenses, net                                              |                          | 4     |                         | 30,889  |                                                     | (8,372  | )                  | (7,872 | )                                              | (210   | )                      | 14,435 
|                                                                                          | Oher intangibles net                                       |                          | 9, 13 |                         | 5,148   |                                                     | (2,176  | )                  | 24,183 |                                                | (51    | )                      | 27,104 
|Property, plant and equipment, net                                                        |                                                            | 8                        |       | 487,746                 |         | (125,995                                            | )       | (1,579             | )      | (1,848                                         | )      | 358,324                |        
|Financial assets                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|                                                                                          | Investment in Tele2 AB shares                              |                          |       |                         | 479,040 |                                                     |        |                    |       |                                                |       |                        | 479,040
|                                                                                          | Investment in other securities                             |                          |       |                         | 25,397  |                                                     | (24     | )                  |       |                                                |       |                        | 25,373 
|                                                                                          | Investments in associates                                  |                          | 7     |                         | 1,340   |                                                     | 96,075  |                    | (688   | )                                              |       |                        | 96,727 
|                                                                                          | Pledged deposits                                           |                          |       |                         | 31,530  |                                                     | (1,460  | )                  |       |                                                | (28    | )                      | 30,042 
|Deferred taxation                                                                         |                                                            |                          |       | 5,226                   |         | (1,698                                              | )       |                   |        | (370                                           | )      | 3,158                  |        
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|                                                                                          |                                                            | Total Non-Current Assets |       |                         |         | 1,115,894                                           |         | (43,650            | )      | 54,408                                         |        | (2,507                 | )      
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Current Assets                                                                            |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Financial assets                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|                                                                                          | Investment in other securities                             |                          |       |                         | 15,291  |                                                     |        |                    |       |                                                |       |                        | 15,291 
|Accounts receivable, net                                                                  |                                                            |                          |       | 129,792                 |         | (31,898                                             | )       |                   |        | (212                                           | )      | 97,682                 |        
|Prepayments, accrued income and other current assets                                      |                                                            | 7                        |       | 80,263                  |         | (16,429                                             | )       | 2,207              |        | (387                                           | )      | 65,654                 |        
|Time deposits                                                                             |                                                            |                          |       | 32,880                  |         |                                                    |         |                   |        | (598                                           | )      | 32,282                 |        
|Cash and cash equivalents                                                                 |                                                            |                          |       | 148,829                 |         | (26,662                                             | )       |                   |        | (356                                           | )      | 121,811                |        
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|                                                                                          | Total Current Assets                                       |                          |       |                         | 407,055 |                                                     | (74,989 | )                  | 2,207  |                                                | (1,553 | )                      | 332,720
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Total assets from disposal group classified as held for sale                              |                                                            |                          |       |                        |         |                                                    |         |                   |        | 4,060                                          |        | 4,060                  |        
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Total Assets                                                                              |                                                            |                          |       | 1,522,949               |         | (118,639                                            | )       | 56,615             |        |                                               |        | 1,460,925              |        
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Shareholders' Equity and Liabilities                                                      |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Shareholders' equity                                                                      |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Share capital and premium                                                                 |                                                            | 6                        |       | 239,876                 |         |                                                    |         | 22,610             |        |                                               |        | 262,486                |        
|Treasury stock                                                                            |                                                            |                          |       | (8,833                  | )       |                                                    |         |                   |        |                                               |        | (8,833                 | )      
|2% PIK notesequity component                                                             |                                                            | 13                       |       | 16,006                  |         |                                                    |         | (16,006            | )      |                                               |        |                       |        
|Legal reserve                                                                             |                                                            |                          |       | 4,256                   |         |                                                    |         |                   |        |                                               |        | 4,256                  |        
|Retained losses brought forward                                                           |                                                            |                          |       | (446,110                | )       | (5,931                                              | )       | 71,093             |        |                                               |        | (380,948               | )      
