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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)o

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

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2008ORo

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

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


000-22828 Commission file number

MILLICOM INTERNATIONAL CELLULAR S.A.

(Exact name of Registrant as specified in its charter)

GRAND-DUCHY OF LUXEMBOURG

(Jurisdiction of incorporation or organization)

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

(Address of principal executive offices)

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

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

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

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

108,297,507 shares of Common Stock as of December 31, 2008

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

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

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

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

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

Large accelerated filer ý

Accelerated filer o

Non-accelerated filer o


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

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

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

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



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Table of Contents

TABLE OF CONTENTS



PageFORWARD-LOOKING STATEMENTS


2PRESENTATION OF FINANCIAL AND OTHER INFORMATION


3PART I


4ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS


4ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE


4ITEM 3.

KEY INFORMATION


4ITEM 4.

INFORMATION ON THE COMPANY


16ITEM 4A

UNRESOLVED STAFF COMMENTS


54ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS


54ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


84ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS


94ITEM 8.

FINANCIAL INFORMATION


95ITEM 9.

THE OFFER AND LISTING


96ITEM 10.

ADDITIONAL INFORMATION


97ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK


106ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES


107PART II


108ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES


108ITEM 14.

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


108ITEM 15.

CONTROLS AND PROCEDURES


108ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT


108ITEM 16B.

CODE OF ETHICS


109ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES


109ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES


109ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES


109ITEM 16F.

CHANGE IN CERTIFYING ACCOUNTANT


109ITEM 16G.

SIGNIFICANT DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES


109PART III


110ITEM 17.

FINANCIAL STATEMENTS


110ITEM 18.

FINANCIAL STATEMENTS


110ITEM 19.

EXHIBITS


110


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Table of Contents

FORWARD-LOOKING STATEMENTS

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

These
factors include, but are not limited to:



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

2

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Table of Contents

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

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

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

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Table of Contents

PART I

ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable for Annual Reporting filing.

ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable for Annual Reporting filing.

ITEM 3.    KEY INFORMATION

Selected Financial Information

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

The
following table sets forth summary financial data of the Group as of and for the years ended December 31, 2008, 2007, 2006, 2005, and 2004. The data are based upon the Group's
audited consolidated balance sheets as of December 31, 2008, 2007, 2006, 2005 and 2004 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 in this document are based upon financial statements prepared in accordance with IFRS.

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

Year Ended December 31,2008

2007

2006

2005

2004(in thousands of U.S. dollars, except per share data)Profit and Loss Statement Data:Revenues

3,412,380

2,623,854

1,570,086

912,438

654,898Operating profit

867,283

671,703

447,958

275,476

173,596Profit for the period from continuing operations(1)

426,838

465,086

246,582

104,590

29,414Net profit attributable to equity holders for the period

517,516

697,142

168,947

10,277

65,891Basic earnings (loss) from continuing operations per common share

$5.01

$4.46

$2.55

$1.00

$0.32Basic earnings (loss) per common share

$4.80

$6.90

$1.68

$0.10

$0.79Weighted average number of shares in basic computation (in thousands)(2)

107,869

101,088

100,361

98,803

83,335Diluted earnings (loss) from continuing operations per common share

$4.98

$4.33

$2.52

$0.98

$0.30Diluted earnings (loss) per common share

$4.77

$6.61

$1.67

$0.10

$0.73Weighted average number of shares in diluted computation (in thousands)(2)

108,646

108,047

101,371

99,921

90,312Dividends per share

$2.40










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As of December 31,2008

2007

2006

2005

2004(in thousands of U.S. dollars)Balance Sheet Data:Property, plant and equipment, net


2,787,224


2,066,122


1,267,159


671,774


575,649Intangible assets, net


990,350


467,502


482,775


373,487


317,968Financial assets at fair value through profit or loss











327,803


397,137Investments in associates(3)


21,087


11,234


6,838


5,367


2,220Total assets


5,220,808


4,413,826


3,320,994


2,559,656


2,046,213Current liabilities


1,749,079


2,002,269


901,851


909,008


505,884Non-current liabilities


1,812,554


1,043,221


1,442,716


1,070,140


1,259,892Minority interest


(25,841
)

80,429


77,514


34,179


43,351Shareholders' equity


1,677,918


1,287,907


504,874


299,605


237,086




As of and for Year Ended December 31,2008

2007

2006

2005

2004Operating Data (unaudited)(4):Total Subscribers:Prepaid


30,637,947


22,253,850


14,027,264


7,008,271


4,381,226Postpaid


1,406,005


996,686


876,126


473,388


432,978Monthly churn (%)(5):Prepaid


6.2


3.7


4.7


4.3


4.4Postpaid


1.5


1.2


1.4


1.7


1.7




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RISK FACTORS

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

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

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

In 2008, our business has been impacted by the general worldwide economic crisis and its effects will continue to impact our results in
2009, as the economic outlook for the next year has worsened significantly and the global economic recession appears set to continue for some time. Some recent events affected negatively the economies
of the countries where we operate and could possibly impact our businesses: decline of remittances from the United States (affecting Central America), raw material price decrease (affecting Chad,
Paraguay, DRC, Ghana) and less international tourism (impacting Senegal, Mauritius, Cambodia and Tanzania).

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

Risks Relating to our Business

Emerging Markets Risks

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

We offer mobile telephony services in 16 emerging markets in Central and South America, Africa and Asia. Many of the countries in which
we operate are considered to be emerging economies and, therefore, can be subject to greater political and economic risk than developed countries. The governments of these 16 countries differ widely
with respect to type of government, constitution, and stability. Many of these 16 countries lack mature legal and regulatory systems. Some of the countries in which we operate, particularly Chad and
Sri Lanka, suffer from political instability, civil unrest, or war-like actions by anti-government insurgent groups. These problems may continue or worsen, potentially
resulting in civil war in these countries. Other countries in which we operate have only recently emerged from civil war and are attempting to rebuild their economies and governments, such as Sierra
Leone and the Democratic Republic of Congo.

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

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

In order for our operations to provide mobile services, they must receive a license from the government of the country in which they
operate. Our ability to operate is therefore dependent on the licenses granted by the government of each country. These licenses generally allow our companies to operate for a number of years, after
which they are subject to renewal. To the extent that our operations depend on governmental approval and regulatory decisions, our local business may be adversely affected by changes in the political
structure or by actions or decisions of specific government representatives in the relevant market. It is possible that a government could decide arbitrarily to revoke a license or impose new
conditions that we do not agree with and may not get consulted about in advance. We may not always have access to efficient avenues for appeal and may have to accept arbitrary conditions imposed upon
us. This could adversely impact our business and our revenues. Our favored recourse is often to the legal system of the relevant country; however, the legal and court systems of many countries in
which we operate tend to be poorly developed and can be subject to political influence and other inherent uncertainties. It can therefore be difficult to obtain a rapid, fair and unbiased resolution
of disagreements with governmental authorities.