|Net profit/(loss) for the year, after cumulative effect of change in accounting principle |                                                            |                          |       | 178,823                 |         | (1,052                                              | )       | (232,731           | )      |                                               |        | (54,960                | )      
|Currency translation reserve                                                              |                                                            |                          |       | (69,198                 | )       |                                                    |         |                   |        |                                               |        | (69,198                | )      
|Deferred compensation costs                                                               |                                                            | 6                        |       |                        |         |                                                    |         | (1,344             | )      |                                               |        | (1,344                 | )      
|Revaluation reserve                                                                       |                                                            | 12                       |       |                        |         |                                                    |         | 241,163            |        |                                               |        | 241,163                |        
|Excess of contribution over assets acquired                                               |                                                            | 4                        |       |                        |         |                                                    |         | (58,628            | )      |                                               |        | (58,628                | )      
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Total Shareholders' Equity                                                                |                                                            |                          |       | (85,180                 | )       | (6,983                                              | )       | 26,157             |        |                                               |        | (66,006                | )      
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Minority Interest                                                                         |                                                            |                          |       | 26,571                  |         |                                                    |         |                   |        |                                               |        | 26,571                 |        
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Liabilities                                                                               |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Non-current liabilities                                                                   |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|                                                                                          | 10% Senior Notes                                           |                          | 9     |                         | 536,036 |                                                     |        |                    | 13,964 |                                                |       |                        | 550,000
|                                                                                          | 2% PIK Notesdebt component                                |                          | 13    |                         | 50,923  |                                                     |        |                    | 973    |                                                |       |                        | 51,896 
|                                                                                          | 5% Mandatory Exchangeable Notesdebt component             |                          | 9     |                         | 327,635 |                                                     |        |                    | 8,943  |                                                |       |                        | 336,578
|                                                                                          | Embedded derivative on the 5% Mandatory Exchangeable Notes |                          |       |                         | 103,457 |                                                     |        |                    |       |                                                |       |                        | 103,457
|                                                                                          | Other debt and financing                                   |                          |       |                         | 126,150 |                                                     | (29,335 | )                  |        |                                                |       |                        | 96,815 
|                                                                                          | Deferred taxation and other non current liabilities        |                          |       |                         | 33,944  |                                                     | (12,089 | )                  |       |                                                |       |                        | 21,855 
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|                                                                                          |                                                            |                          |       | 1,178,145               |         | (41,424                                             | )       | 23,880             |        |                                               |        | 1,160,601              |        
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Current liabilities                                                                       |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|                                                                                          | Other debt and financing                                   |                          |       |                         | 132,664 |                                                     | (10,099 | )                  |       |                                                | (75    | )                      | 122,490
|                                                                                          | Trade payables                                             |                          |       |                         | 112,764 |                                                     | (36,150 | )                  |       |                                                | (195   | )                      | 76,419 
|                                                                                          | Other current liabilities                                  |                          | 7     |                         | 157,985 |                                                     | (23,983 | )                  | 6,579  |                                                | (240   | )                      | 140,341
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|                                                                                          |                                                            |                          |       | 403,413                 |         | (70,232                                             | )       | 6,579              |        | (510                                           | )      | 339,250                |        
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Total Liabilities                                                                         |                                                            |                          |       | 1,581,558               |         | (111,656                                            | )       | 30,459             |        | (510                                           | )      | 1,499,851              |        
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Total liabilities from disposal group classified as held for sale                         |                                                            |                          |       |                        |         |                                                    |         |                   |        | 510                                            |        | 510                    |        
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        
|Total Shareholders' Equity and Liabilities                                                |                                                            |                          |       | 1,522,949               |         | (118,639                                            | )       | 56,615             |        |                                               |        | 1,460,925              |        
|                                                                                          |                                                            |                          |       |                         |         |                                                     |         |                    |        |                                                |        |                        |        

---

F-75

---



The following significant balance sheet differences arise under U.S. GAAP in 2002:

|Balance sheet as of December 31, 2002                                        |                                 | Item |    | Per Balance
Sheet Group |         | Proportional
Consolidation
Adjustment
(Items 1 & 2) |         | Other
Adjustments* |         | Held for sale
assets and
liabilities
(Item 14) |         | Under
U.S. GAAP
Group* |        
|---------------------------------------------------------------------------- | ------------------------------- | ---- | -- | ----------------------- | ------- | --------------------------------------------------- | ------- | ------------------ | ------- | ---------------------------------------------- | ------- | ---------------------- | -------
|
|Assets                                                                       |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Non-current assets                                                           |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Intangible assets                                                            |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|                                                                             | Goodwill, net                   |      | 10 |                         | 10,172  |                                                     |        |                    | 14,065  |                                                |        |                        | 24,237 
|                                                                             | Licenses, net                   |      | 4  |                         | 84,471  |                                                     | (4,083  | )                  | (7,911  | )                                              | (52,070 | )                      | 20,407 
|                                                                             | Other intangibles, net          |      | 9  |                         | 4,919   |                                                     | (2,351  | )                  | 8,359   |                                                | (9      | )                      | 10,918 
|Property, plant and equipment, net                                           |                                 |      |    | 458,933                 |         | (135,699                                            | )       |                   |         | (36,862                                        | )       | 286,372                |        
|Financial assets                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|                                                                             | Investment in Tele2 AB shares   |      |    |                         | 164,031 |                                                     |        |                    |        |                                                |        |                        | 164,031
|                                                                             | Investment in other securities  |      | 3  |                         | 56,355  |                                                     | (21     | )                  | (52,858 | )                                              |        |                        | 3,476  
|                                                                             | Investments in associates       |      | 3  |                         | 1,013   |                                                     | 110,609 |                    | 63,385  |                                                |        |                        | 175,007
|                                                                             | Pledged deposits                |      |    |                         | 32,921  |                                                     |        |                    |        |                                                | (508    | )                      | 32,413 
|                                                                             | Deferred taxation               |      |    |                         | 8,470   |                                                     | (1,165  | )                  |        |                                                |        |                        | 7,305  
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Total Non-Current Assets                                                     |                                 |      |    | 821,285                 |         | (32,710                                             | )       | 25,040             |         | (89,449                                        | )       | 724,166                |        
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Current Assets                                                               |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Investment in Tele2 AB shares                                                |                                 |      |    | 101,540                 |         |                                                    |         |                   |         |                                               |         | 101,540                |        
|Accounts receivable, net                                                     |                                 |      |    | 134,080                 |         | (21,333                                             | )       |                   |         | (14,052                                        | )       | 98,695                 |        
|Prepayments, accrued income and other current assets                         |                                 | 7    |    | 59,563                  |         | (14,683                                             | )       | 1,328              |         | 2,514                                          |         | 48,722                 |        
|Time deposits                                                                |                                 |      |    | 16,200                  |         | (1,428                                              | )       |                   |         | (1,111                                         | )       | 13,661                 |        
|Cash and cash equivalents                                                    |                                 |      |    | 70,451                  |         | (25,612                                             | )       |                   |         | (1,988                                         | )       | 42,851                 |        
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Total Current Assets                                                         |                                 |      |    | 381,834                 |         | (63,056                                             | )       | 1,328              |         | (14,637                                        | )       | 305,469                |        
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Total Assets from disposal group classified as held for sale                 |                                 | 14   |    |                        |         |                                                    |         |                   |         | 104,086                                        |         | 104,086                |        
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Total Assets                                                                 |                                 |      |    | 1,203,119               |         | (95,766                                             | )       | 26,368             |         |                                               |         | 1,133,721              |        
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Shareholders' equity and liabilities                                         |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Shareholders' equity                                                         |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Share capital and premium                                                    |                                 | 6    |    | 281,989                 |         |                                                    |         | 8,339              |         |                                               |         | 290,328                |        
|Treasury stock                                                               |                                 |      |    | (54,521                 | )       |                                                    |         |                   |         |                                               |         | (54,521                | )      
|Legal reserve                                                                |                                 |      |    | 4,256                   |         |                                                    |         |                   |         |                                               |         | 4,256                  |        
|Retained losses brought forward                                              |                                 |      |    | (57,719                 | )       | (1,710                                              | )       | (586               | )       |                                               |         | (60,015                | )      
|Loss for the year, after cumulative effect of change in accounting principle |                                 |      |    | (385,143                | )       | (4,221                                              | )       | 68,431             |         |                                               |         | (320,933               | )      
|Currency translation reserve                                                 |                                 |      |    | (84,121                 | )       |                                                    |         |                   |         |                                               |         | (84,121                | )      
|Deferred compensation costs                                                  |                                 | 6    |    |                        |         |                                                    |         | (2,941             | )       |                                               |         | (2,941                 | )      
|Excess of contribution over assets acquired                                  |                                 | 4    |    |                        |         |                                                    |         | (58,628            | )       |                                               |         | (58,628                | )      
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Total shareholders' equity                                                   |                                 |      |    | (295,259                | )       | (5,931                                              | )       | 14,615             |         |                                                |         | (286,575               | )      
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Minority interest                                                            |                                 |      |    | 23,733                  |         |                                                    |         |                   |         |                                               |         | 23,733                 |        
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Liabilities                                                                  |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Non-Current Liabilities                                                      |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|                                                                             | 13.5% Senior Subordinated Notes |      | 9  |                         | 912,539 |                                                     |        |                    | 5,461   |                                                |        |                        | 918,000
|                                                                             | Other debt and financing        |      | 9  |                         | 159,370 |                                                     | (26,803 | )                  | 2,898   |                                                | (33,765 | )                      | 101,700
|                                                                             | Deferred taxation               |      |    |                         | 26,874  |                                                     | (12,831 | )                  |        |                                                |        |                        | 14,043 
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|                                                                             |                                 |      |    | 1,098,783               |         | (39,634                                             | )       | 8,359              |         | (33,765                                        | )       | 1,033,743              |        
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Current Liabilities                                                          |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|                                                                             | Other debt and financing        |      |    |                         | 156,666 |                                                     | (20,244 | )                  |        |                                                | (45,064 | )                      | 91,358 
|                                                                             | Trade payables                  |      |    |                         | 90,945  |                                                     | (5,043  | )                  |        |                                                | (6,216  | )                      | 79,686 
|                                                                             | Other current liabilities       |      | 7  |                         | 128,251 |                                                     | (24,914 | )                  | 3,394   |                                                | (6,865  | )                      | 99,866 
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|                                                                             |                                 |      |    | 375,862                 |         | (50,201                                             | )       | 3,394              |         | (58,145                                        | )       | 270,910                |        
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Total Liabilities from disposal group classified as held for sale            |                                 | 14   |    |                        |         |                                                    |         |                   |         | 91,910                                         |         | 91,910                 |        
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Total Liabilities                                                            |                                 |      |    | 1,474,645               |         | (89,835                                             | )       | 11,753             |         |                                               |         | 1,396,563              |        
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        
|Total Shareholders' Equity and Liabilities                                   |                                 |      |    | 1,203,119               |         | (95,766                                             | )       | 26,368             |         |                                               |         | 1,133,721              |        
|                                                                             |                                 |      |    |                         |         |                                                     |         |                    |         |                                                |         |                        |        