Even
where we have other options, such as claiming compensation in arbitration proceedings for violations of a bilateral investment treaty, the process can be lengthy and costly. Even
when the outcome is successful, the enforcement of any award favorable to us could be a challenge.

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

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

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

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

Some
of these countries have historically experienced high inflation rates, although in the recent years inflation rates in all countries where we operate have been relatively low.
Periods of significant inflation in any of our markets could adversely affect our costs and financial condition.

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

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

The
electricity supply is insufficient in certain countries in which we operate (predominantly Africa, with the exception of Mauritius) due to the growth experienced in such countries.
We therefore have to rely on diesel-powered generators that we source, install, maintain and refuel. In Chad, at December 31, 2008, almost 100% of our radio sites were powered by diesel-powered
generators, and in the Democratic Republic of Congo it was the case for about 45% of our sites. This increases our costs and impacts the profitability of our African operations.

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

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

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

Many of our countries receive significant inflows of funds from relatives and friends in developed countries that work abroad. A
significant deterioration in the developed country economies could impact the ability of those abroad to continue remitting funds because of job losses or reduced wages. Lower remittances would reduce
the disposable income which would impact our revenues. A change in the situation was noticed in Central America where remittances went down of about 5% in the last quarter of 2008.

The recent increase in food prices within developed countries could have an inflationary impact on the emerging market economies.

A significant increase in food prices within our operating markets could impact the consumers' ability to pay for our products and
services. Currently, we have not seen a noticeable difference in consumer behavior towards our products and services. This might be because there is an agricultural sector in many of the economies in
which we operate which could be providing protection against inflationary food prices seen in developed countries, or because our products and services are essential for basic communication which is
relatively high on the list of customer needs and therefore consumers are making sacrifices to continue spending on our services. However, this situation could change if food prices remain higher than
before or increase.

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

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

We
generally do not hedge our foreign currency exposures, because of lack of available intruments in the countries where we operate. Millicom had a net exchange loss of
$56 million for the year ended December 31, 2008, compared to a gain of $15 million for the year ended December 31, 2007.

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

Most of the operations in which we have interests receive substantially all of their revenues in the currency of the countries in which
they operate. We derive substantially all of our revenues through funds generated by our local operations and, therefore, we rely on their ability to transfer funds to the Company.

Although
there are foreign exchange controls in some of the countries in which our mobile telephone companies operate, none of these countries currently significantly restrict the
ability of these operations to pay interest, dividends, technical service fees and royalties and repay loans by exporting cash, instruments of credit or securities in foreign currencies. Although we
have so far experienced no major difficulty in obtaining permits to allow our operations to upstream cash directly or indirectly to the ultimate parent company of the Millicom group, this may not be
the case in the future. Foreign exchange control restrictions may be introduced in countries where we operate or strengthened where such restrictions already exist, or other countries where we operate
that do not currently have such restrictions may decide to impose them, in which cases the Company's ability to receive funds from the operations will subsequently be restricted, which will negatively
impact the Company's revenues.

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

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

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

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

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

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

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



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

Risks Related to our Operations and the Mobile Telephony Market

We face intense competition in the mobile telephone operator market.

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

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

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In
addition, new competitors, such as mobile and fixed line operators in developed markets that are able to leverage their existing networks may enter emerging 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 into our markets and price competition intensifies, our customers may move to another mobile telephone operator. This may result in
our revenue declining, which would adversely affect our results of operations.

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

The mobile telephony market is heavily regulated.

The licensing, construction, ownership and operation of mobile telephone networks, and the grant, maintenance and renewal of mobile
telephone licenses, as well as radio frequency allocations and interconnection arrangements, are regulated by national, state, regional or local governmental authorities in the markets that we
service. In addition, such matters and certain other aspects of mobile telephone operations, including rates charged to customers and the resale of mobile telephone services, may be subject to public
utility regulation in the relevant market. Our operations also typically require governmental permits, including permits for the construction and operation of cell sites. We do not believe that
compliance with these permit requirements generally has a material adverse effect on our company. However, we may become subject to claims or regulatory actions relating to any past or future
non-compliance with permit requirements.

Changes
in the regulation of our activities, such as increased or decreased regulation affecting prices or requirements for increased capital investments, may materially adversely affect
us.

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

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

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

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

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

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

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

Fixed network and other system equipment used in the mobile telephone industry have a limited life and must be replaced frequently due
to damage or as a result of ordinary wear and tear. In addition, substantial expansion of existing networks is required to remain competitive. Our networks are based on the GSM standard. The GSM
standard has been most appropriate for our markets because it has the greatest availability of handsets with strong functionality and has relatively low repair and maintenance costs. As new
technologies develop, such as third generation systems, including WiMAX and 3G, equipment may need to be replaced or upgraded or a mobile telephone network may need to be rebuilt in whole or in part,
at substantial cost, to remain competitive. Unforeseeable technological developments may also render our services unpopular with customers or obsolete. To the extent our equipment or systems become
obsolete, we may be required to recognize an impairment charge to such assets, which may have a material adverse effect on our results of operations.

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

In line with the current trend in the European Union ("EU"), where the European Commission intends to change spectrum regulation in
such a way that spectrum (900 Mhz and 1800 Mhz bands) formerly reserved exclusively for GSM operators would be opened to other uses, such as 3G, we could find that new competitors are given access to
the spectrum bands we operate in. Among the markets that we operate in, we believe that the region most likely to follow the trends in EU telecommunications regulation is Africa. Although we do not
believe such changes will occur in the near future, we believe EU telecoms regulatory developments are likely to impact telecom regulatory trends in other parts of the world, particularly in Africa.
If such trends become law, our competitive position in the relevant countries may become adversely affected.

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

Our ability to increase our subscriber base depends upon the success of the expansion and management of our networks and distribution.
The build-out of our networks and distribution is subject to risks and uncertainties which may delay the introduction of service and increase the cost of network construction. Such
uncertainties may include natural disasters such as the tsunami in Sri Lanka (as occurred in late December 2004), the risk of hurricanes, volcanic activity and earthquakes in Central America, flooding
in low-lying areas in Bolivia and Paraguay (as occurred in the first quarter of 2007) and in South-East Asia. Other risks include sabotage, which is an ongoing risk
particularly in Colombia, DRC and Sri Lanka. To the extent we fail to expand our network and distribution capabilities on a timely basis, we may experience difficulty in expanding our subscriber base.

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

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

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



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

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

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

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

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

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

General Risks

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

Our ability to generate cash is dependent on our future operating and financial performance. This will be impacted by our ability to
implement successfully our business strategy, as well as general economic, financial, competitive, regulatory, technical and other factors beyond our control. If we cannot generate sufficient cash, 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 may have difficulties to access to the financial
markets as we are not an investment grade rated credit. In addition, banks are refocusing on their domestic markets and we are operating in Luxembourg with few national banks. This could impact the
operating performance of our business.

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

As of December 31, 2008, Millicom's total consolidated indebtedness was $2.2 billion. Of this amount, $0.5 billion
represented the Company's indebtedness and $1.7 billion represented our consolidated share of the indebtedness of our subsidiaries and joint ventures.