---

F-76

---



Impact of consolidation of Great Universal and Modern Holdings

As explained in adjustment item No. 16, under U.S. GAAP, both Great Universal ("GU") and Modern Holdings ("Modern") should be consolidated. Presented in
the table below are the main line items of MIC's consolidated balance sheets as of December 31, 2003 and 2002 that would be materially impacted had GU and Modern been consolidated.

|                                                            |  | 2003*     |   | 2002*     |  
|----------------------------------------------------------- |  | --------- | - | --------- | -
|
|Consolidated total assets under U.S. GAAP                   |  | 1,460,925 |   | 1,133,721 |  
|Impact of consolidation                                     |  | 48,063    |   | 71,592    |  
|                                                            |  |           |   |           |  
|Consolidated total assets after consolidation               |  | 1,508,988 |   | 1,205,313 |  
|Consolidated total shareholders' equity under U.S. GAAP     |  | (66,006   | ) | (286,575  | )
|Impact of consolidation                                     |  | (2,195    | ) | (8,611    | )
|                                                            |  |           |   |           |  
|Consolidated total shareholders' equity after consolidation |  | (68,201   | ) | (295,186  | )

---

Comprehensive Income:

The Company's statement of comprehensive income under U.S. GAAP for the three-year period ended December 31, 2003, 2002 and 2001, is as
follows:

|                                            |                                                                                                           | 2003*   |         | 2002*    |          | 2001*    |        
|------------------------------------------- | --------------------------------------------------------------------------------------------------------- | ------- | ------- | -------- | -------- | -------- | -------
|
|Net loss under U.S. GAAP                    |                                                                                                           | (54,960 | )       | (320,933 | )        | (172,126 | )      
|                                            |                                                                                                           |         |         |          |          |          |        
|Other comprehensive income (loss):          |                                                                                                           |         |         |          |          |          |        
|                                            | Holding gain (loss) excluding effect of sale of marketable securities sold during the year, net of tax(a) |         | 241,163 |          | (37,422  | )        | (35,616
|                                            | Holding (loss) gain for securities sold during the year, net of tax(a)                                    |         | 5,597   |          | (131,396 | )        | 1,949  
|                                            | Reclassification adjustment for net (gain) loss realized on sale of marketable securities, net of tax(a)  |         | (5,597  | )        | 168,818  |          | 15,931 
|Currency translation reserve                |                                                                                                           | 14,923  |         | (37,263  | )        | (13,510  | )      
|                                            |                                                                                                           |         |         |          |          |          |        
|Other comprehensive income (loss)           |                                                                                                           | 256,086 |         | (37,263  | )        | (31,246  | )      
|                                            |                                                                                                           |         |         |          |          |          |        
|Comprehensive income (loss) under U.S. GAAP |                                                                                                           | 201,126 |         | (358,196 | )        | (203,372 | )      
|                                            |                                                                                                           |         |         |          |          |          |        

---

F-77

---



Additional Stock Option Disclosure:

As described above, under U.S. GAAP, the Company accounts for stock options under APB25. Had compensation costs been determined in accordance with
SFAS 123, the Company's net income and loss per share would have been adjusted to the following pro forma amounts.

|                                                                                                                                            |                                   | Year ended December 31, |      
|------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | ----------------------- | -----
|
|
|Net loss, as reported                                                                                                                       |                                   | (54,960                 | )    
|Add: total stock-based employee compensation expense determined under APB 25 for all awards, net of related tax effects                     |                                   | 1,157                   |      
|Deduct: total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |                                   | (2,579                  | )    
|                                                                                                                                            |                                   |                         |      
|Pro forma net loss                                                                                                                          |                                   | (56,382                 | )    
|                                                                                                                                            |                                   |                         |      
|Loss per share:                                                                                                                             |                                   |                         |      
|                                                                                                                                            | As reported (basic and diluted)$ |                         | (0.84
|                                                                                                                                            | Pro forma (basic and diluted)$   |                         | (0.86

---

The
fair value of the options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rates of 4.4%
(2002: 4.4%), expected lives of 3.5 years, no dividends and expected volatility of 114.9% (2002: 58.4%).

Additional Tax Disclosure:

The following table presents a reconciliation of the weighted average statutory tax rate and the effective tax rate, as required by Statement of Financial
Accounting Standard No. 109,Income Taxes. The information below is presented under IFRS.

|                                                |  | 2003 |   | 2002 |   | 2001 |  
|----------------------------------------------- |  | ---- | - | ---- | - | ---- | -
|
|Weighted average statutory rate                 |  | 26   |   | 19   |   | 32   |  
|Items taxed at other than weighted average rate |  | 15   |   | 10   |   | 11   |  
|Reversal of tax provision                       |  |     |   |     |   | (10  | )
|Investment incentive program (Paraguay)         |  |     |   |     |   | (2   | )
|Non taxable items                               |  | (19  | ) | (35  | ) | (36  | )
|Utilization of tax loss carry forward           |  | (1   | ) | (1   | ) | (1   | )
|                                                |  |      |   |      |   |      |  
|Effective rate                                  |  | 21   |   | (7   | ) | (6   | )
|                                                |  |      |   |      |   |      |  

32. SUBSEQUENT EVENTS

In January 2004 MIC's Registration of its 2% Senior Convertible PIK Notes due 2006 was declared effective by the U.S. Securities and Exchange Commission.

On
March 25, 2004, MIC announced that it has received approval for a listing of its shares on Stockholmsbörsen (the Stock Exchange in Sweden). Trading commenced on
March 30, 2004.

On
February 4, 2004 MIC's subsidiary in Vietnam, Comvik International (Vietnam) AB signed a Memorandum of Understanding with its partner VMS, a subsidiary of the Vietnam Posts and
Telecommunications, to confirm their intention to extend the co-operation for the long term.

F-78

---



On
February 5, 2004 MIC acquired 26% of Millicom Tanzania Ltd from the Government of Tanzania, bringing its ownership to 84%.

On
February 9, 2004, MIC entered into an agreement with Rafsanjan Industrial Complex ("RIC") to manage the network to be owned by RIC under a build, operate and transfer contract
(the "BOT Contract") between RIC and Telecommunications Company of Iran ("TCI"). The BOT Contract allows RIC to build and operate a nationwide GSM network (the "Network") for 2 million prepaid
subscribers for a period of 11 years. MIC will be paid a share of the revenues generated by the Network. In
addition, MIC has been awarded an option to acquire 47% of the company that will operate the Network.

MIC
held an Extraordinary General Meeting of Shareholders on February 16, 2004, which approved a stock split of the issued shares of the Company by exchanging one existing
ordinary share with a par value of US$ 6 into four new ordinary shares with a par value of US$ 1.50 which became effective on February 20, 2004.

On
March 8, 2004, the Chairman of the Board of Directors, Mr Ledin passed away peacefully at the age of 66. Mr. Ledin provided great services to MIC contributing to the
success of the Group. Mr Johannesson was appointed as new Chairman of the Board of Directors.

On
March 19, 2004, MIC formally requested the Trustee to call the entire outstanding amount of 2% Notes for redemption in cash on April 26, 2004 in accordance with the
terms of the Indenture covering the 2% Notes.

33. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

As mentioned in Note 18, MIC exchanged, on May 8, 2003, $776 million of the 13.5% Senior Subordinated Notes for $562 million of the
11% Senior Notes and $64 million of the 2% PIK Notes, together the "New Notes". MIC's indirectly wholly owned subsidiary, Millicom International Operations B.V. or "MIOBV", will irrevocably and
unconditionally guarantee certain payments of the New Notes.

The
following information presents condensed consolidating financial information for MIC, the "Issuer", MIOBV, "the Guarantor", and the other non-guarantor subsidiaries of
MIC, the "Non-Guarantor Subsidiaries".

The
Company has not provided reconciliation between IFRS and U.S. GAAP for the columns relating to the Guarantor as such reconciliation would not materially affect an investor's
understanding of the nature of the guarantee.