Corporate
guarantees issued by the Company secured $0.7 billion of the indebtedness of our operations at December 31, 2008. The Group's share of total debt and financing
secured by either pledged assets, pledged deposits issued to cover letters of credit or guarantees issued by the Company was $1.3 billion at December 31, 2008.

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



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

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

We
rely upon dividends and other payments from our operations to generate the funds necessary to meet the Company's obligations, including the Company's debt obligations. The local
operations are legally separate and distinct from the Company and have no obligation to pay amounts due with respect to the Company's obligations or to make funds available for such payments. Our
local operations do not guarantee the Company's obligations. The ability of our operations to make such payments to the Company will be subject to, among other things, the availability of funds, the
agreement of our partners, the terms of each operation's indebtedness and local law. The majority of our local operations have entered into financing facilities, most of which are guaranteed by the
Company, many of which restrict the payment of dividends by those operations to the Company. Claims of creditors of our operations, including trade creditors, will generally have priority over our
claims and the holders of our indebtedness.

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

Investment AB Kinnevik our largest shareholder owned 37,835,438 shares in Millicom, representing approximately 35% of the voting shares
as at December 31, 2008. The Kinnevik group and its subsidiaries, the non-independent directors, the Stenbeck estate, and certain Stenbeck Trusts, beneficially owned 38,841,589
shares in Millicom, representing about 36% of Millicom's outstanding shares as at December 31, 2008. Kinnevik and its affiliates, having a significant ownership in Millicom, have significant
influence over our management and affairs. The influence that they have may not always be consistent with your interests.

A substantial number of our directors hold positions with Investment AB Kinnevik ("Kinnevik") or Tele2 AB, which may present conflicts that may be resolved in a manner not
consistent with your interests.

Three Millicom board members hold executive and/or director positions with Kinnevik and Tele2 AB, a pan-European
telecommunications company offering fixed and mobile telephony. Tele2 AB is controlled by Kinnevik and certain of its affiliates.

These
positions may create, or appear to create, potential conflicts of interest when these directors are faced with decisions that may have different implications for us, Kinnevik or
Tele2 AB. There is a risk that these conflicts may ultimately be resolved in a manner not consistent with your interests.

While
it is the current understanding and has been the practice to date that we have the initial right to consider any telecommunications opportunity that arises in the emerging
non-European markets that we target, there is no contractual arrangement that grants us to this effect among us, Kinnevik and Tele2 AB.

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

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

ITEM 4.    INFORMATION ON THE COMPANY

Background

Overview

We are a global mobile telecommunications operator with operations in some of the world's emerging markets over which we generally
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. In October 2008, we acquired Amnet Telecommunications Holding Limited (Amnet) a cable, broadband, fixed telephony and Corporate data business across Central
America. The acquisition of Amnet will allow us to accelerate our broadband offering across the Central American region.

We
have interests in 16 mobile operations in 16 countries, focusing on emerging markets in Central America, South America, Africa and Asia. In December 2008 we successfully tendered for
the third national mobile license in Rwanda.

At
December 31, 2008, the countries where we had mobile operations had a combined population of approximately 294 million. This means that our licenses cover
294 million people, which represents the number of people who could receive mobile services under the terms of our licenses if our networks covered the entire population. Our total number of
mobile subscribers reached 32 million (28 million on an attributable basis) at December 31, 2008.

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

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Lastly,
we are seeing growing demand for services beyond our traditional voice business, particularly with value-added services, data and broadband. These other services could be a
source of significant future growth.

Summary of Highlights and Recent Developments

On January 22, 2008, Millicom announced the completion of the early redemption of its $200 million 4% Convertible Bonds
due 2010. Following the conversion of $1 million bonds into 28,686 Swedish Depositary Receipts ("SDRs") in October 2007, the bondholders converted a further $196 million of the remaining
$199 million of the outstanding bonds into 5,420,235 Ordinary Shares and 202,236 SDRs. Millicom repaid in cash the face value of $3 million of bonds and accrued interests to those
bondholders who did not convert their bonds as of the conversion deadline of January 11, 2008.

On
October 1, 2008, the Group acquired 100% interest in Amnet Telecommunications Holding Limited (together with its subsidiaries "Amnet" or "Amnet Group"). Acquisition cost
amounted to $546 million and net cash acquired to $14 million; net cash used for the acquisition of Amnet therefore amounted to $532 million.

On
October 30, 2008, Millicom announced that the government of the Republic of Senegal had informed Millicom of its intention to revoke, effective October 31, 2008, its
license to provide mobile telephony services of Sentel GSM, Millicom's operation in Senegal (see note 28).

On
November 17, 2008, Millicom announced that it had been successful in the tender for the 3rd national mobile license in Rwanda.

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

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 whilst at the same time offering network quality and wide distribution. We believe that, given the relatively low mobile penetration levels in our markets compared to more developed markets,
we can continue to achieve significant growth in our subscriber base while continuing to improve our operating margins and cash flows by rolling out our tigo® brand across most of our
operations and focusing on our triple "A" operating strategy:



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Focusing on growth.We believe there is a significant opportunity for further growth in our markets due to the relatively low mobile
penetration
levels (the weighted average penetration rate in the markets in which we operate is 39%) as many of our markets have high growth potential and substantial unmet 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 will
continue to invest in our existing mobile operations, where we believe we can generate attractive returns. In addition, we intend to increase our equity ownership in those of our operations where we
still have either joint-venture or minority partners, provided it is permitted under the terms of our license, through buy-outs of our partners when the opportunities arise. We may
participate in consolidation within our markets through the careful evaluation, selection and pursuit of strategic opportunities. We may pursue new license opportunities in our adjacent markets within
existing financial guidelines and provided there is group-wide synergy potential. We will also look to expand into other services such as broadband.

Improving cost efficiencies and capturing synergies.We continue to seek ways to further reduce our cost base by rationalizing our
operations. We
maintain a strict centralized cost control program across our operations which lowers our operating costs. In addition, we expect to realize additional synergies across our operations, such as sharing
of information, human resources, best practices and technologies, and centralized negotiations of financing and supply contracts for network equipment.

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

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

We
are beginning to see strong demand for broadband services in some of our markets, particularly in the relatively more mature markets in Latin America. We are looking at the ways in
which we can meet this growing customer demand, including deploying new technologies where this is economically justified. One of them is 3G (WCDMA) using HSDPA since this provides a very spectrally
efficient wireless solution. This technology is being deployed in Asia and Africa in the 2100MHz spectrum while in the Americas 3G is using the current existing 850 and 1900MHz spectrum.

Other
new technologies will start to appear. One of them is mobile WiMAX 802.16m, Ultra Mobile Broadband (UMB) and Long Term Evolution (LTE) based on a new OFDMA technology. This
eventually will allow operators to have an all IP packet only connection. On case by case basis, where ever we find convenient we are acquiring WiMAX licenses or spectrum in our countries of operation
where they are available to ensure we can offer WiMAX- based services if and when our customers demand them and we are able to offer these services at reasonable prices.