F-79

---



Consolidated
condensed balance sheets as of December 31, 2003 and 2002 are as follows:

|                                     |  | As of December 31, 2003 |  
|------------------------------------ |  | ----------------------- | -
|
|
|ASSETS                               |  |                         |  
|Non-current assets                   |  |                         |  
|Property, plant and equipment, net   |  | 143                     |  
|Investment in securities             |  | 2,962                   |  
|Pledged deposits                     |  | 22,296                  |  
|Deferred taxation                    |  |                        |  
|Other non-current assets             |  | 314                     |  
|Current assets                       |  |                         |  
|Inventories                          |  |                        |  
|Investment in securities             |  |                        |  
|Amounts due from joint ventures      |  | 533,729                 |  
|Time deposits                        |  |                        |  
|Cash and cash equivalents            |  | 22,738                  |  
|Other current assets                 |  | 5,535                   |  
|                                     |  |                         |  
|Total assets                         |  | 587,717                 |  
|                                     |  |                         |  
|LIABILITIES                          |  |                         |  
|Non-current liabilities              |  |                         |  
|Other non-current liabilities        |  |                        |  
|Deferred taxation                    |  |                        |  
|Corporate debt                       |  | 586,959                 |  
|Other debt and financing             |  | 70,751                  |  
|Current liabilities                  |  |                         |  
|Other debt and financing             |  |                        |  
|Trade payables                       |  | 2,297                   |  
|Amounts due to other related parties |  | 125                     |  
|Other liabilities                    |  | 12,765                  |  
|                                     |  |                         |  
|Total liabilities                    |  | 672,897                 |  
|                                     |  |                         |  
|EQUITY                               |  |                         |  
|Total shareholders' equity           |  | (85,180                 | )
|Minority interest                    |  |                        |  

F-80

---



|                                     |  | As of December 31, 2002 |  
|------------------------------------ |  | ----------------------- | -
|
|
|ASSETS                               |  |                         |  
|Non-current assets                   |  |                         |  
|Property, plant and equipment, net   |  | 188                     |  
|Investment in securities             |  |                        |  
|Pledged deposits                     |  | 36,595                  |  
|Deferred taxation                    |  |                        |  
|Other non-current assets             |  | 498                     |  
|Current assets                       |  |                         |  
|Inventories                          |  |                        |  
|Investment in securities             |  |                        |  
|Amounts due from joint ventures      |  | 616,844                 |  
|Time deposits                        |  | 10,427                  |  
|Cash and cash equivalents            |  | 6,895                   |  
|Other current assets                 |  | 7,051                   |  
|                                     |  |                         |  
|Total assets                         |  | 678,498                 |  
|                                     |  |                         |  
|LIABILITIES                          |  |                         |  
|Non-current liabilities              |  |                         |  
|Other non-current liabilities        |  |                        |  
|Corporate subordinated debt          |  | 912,539                 |  
|Other debt and financing             |  |                        |  
|Current liabilities                  |  |                         |  
|Other debt and financing             |  |                        |  
|Trade payable                        |  | 1,300                   |  
|Amounts due to shareholders          |  | 62                      |  
|Amounts due to other related parties |  |                        |  
|Other liabilities                    |  | 59,856                  |  
|                                     |  |                         |  
|Total liabilities                    |  | 973,757                 |  
|                                     |  |                         |  
|EQUITY                               |  |                         |  
|Total shareholders' equity           |  | (295,259                | )
|Minority interest                    |  |                        |  

F-81

---



Consolidated condensed profit and loss accounts for the year ended December 31, 2003, 2002 and 2001 are as follows:

|                                                              |  | For the year ended December 31, 2003 |  
|------------------------------------------------------------- |  | ------------------------------------ | -
|
|
|Revenues                                                      |  | 4,228                                |  
|Cost of sales                                                 |  |                                     |  
|Sales and marketing                                           |  |                                     |  
|General and administrative expenses                           |  | (351                                 | )
|Gain (loss) from sale of subsidiaries and joint ventures, net |  | (1,820                               | )
|Other operating expenses                                      |  | (22,851                              | )
|Loss from investment securities, net                          |  | 16,866                               |  
|Net interest                                                  |  | (47,424                              | )
|Exchange gain (loss)                                          |  | (4,719                               | )
|Charge for taxes                                              |  | (200                                 | )
|Other income                                                  |  | 96,748                               |  
|Fair value result on financial instruments                    |  |                                     |  
|Equity income (loss)                                          |  | 138,346                              |  
|Minority interest                                             |  |                                     |  
|Net profit (loss) for the year                                |  | 178,823                              |  