In
the case that future successful technologies are different from the one adopted by the company then this will force additional investment in network equipment replacement and
training.

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

Sales, marketing and distribution.We pursue a low-cost, innovative and high-impact approach to sales, marketing and
distribution. Except in few countries , we do not provide handset subsidies for our prepaid subscribers. As a result, we typically 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 or retail outlets such as
local convenience stores, newspaper stands, and street vendors.

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

Competitive Strengths

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

Established prepaid operator.Our focus on prepaid mobile services for the mass market offers the advantage of lower subscriber
acquisition and
operating costs, which results in higher margins and a faster average payback time (on average, less than three months). In addition, prepaid customers allow us to eliminate customer bad debt issues
and billing and collection costs. The introduction of prepaid mobile services has opened up the market for mobile services to customers who have previously been denied access to mobile service.
Increased demand for prepaid mobile services is also arising from business users and those customers who purchase prepaid credits in order to control their telephone costs, creating a new segment of
the market.

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

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

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Low operating costs and high capital efficiencies.We establish services in markets that we believe offer high potential financial
returns and
substantial operational leverage. While we have always had a strategy to control costs, we initiated a stricter centralized cost reduction program for all of our operations in 2002 that we continue to
apply today. We operate sizeable networks covering areas of the highest population density and business activity. Any further build-outs of our network infrastructure are demand-driven. In
addition, our migration to GSM has lowered our investment per capacity minute with faster payback times. Historically, our operations have generated an operating profit before depreciation and
amortization within 12 to 18 months of start-up.

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

Diversified operations.We believe our 16 mobile operations based in 16 countries on three continents provide a balance of established
cash flow
generation and high-growth potential. Our diversification across countries and continents also lessens our exposure to unfavorable changes in a single market or currency. For example, we
have continued to grow our total mobile subscriber base and operating profitability despite the expiry of our BCC contract in Vietnam in May 2005 and the divestiture of our operations in Peru and
Pakistan.

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

License Acquisition

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

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

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

Management Structure

The Millicom management team is led by Chief Executive Officer and President, Mikael Grahne, the former Millicom's Chief Operating
Officer, who took over the position from the former Chief Executive Officer, Marc Beuls; on March 2, 2009 and who has overall responsibility for the business; he manages and coordinates the
day-by-day operations. Our Chief Financial Officer, Francois-Xavier Roger, looks after the financial, administrative and accounting areas. Our Chief Officer Operations, Osmar
Coronel is responsible for the IT, technical, commercial and procurement areas; our Chief of Tigo people, Carel Maasland, oversees the development of our employees, compensation and benefits and the
recruitment of new talent.

We
operate in four major geographic regions of the world: Central America, South America, Africa and Asia. Mario Zanotti is the Head of Latin America (Central and South America) and
Regis Romero is the Head of Africa, they both report directly to our Chief Executive Officer. Judy Tan is the Head of Asia and reports to our Chief Officer Operations. 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.

The Industry

Mobile Telephone Industry Overview

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

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

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

A
mobile 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.

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

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

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

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

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

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

During
2008, in the Latin America markets operators introduced 3G networks based on W-CDMA/HSDPA (High-Speed Downlink Packet Access). WCDMA is a system based on
the third generation (3G) of mobile phone standards and technology that allows the transmission of large volumes of data at high speeds. 3G technologies enable network operators to offer users a wider
range of more advanced services while achieving greater network capacity through improved spectral efficiency. 3G enables operators in Latin America to offer new Services to our corporate as well as
prepaid customers like , video calls, mobile broadband data, full internet experience with richer mobile content. The main reason to introduce 3G /HSDPA networks are:

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

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

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

Other
new technologies will start to appear. One of them is mobile WiMAX 802.16m, Ultra Mobile Broadband (UMB) and Long Term Evolution (LTE) based on a new OFDMA technology. This
eventually will allow operators to have an all IP packet only connection.

In
the case that future successful technologies are different from the one adopted by the company then this will force additional investment in network equipment replacement and
training.

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

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

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Table of Contents

Development of the Mobile Telephone Industry

Mobile Telephony in Developed Countries.The first mobile 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, mobile telephony has grown rapidly. All developed countries now have mobile telephone service and levels of penetration
increased substantially in these countries.

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

Mobile Telephony in Developing Countries.While the mobile telephone industry is well-established in the developed world, the mobile
telephone industry in the developing world is still in a high growth phase. Millicom believes that mobile telephony will continue to grow rapidly in developing countries because of the poor quality of
the existing fixed-line service, the unsatisfied demand for basic telephone service and the increasing demand from users who want the convenience of mobile telephones. In some countries
the mobile telephone network provides significantly improved access to the local and international fixed-line network compared with the existing fixed-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 lower in developing countries than in developed countries. Consequently, Millicom believes that its markets offer high growth potential.

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

Other Mobile industry trends

Other Mobile industry trend and new market opportunity has been to integrate the broadband and fixed services to offer triple and
quadriple plays.

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Table of Contents

Competitive Position in the Market

The following table shows certain estimated information regarding Millicom's continuing operations' competitive position in each of its
mobile telephony markets as at December 31, 2008. This information was derived from active subscribers based on interconnect activity on our own networks. Millicom operates in developing
economies and markets and believes that the data research available in these countries is not always accurate, consistent or verifiable. Therefore, the information provided here is given in ranges of
market share to indicate the relative size and market position of Millicom's mobile telephony operations in comparison to its competitors.

Estimated Market Share Ranking at December 31, 2008Market

Greater
than 50%

Between 25%
and 50%

Between 10%
and 25%

Less
than 10%

December 31,
2008(1)Central AmericaEl Salvador



Millicom

Am. Movil
Telefonica
Digicel

Red Intelfon


1 of 5Guatemala



Millicom
Am. Movil

Telefonica




1 of 3Honduras

Millicom



Am. Movil

Digicel
Honducel


1 of 4South AmericaBolivia



Entel
Millicom

NuevaTel




2 of 3Colombia

Am. Movil

Telefonica



Millicom


3 of 3Paraguay

Millicom

Personal



Am. Movil
Vox


1 of 4AfricaChad

Celtel (Zain)

Millicom






2 of 2DRC



Vodacom
Celtel

Millicom
CCT

Standard


3 of 5Ghana

MTN



Millicom
One touch

Kasapa T.
(Hutchison)
Zain


2 of 5Mauritius

Cellplus (France T).

Millicom



Mahanagar T.


2 of 3Senegal

Sonatel Mobiles (France T).

Millicom






2 of 2Tanzania



Vodacom
Zain
Millicom



Zantel
TTCL Mobile
Bol


3 of 6AsiaCambodia

Millicom

Camshin

TMIC

Appliphone
Cadcom
Viettel


1 of 6Laos

Lao Tel.



ETL Mobile
Millicom

Lao Asia Tel.
(LAT)


3 of 4Sri Lanka



Dialog
Millicom
Mobitel



Hutchison


2 of 4




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Table of Contents

Operations

Description of operations

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



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

2008

2007

2006

2005Central America


40
%

44
%

51
%

49
%South America


30
%

31
%

20
%

16
%Africa


21
%

18
%

20
%

22
%Asia


8
%

7
%

9
%

13
%Amnet


1
%







Total


100
%

100
%

100
%

100
%


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Table of Contents

Subsidiaries and their Market Presence

The following table shows certain information for each of Millicom's mobile operations as at December 31, 2008.

Market

Company Name

Ownership

Method of
Consolidation(1)

Start-Up/
Acquisition
Date

Estimated
Population
of Area
under
License(2)

Mobile
Penetration
as of
December 31,
2008(3)(percent)





(millions)

(percent)Central AmericaEl Salvador

Telemóvil El
Salvador S.A.


100.0
%
S


1993


7


96
%Guatemala

Comunicaciones
Celulares S.A.


55.0
%
JV


1990


13


72
%Honduras

Telefónica
Cellular S.A.


66.7
%
JV


1996


8


78
%South AmericaBolivia

Telefónica Celular
de Bolivia S.A.


100.0
%
S


1991


9


42
%Colombia

Colombia Móvil S.A. E.S.P.


50.0
+1 share
%
S


2006


45


87
%Paraguay

Telefónica Celular
del Paraguay S.A.


100.0
%
S


1992


7


78
%AfricaChad

Millicom
Tchad S.A.


87.5
%
S


2004


10


12
%DR of Congo

Oasis S.P.R.L.


100.0
%
S


2005


66


9
%Ghana

Millicom Ghana
Company Limited


100.0
%
S


1992


23


44
%Mauritius

Emtel Limited


50.0
%
JV


1989


1


77
%Senegal

Sentel GSM S.A.


100.0
%
S


1999


13


42
%Tanzania

MIC Tanzania
Limited


100.0
%
S


1994


40


22
%AsiaCambodia

Cam GSM
Company Limited


58.4
%
JV


1997


14


25
%Lao People's Democratic Rep

Millicom Lao
Co. Limited


74.1
%
S


2003


7


17
%Sri Lanka

Tigo (Pvt)
Limited


99.9
%
S


1989


21


35
%Grand Total












284




S = Subsidiary. Subsidiaries are entities over which we have control and are fully consolidated.

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Table of Contents

Selected Operating Data

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

As at December 31,Total Subscribers

Prepaid Subscribers
as Percentage of
Total SubscribersMarket

2008

2007

2006

2008

2007

2006Central AmericaEl Salvador


2,528,056


2,217,560


1,387,395


92
%

91
%

88
%Guatemala


4,413,519


3,681,405


2,223,059


97
%

97
%

95
%Honduras


4,239,676


2,925,959


1,553,713


95
%

95
%

94
%Subtotal Central America


11,181,251


8,824,924


5,164,167


95
%

95
%

93
%South AmericaBolivia


1,399,048


1,055,823


936,374


94
%

96
%

97
%Colombia


3,313,851


2,769,884


2,120,284


87
%

90
%

85
%Paraguay


2,747,872


2,067,019


1,273,315


90
%

92
%

91
%Subtotal South America


7,460,771


5,892,726


4,329,973


90
%

92
%

89
%AfricaChad


541,159


323,356


186,700


100
%

100
%

100
%DR Congo


1,048,419


546,500


50,337


100
%

100
%

99
%Ghana


2,887,927


2,023,091


1,211,904


100
%

100
%

100
%Mauritius


421,683


365,018


279,193


93
%

93
%

92
%Senegal


1,852,461


1,118,505


894,617


100
%

100
%

100
%Tanzania


2,297,003


1,191,678


760,874


100
%

100
%

100
%Subtotal Africa


9,048,652


5,568,148


3,383,625


100
%

99
%

99
%AsiaCambodia


2,119,949


1,652,649


1,075,162


100
%

100
%

99
%Lao People's Democratic Republic


233,258


130,512


87,228


100
%

100
%

100
%Sri Lanka


2,000,071


1,181,577


863,235


99
%

99
%

99
%Subtotal Asia


4,353,278


2,964,738


2,025,625


99
%

99
%

99
%Total


32,043,952


23,250,536


14,903,390


96
%

96
%

94
%


CENTRAL AMERICA

Central America consists of Millicom's mobile telephony in El Salvador, Guatemala and Honduras. Millicom Central America's licenses
covered approximately 28 million people as at December 31, 2008.

El Salvador

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

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Table of Contents

El
Salvador is the third largest economy on Central America, but growth has been modest in recent years The economy is divided principally on services (59.1%), industry (29.8%) and
agriculture (11.1%). Economic growth is expected to decelerate in 2009 due to the global slowdown and to El Salvador's dependence on US economy (mainly for exports and remittances). In 2006 El
Salvador was the first country to ratify the Central America-Dominican Republic Free Trade Agreement (CAFTA). CAFTA has bolstered the export of processed foods, sugar, and ethanol, and supported
investment in the maquila sector. El Salvador became a member of the World Trade Organization in 1995. As the country does not have control over its monetary policies following the adoption of the
U.S. dollar in 2001, the government is committed to maintaining tight fiscal policies. El Salvador had a population of about 7 million in mid-2008. The 2008 GDP real growth rate was
estimated at 3.2% and GDP per capita at about $6,400.

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

Millicom
has a 100.0% equity interest in Telemóvil El Salvador, S.A. Millicom accounts for this operation as a subsidiary using the full consolidation accounting
method.

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

In
2008 there were 5 mobile services providers in the country. Telefónica and Telecom (initially owned by France Telecom) entered the market in 1999 as the second and
third mobile operator, respectively Digicel (privately owned) entered the market in 2001 with a GSM network as the fourth operator. Digicel was recently acquired by the Caribbean operator with the
same name. América Móvil of Mexico acquired France Telecom's interest in Telecom in 2003. In October 2005 Intelfon (privately owned) entered the market as the fifth
mobile operator, offering services based on the iDen push-to-talk technology. Intelfon has a negligible market share to date.

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

Telemóvil's
strategy is based on offering a combination of high quality network coverage and services at low prices showing the customer the "Aquí estoy"
(here we are) culture. Leveraging Telemóvil's distribution capabilities through e-PIN, internet and other electronic means further enhances this strategy.
Telemóvil also expanded its value added services and strengthened its customer services operations (18 service centers for customer direct care). As at December 31, 2008,
Telemóvil's network comprised a total of 820 base stations with the capacity to handle a maximum of 2.5 million concurrent subscribers, and covered 89% of the total population
leading the market with a share of 45.2% and area coverage of 97%.