|                                                              |  | For the year ended December 31, 2002 |  
|------------------------------------------------------------- |  | ------------------------------------ | -
|
|
|Revenues                                                      |  | 7,419                                |  
|Cost of sales                                                 |  |                                     |  
|Sales and marketing                                           |  |                                     |  
|General and administrative expenses                           |  |                                     |  
|Gain (loss) from sale of subsidiaries and joint ventures, net |  | 19,084                               |  
|Other operating expenses                                      |  | (20,417                              | )
|Loss from investment securities, net                          |  |                                     |  
|Net interest                                                  |  | (55,235                              | )
|Exchange gain (loss)                                          |  | 5,387                                |  
|Charge for taxes                                              |  | (320                                 | )
|Other income (charges)(1)                                     |  | 118,698                              |  
|Equity income (loss)                                          |  | (459,759                             | )
|Minority interest                                             |  |                                     |  
|Net profit (loss) for the year                                |  | (385,143                             | )

---

F-82

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|                                                              |  | For the year ended December 31, 2001 |  
|------------------------------------------------------------- |  | ------------------------------------ | -
|
|
|Revenues                                                      |  | 5,382                                |  
|Cost of sales                                                 |  |                                     |  
|Sales and marketing                                           |  |                                     |  
|General and administrative expenses                           |  |                                     |  
|Gain (loss) from sale of subsidiaries and joint ventures, net |  | (46,327                              | )
|Other operating expenses                                      |  | (23,874                              | )
|Loss from investment securities, net                          |  |                                     |  
|Net interest                                                  |  | (68,947                              | )
|Exchange loss                                                 |  | (19,449                              | )
|Charge for taxes                                              |  | (79                                  | )
|Other income (charges)                                        |  | 15,900                               |  
|Equity income (loss)                                          |  | (659                                 | )
|Minority interest                                             |  |                                     |  
|Net profit (loss) for the year                                |  | (138,053                             | )

Consolidated
condensed cash flow statements for the year ended December 31, 2003, 2002 and 2001 are as follows:

|                                                                                    |  | For the year ended December 31, 2003 |  
|----------------------------------------------------------------------------------- |  | ------------------------------------ | -
|
|
|Net cash provided by (used in) operating activities                                 |  | 228,223                              |  
|                                                                                    |  |                                      |  
|Cash flows from investing activities:                                               |  |                                      |  
|Proceeds from the disposal of subsidiaries and joint ventures, net of cash disposed |  |                                     |  
|Proceeds from the disposal of investments in securities                             |  |                                     |  
|Purchase of investments in securities                                               |  |                                     |  
|Purchase of tangible assets                                                         |  |                                     |  
|(Increase) Decrease in pledged deposits                                             |  | 9,935                                |  
|(Increase) Decrease in time deposits                                                |  | 10,427                               |  
|Cash provided by (used in) other investing activities                               |  | (17,510                              | )
|                                                                                    |  |                                      |  
|Net cash provided by (used in) investing activities                                 |  | 2,852                                |  
|                                                                                    |  |                                      |  
|Cash flows from financing activities:                                               |  |                                      |  
|Proceeds from the issuance of debt                                                  |  | 535,967                              |  
|Repayment of debt and other financing                                               |  | (699,929                             | )
|Other financing activities                                                          |  | (51,270                              | )
|                                                                                    |  |                                      |  
|Net cash provided by (used in) financing activities                                 |  | (215,232                             | )
|                                                                                    |  |                                      |  
|Cash effect of exchange changes                                                     |  |                                     |  
|                                                                                    |  |                                      |  
|Net increase in cash and cash equivalents                                           |  | 15,843                               |  
|Cash and cash equivalents, beginning                                                |  | 6,895                                |  
|                                                                                    |  |                                      |  
|Cash and cash equivalents, ending                                                   |  | 22,738                               |  
|                                                                                    |  |                                      |  