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Table of Contents

Guatemala

Guatemala's government system is a constitutional democratic republic. In 1996, peace accords were signed which brought an end to a
36-year civil war. Although Guatemala has completed a successful transition from military to civilian government, the military retains considerable political power. In November 2007,
Mr. Alvaro Colom was elected President with 52.82% of votes. Mr Colom's Party is UNE, is of center-left tendency and does not control majority of seats in Congress.

Guatemala
is the largest and most populous of the Central American countries with a population of about 13 million in mid-2006. The agricultural sector accounts for
about one-quarter of GDP, two-fifths of exports, and half of the labor force. Ongoing challenges include increasing government revenues, negotiating further assistance from
international donors, upgrading both government and private financial operations, curtailing drug trafficking, fighting corruption, and narrowing the trade deficit. Remittances from a large expatriate
community that moved to the United States during the civil war have become an important source of foreign exchange. Given Guatemala's large expatriate community in the United States, it is the top
remittance recipient in Central America, with inflows serving as a primary source of foreign income equivalent to nearly two-thirds of exports. Economic growth is expected to slow in 2009
as export demand from US and other Central American markets drop, remittances from the United States come under pressure and foreign investment slows amid the global slowdown.

The
extension of the European Union's generalized system of preferences, under which Guatemalan exports enjoy preferential access to EU markets, is expected to have a positive impact on
the economy going forward. Guatemala joined the GATT in 1991 and became member of the World Trade Organisation in 1995. The distribution of income in Guatemala remains very unequal with 75% of the
population living under the poverty line, mostly in rural areas. The 2008 GDP real growth rate is estimated to be 3.9% and GDP per capita was about $5,400.

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

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

Comcel
was the first mobile operator in Guatemala when it launched commercial operations in 1990. The company enjoyed a monopoly position until 1999 when Telefónica and
Telgua (owned by América Móvil) entered the market as the second and third operators. In 2001, BellSouth of the U.S. entered the market as the fourth operator but
Telefónica of Spain acquired BellSouth's operations in 2004. América Móvil offers an integrated telecommunications solution including fixed and mobile
telephony, cable TV and internet services. América Móvil and Telefónica are Comcel's most challenging competitors. In March 2003 two additional mobile
licenses were granted. One license was granted to Electrónica Industrial, S.A., which sold the usufruct of the spectrum to Comcel in November 2006. The other license was granted
to Digicel Guatemala S.A., which as of March 30, 2009 had not launched commercial operations.

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Table of Contents

Comcel
operates a GSM/GPRS/EDGE and a 3G networks. The GSM/GPRS/EDGE network was launched in August 2004 and the 3G network was launched in August 2008. Comcel also provides
international long-distance services, roaming service, internet services and local telephony services.

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

At
December 31, 2008 the GSM network comprised 1,844 radio base stations serving approximately 4.4 million subscribers, and the network covers approximately 86% of the
total population.

Honduras

Honduras' government system is a democratic constitutional republic. Since the regional peace process that took place in the late
1980s, democracy in Honduras has been strengthened. The last presidential elections took place in November 2005, with the opposition candidate Manuel Zelaya Rosales of the Partido Liberal party being
elected. The new government took office in January 2006. The next elections are planned for November 2009 with the same political parties leading the polls; with candidates: Porfirio Lobo Sosa running
for the National Party and Elvin Santos for the Liberal Party.

Although
GDP per capita in Honduras is one of the lowest in Latin America, it has increased since the 1990s and overall economic growth has been higher in recent years than in many other
countries in the region. Real GDP growth dropped to 2.3% in 2008 as a result of smaller remittances from the U.S. and the general economic climate. GDP per capita was estimated at $3,700 in 2008.
Honduras continues to focus on pursuing the economic and reform program agreed with the International Monetary Fund (IMF) under the poverty reduction and growth facility in February 2004. Although no
recent figures are available, it is estimated that between half and two-thirds of Hondurans lived below the poverty line in 2006. Honduras suffers from a very unequal distribution of
income and massive unemployment As the country has met most of its macroeconomic targets, it has achieved debt relief under the IMF-World Bank's heavily indebted poor countries initiative.
The United States is Honduras' largest trading partner. Honduras became a member of the US-Central America Free Trade Agreement in May 2004. The economy relies heavily on a narrow range of
exports, notably bananas and coffee, making it vulnerable to natural disasters and shifts in commodity prices, but in recent years has experienced a rapid rise in exports of light manufacturers.
Growth remains dependent on the economy of the U.S., its largest trading partner, and on reducing the high crime rate, as a means of attracting and maintaining investment. Honduras had a population of
about 8 million in mid-2008.

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

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

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

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

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

As
at December 31, 2008 the GSM network comprised 1,326 radio base stations with the capacity to handle a maximum of 5 million concurrent subscribers and covered 98% of
urban population and 82% of rural population.

SOUTH AMERICA

Millicom's mobile operations in South America are located in Bolivia, Colombia and Paraguay. Our South American licenses covered
approximately 61 million people as at December 31, 2008.

Bolivia

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

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

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

Bolivia's
GDP per capita was estimated to be $4,700 in 2008. The GDP real growth rate in 2008 was estimated to be 4.8%. Oil and gas, mining, smelting, food and beverages, tobacco and
clothing are the most important industries in Bolivia. The country became member of the World Trade Organization in 1995 and is a member of Mercosur (the Southern Common Market with Argentina, Brazil,
Paraguay and Uruguay). In early 2008, higher earnings for mining and hydrocarbons exports pushed the current account surplus to 9.4% of GDP and the government's higher tax take produced a fiscal
surplus after years of large deficits. Private investment as a share of GDP remains among the lowest in Latin America, and inflation was at double-digit levels in 2008. The decline in commodity prices
in late 2008, the lack of foreign investment in the mining and hydrocarbon sectors, and the suspension of trade benefits with the United States will pose challenges for the Bolivian economy in 2009.
Bolivia's population at end of 2008 was of 9 million.

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

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

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

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

At
December 31, 2008, 591 base stations were in place, compared to 367 at December 31, 2007. Telecel's customer base reached 1,399,048 subscribers at the end of 2008. The
number of Telecel subscribers grew 33% covering 54% of Bolivia's population.

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Colombia

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

Colombia's
GDP per capita was estimated to be $9,000 in 2008. Colombia's population was estimated at 45 million in mid-2008. Colombia's economy has experienced
positive growth over the past four years despite a serious armed conflict and the GDP real growth rate was estimated at 3.8% in 2008. The economy slowed down in 2008 as a result of the global
financial crisis, reducing the demand for Colombia's exports and weakening of internal demand. In response the government has quickly adopted measures to maintain investor confidence and to keep
credit lines to the private sector. These actions have included the cut of capital controls, emergency credit lines from multilateral institutions and putting liquidity into the financial markets
through the reduction of the interest rate from the central bank. The business sector is concerned about the impact of the global recession over Colombia's exports, as well as the approval of the FTA,
which is installed in the US Congress.

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

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

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

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

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

Colombia
Movil launched a 3G trial service in key cities on the last quarter of 2008.

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

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

The
Colombian telecommunications market is very competitive with about 30 fixed local operators, two mobile operators, one mobile PCS, one digital trunking and around thirty five long
distance operators, which are owned by private and public shareholders. Colombia Móvil has interconnection with all fixed operators through direct or indirect agreements.
Interconnection charges have been commercially agreed or imposed by regulation, on December 2007 important reductions in interconnection charges were issued. Mobile operators mutually pay
interconnection charges for call termination. As of December 31, 2008 Colombia Móvil had a market share of approximately 8,4%.

Colombia
Móvil rebranded and redesigned its services using tigo® in the last quarter of 2006. According to the Superintendencia de Industria y Comercio, the
country has an estimate of 40 million active mobile subscribers reaching a penetration of 90%, most of which are using prepaid.

As
at December 31, 2008, Colombia Móvil's network comprised 2,680 radio base stations with the capacity to handle a maximum of 3.5 million concurrent
subscribers. The network covered 78% of the total population at the end of 2008. The network is GSM/GPRS, EDGE and 3.5G enabled.

Paraguay

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

Paraguay
has a market economy characterized by a large informal sector. Soya and other agricultural products as well as meat are being exported to Mercosur, Europe and other countries,
(66% of economic growth was due to exports of agricultural products) this, together with royalties from Itaipu (the largest hydro electric power plant worldwide) and remittances from Paraguayans
living abroad, represent the main income sources. A large proportion of the population derives their living from agricultural activity, often on a subsistence basis. It is estimated that about 35% of
the population continued to live below the poverty line in 2008. During the 1990s, the average annual growth rate in GDP per capita was negative with growth of only 0.5% between 1990 and 1995. Most
observers attribute Paraguay's relatively poor economic performance to political uncertainty, corruption, limited progress on structural reform, and deficient infrastructure. The economy rebounded
between 2003 and 2008 as growing world demand for commodities combined with high prices and favorable weather to support Paraguay's commodity-based export expansion. The real GDP growth rate was
estimated at 4.7% in 2008. Paraguay had a population estimated at 7 million in 2008.

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The
Telecommunications Law of 1995 was aimed at liberalizing the sector through the creation of the Comisión Nacional de Telecomunicaciones (Conatel), the regulatory
authority of the telecommunications sector. Although the law succeeded in opening up the mobile and value added sectors, including the internet service provider market, state owned incumbent Copaco
has retained its monopoly position in the fixed-line and international calls market. This monopoly remains despite Conatel's decision to enforce regulation which will allow international
connectivity to Internet Fiber Optic networks in the border with Argentina or Brazil, as VoIP services, though this is rejected by Copaco workers' Union.

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

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

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

Tigo
Paraguay subscribers grew 33% in 2008. By the end of 2008, Tigo had 2,747,872 subscribers. At December 31, 2008, 737 radio base stations were in place.

In
August 2008 Tigo launched the Fiber to the Home services (FTTH), with an initial phase of 25 Central Offices and an initial capacity of 2,000 ports, covering the metropolitan area of
Asuncion, Ciudad del Este and Encarnación.

AFRICA

Millicom's Africa cluster consists of its mobile operations in Chad, the Democratic Republic of Congo, Ghana, Mauritius, Senegal and
Tanzania. Our African licenses covered approximately 153 million people as at December 31, 2008.

Chad

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

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Chad's primarily agricultural economy continues to be supported by major oil and gas projects which started in 2000. Over 80% of the country's population relies
on subsistence farming and livestock for its livelihood. Chad's economy has long been handicapped by its landlocked position, high energy costs, and a history of instability. Chad relies on foreign
assistance and foreign capital for most public and private sector investment projects. A consortium led by two U.S. companies has been investing $3.7 billion to develop oil reserves, estimated
at 1 billion barrels, in southern Chad. The nation's total oil reserves has been estimated to be 2 billion barrels. Oil production came on stream in late 2003 and Chad began to export
oil in 2004. Although cotton, cattle, gum arabic are important commodities produced for export in Chad, around 97% of the country's exports are derived from the oil and gas industry. Following the
resumption of IMF assistance in early 2005, a new poverty reduction and strategy paper has begun to broadly shape future economic policy. Poverty remains a key issue in Chad with approximately 80% of
the population living below the poverty line in 2006, and a 2008 GDP per capita estimated at $1,600. Real GDP growth in 2008 was estimated at 1.7%. Chad became a member of the World Trade Organization
in 1996. Chad had a population of about 10 million in mid-2008 and had about 400,000 refugees from Sudan (Darfur) and Central Africa on its soil.

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

Millicom
has an 87.5% equity interest in Millicom Tchad. The remaining 12.5% of the company is owned by a local business man, Mr. David Abtour. Millicom accounts for this
operation as a subsidiary, i.e. using the full consolidation accounting method.

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

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

As
at December 31, 2008 Millicom Tchad's GSM network comprised 216 radio base stations with the capacity to handle a maximum of 850,000 concurrent subscribers and the network
covered 54% of the total population.

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Democratic Republic of Congo (DRC)

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

The
economy of the DRC, a nation endowed with vast potential wealth, has declined drastically since the mid-1980s. The war, which began in August 1998, dramatically reduced
national output and government revenue, increased external debt, and resulted in the deaths of about 3.5 million people from violence, famine, and disease. Foreign businesses curtailed
operations due to uncertainty about the outcome of the conflict, lack of infrastructure, and the difficult operating environment. Conditions improved in late 2002 with the withdrawal of a large
portion of the invading foreign troops. The transitional government has reopened relations with international financial institutions and international donors, and President Kabila has begun
implementing reforms. Much economic activity lies outside the GDP data. Economic stability improved in 2003 - 7, although an uncertain legal framework, corruption, and a lack of openness
in government policy continues to hamper growth. In 2005 - 07, renewed activity in the mining sector, the source of most exports, boosted the government's fiscal position and GDP growth.
Business and economic prospects are expected to improve as a result of the announcement in February 2007 of the new government. Economic growth as measured by real GDP growth in DRC was estimated at
over 7% in 2007, largely driven by the country's main industries such as mining, mineral processing and textiles. The country continues to suffer from severe lack of infrastructure and continued
instability and attacks by rebels in the eastern parts of the country (Ituri region). DRC became a member of the World Trade Organization in 1997. DRC had a population estimated at about
66 million in 2007. GDP per capita was estimated at $300 in 2007. The percentage of persons living below the poverty line is not available but is clearly very large.

As
2008 ends, the international crisis is now hitting DRC with all commodities (wood, minerals) exports dropping by more than 50% compared to previous quarter. Consequently, 50% of the
mining companies already closed down, laid off more than 300 K employees and resulting in a deep recession in the Katanga region. According to the Governor of Central Bank of Congo, the crisis will
result in the Franc Congolese dropping against US dollar in coming months.