F-83

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|                                                                                    |  | For the year ended December 31, 2002 |  
|----------------------------------------------------------------------------------- |  | ------------------------------------ | -
|
|
|Net cash provided by (used in) operating activities                                 |  | 36,479                               |  
|                                                                                    |  |                                      |  
|Cash flows from investing activities:                                               |  |                                      |  
|Proceeds from the disposal of subsidiaries and joint ventures, net of cash disposed |  | 24,292                               |  
|Proceeds from the disposal of investments in securities                             |  | 73                                   |  
|Purchase of tangible assets                                                         |  |                                     |  
|(Increase) Decrease in pledged deposits                                             |  | (32,203                              | )
|Cash provided by (used in) other investing activities                               |  | (25,748                              | )
|                                                                                    |  |                                      |  
|Net cash provided by (used in) investing activities                                 |  | (33,586                              | )
|                                                                                    |  |                                      |  
|Cash flows from financing activities:                                               |  |                                      |  
|Proceeds from the issuance of debt                                                  |  |                                     |  
|Repayment of debt and other financing                                               |  |                                     |  
|Other financing activities                                                          |  | 76                                   |  
|                                                                                    |  |                                      |  
|Net cash provided by (used in) financing activities                                 |  | 76                                   |  
|                                                                                    |  |                                      |  
|Cash effect of exchange changes                                                     |  |                                     |  
|                                                                                    |  |                                      |  
|Net increase in cash and cash equivalents                                           |  | 2,969                                |  
|Cash and cash equivalents, beginning                                                |  | 3,926                                |  
|                                                                                    |  |                                      |  
|Cash and cash equivalents, ending                                                   |  | 6,895                                |  
|                                                                                    |  |                                      |  

F-84

---



|                                                                                    |  | For the year ended December 31, 2001 |  
|----------------------------------------------------------------------------------- |  | ------------------------------------ | -
|
|
|Net cash provided by (used in) operating activities                                 |  | (182                                 | )
|                                                                                    |  |                                      |  
|Cash flows from investing activities:                                               |  |                                      |  
|Proceeds from the disposal of subsidiaries and joint ventures, net of cash disposed |  |                                     |  
|Proceeds from the disposal of investments in securities                             |  |                                     |  
|Purchase of tangible assets                                                         |  |                                     |  
|(Increase) Decrease in pledged deposits                                             |  | 70,584                               |  
|Cash provided by (used in) other investing activities                               |  | 3,588                                |  
|                                                                                    |  |                                      |  
|Net cash provided by (used in) investing activities                                 |  | 74,172                               |  
|                                                                                    |  |                                      |  
|Cash flows from financing activities:                                               |  |                                      |  
|Proceeds from the issuance of debt                                                  |  |                                     |  
|Repayment of debt and other financing                                               |  | (115,088                             | )
|Other financing activities                                                          |  | (1,055                               | )
|                                                                                    |  |                                      |  
|Net cash provided by (used in) financing activities                                 |  | (116,143                             | )
|                                                                                    |  |                                      |  
|Cash effect of exchange changes                                                     |  |                                     |  
|                                                                                    |  |                                      |  
|Net (decrease) increase in cash and cash equivalents                                |  | (42,153                              | )
|Cash and cash equivalents, beginning                                                |  | 46,079                               |  
|                                                                                    |  |                                      |  
|Cash and cash equivalents, ending                                                   |  | 3,926                                |  
|                                                                                    |  |                                      |  

F-85

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SIGNATURES

Pursuant to 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
April 30, 2004

| |  | MILLICOM INTERNATIONAL CELLULAR S.A.
| |  | ------------------------------------
| |  | By:                                 
| |  | By:                                 

i

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EXHIBIT INDEX

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                        
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1         |  | Memorandum and Articles of Association and bylaws of Millicom International Cellular S.A.                                                                                                                                                                                                                          
|2.1         |  | Indenture, dated as of November 24, 2003 between Millicom International Cellular S.A. and The Bank of New York, as Trustee (Incorporated by reference to Exhibit 4.1 of the Company's Registration Statement on Form F-4 (File No. 333-112948) filed on
February 19, 2004).                                        
|2.2         |  | Trust Deed, dated August 7, 2003 between Millicom Telecommunications S.A., Millicom International Cellular S.A. and Deutsche Trustee Company Limited.                                                                                                                                                              
|7.1         |  | Explanation of the calculation of (loss) earnings per share.                                                                                                                                                                                                                                                       
|12.1        |  | Certification of Marc Beuls filed pursuant to Securities Exchange Act of 1934, as amended (the "Exchange Act") Rule 13a-14(a).                                                                                                                                                                                     
|12.2        |  | Certification of Bruno Nieuwland filed pursuant to Exchange Act Rule 13a-14(a).                                                                                                                                                                                                                                    
|12.3        |  | Certification of Judy Tan filed pursuant to Exchange Act Rule 13a-14(a).                                                                                                                                                                                                                                           
|13.1        |  | Certification of Marc Beuls and Bruno Nieuwland furnished pursuant to Exchange Act Rule 13a-14(b).                                                                                                                                                                                                                 
|14.1        |  | Consent of PricewaterhouseCoopers S.àr.l to the incorporation by reference of their report dated March 31, 2004, except for Note 31, as to which the date is April 30, 2004 in the Company's Registration Statement on Form F-3 (File No.
333-111779) and Registration Statement on Form F-4 (File No. 333-112948).

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