DRC's
incumbent fixed line operator is the "Office Congolais des Postes et des Télécommunications" (OCPT). It operates an outdated, poorly managed analogue
fixed-line network of approximately 10,000 lines mainly concentrated in the capital city of Kinshasa. The Autorité de Régulation de la Poste et des
Télécommunications du Congo (ARPTC) is in charge of regulating the telecommunications sector. Legislation has been prepared but not yet implemented which will formally
end the OCPT's monopoly and allow for market liberalization. To date, the government has no developed telecommunications policy. As the DRC lacks the funds to invest in a modern fixed-line
infrastructure, the country's mobile sector has been facing high demand in recent years.

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

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

Discussions
have continued with the relevant authorities about whether, as a result of the acquisition of Oasis by Millicom, a license transfer fee of $14,8 million may be due
under a ministerial decree dated July 29, 2005. Millicom's position is that no transfer fee is due because the wording of the law in question does not apply to the specific transaction
structure by which Millicom acquired Oasis. However, there is a risk that Oasis may not be able to avoid the payment of the transfer fee in 2009.

Three
operators (Starcel, Comcel and Afritel) were offering limited analogue and CDMA mobile services in DRC when Oasis entered the market with its GSM offering. These operators had
ceased to exist by the end of 2003. Initially Celtel Congo, owned by Kuwait based Zain (formerly MTC), was the only other GSM operator in the market, becoming the leading provider of mobile services
in DRC with coverage in almost 100 cities. In 2001, Congolese Wireless Networks (CWN) entered into a joint venture with South African mobile operator Vodacom, creating a new operator, Vodacom Congo,
which launched GSM services in DRC in April 2002 and extended its coverage to a large number of cities. The fourth operator, CCT, jointly owned by Chinese telecoms equipment provider ZTE (51%) and the
DRC government (49%), launched its GSM network in January 2002.

After
several years of underinvestment, Oasis' market position had declined to a number four position in terms of subscribers when it was acquired by Millicom in
mid-September 2005. Since then, Millicom has built up and re-launched the operation by introducing tigo® in January 2007 by offering a combination of improved
coverage and quality of mobile voice services, innovative products and services, a direct distribution network, and a new pricing strategy. Starting with 50K subs in January 2007, tigo DRC ended 2008
with more than million subscribers (1,048K)..

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

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

3G
licenses should be auctioned in 2010 according to the Ministry of Telecommunications in charge to organize the auction.

As
of end of 2008, Oasis' GSM network comprises 607 base stations with the capacity to handle a maximum of 2 million concurrent subscribers. The network covers 30% of the total
population, so 20 million people.

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Ghana

On March 6, 1957, Ghana (formerly the Gold Coast), became the first sub-Saharan country in colonial Africa to gain
independence. The country's constitution was temporarily suspended in 1981, following a series of alternating military and civilian governments. A new constitution, restoring multi-party politics, was
approved in 1992 with Lt. Jerry Rawlings, being democratically voted in power for a term from 1992 to 1996 and another from 1996 to 2000. President Rawlings, was however constitutionally prevented
from running for a third term in 2000, thus allowing now ex president John Kufuor an opportunity to govern Ghana from 2000 till the just ended second term, in December 2008. In December 2008,
Ghanaians again enjoyed a free and fair election, voting President Evans Atta Mills as president from 2009 till 2012.

Ghana's
key industries include mining, lumber, light manufacturing, aluminum smelting and food processing. Gold, timber and cocoa production are major sources of foreign exchange. Ghana
remains dependent on international financial and technical assistance from foreign bodies and governments. The country opted for debt relief under the IMF-World Bank's heavily indebted
poor countries program in 2002 and in July 2004 it satisfied the program's conditions and the decision was taken to give Ghana debt relief of approximately US$3.5 billion on debt it owed to
international institutions, resulting in debt service savings of approximately US$100 million per annum for the following 20 years. Policy priorities include tighter monetary and fiscal
policies, accelerated privatization and improvement of social services. Ghana had an estimated 6.3% real GDP growth in 2008 and inflation rate at close to 16%. Ghana has been plagued with a recent
energy crisis as its main source of electricity (the Akosombo hydro-electric dam) was unable to generate enough electricity to meet the needs of the growing population and the expanding industrial
activities. The energy crisis lasted until the last quarter of 2007 when the water level in the dam improved slightly and the power generation became more stable. Ghana's GDP per capita was estimated
at $1,500 in 2008. Although no reliable recent figures are available, it is estimated that at least a quarter of the estimated current population of 23million (December 2008) continues to live under
the poverty line.

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

Millicom
Ghana (tigo) was the first mobile operator in Ghana having commenced operations in 1992. Millicom Ghana further pioneered the concept of prepaid services in Ghana in 1998. Tigo
was the second largest mobile operator in Ghana as at December, 2008. In addition to Millicom Ghana, four other companies offer mobile services in the country: Kasapa, MTN, OneTouch and Westel. After
nearly a decade of relatively slow growth, the mobile market in Ghana started seeing considerable growth in penetration starting in 2001 as a result of several favorable factors, including the
development of a regulatory framework, increased competition and the improving macroeconomic environment. Mobile penetration has increased in recent years from 7% to almost 44% at the end of 2008.

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

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

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

In
March 2006, Millicom Ghana introduced tigo® and offered an array of Value-Added Services (VAS): General Packet Radio Services (GPRS), Wireless Application Protocol (WAP),
Multimedia Messaging Services (MMS), Caller Ring Back Tones (CRBT) and other interactive value added services. Millicom Ghana acquiried a 3G license in the last quarter of 2008, but it has not yet
started to prepare its current network to be compatible.

Millicom
Ghana's GSM network had a total of 665 radio base stations and the capacity to handle over 4.9 million concurrent subscribers at December 31, 2008. Its network
covered slightly over 81% of the total population as at the same date.

Mauritius

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

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Since
1968 Mauritius has developed from a low-income, agriculturally based economy to a middle income diversified economy with growing industrial, financial and tourist
sectors. For most of the period, economic growth (as measured by real GDP) has been between 5% and 6% per year, which has resulted in more equitable income distribution, increased life expectancy, and
significantly improved infrastructure. Real GDP growth was estimated at over 5% in 2007 and GDP per capita (at PPP) at $11k. About 10% of the Mauritius population lived under the poverty line in 2007.
Sugarcane is grown on approximately 90% of the cultivated land area and accounts for 25% of export earnings. The government's development strategy centers on foreign investment, expanding local
financial institutions and expanding the domestic ICT industry. Mauritius, with its strong textile sector, is well positioned to take advantage of the Africa Growth and Opportunity Act. Mauritius had
a population of about 1.3 million in mid 2008 .

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

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

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

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

Emtel
owns licenses for mobile services, international long-distance and internet services . Emtel was awarded a 10-year license in 1989, including a seven year
exclusivity period. Emtel's license was modified in November 2000 and is valid for a period of 15 years. Furthermore, Emtel obtained additional spectrum for UMTS/3G services in November 2004,
an international long-distance license in December 2003 (valid until 2018) and an internet service license in May 2004 (valid until 2019). Since May 2006, Emtel has had temporary rights to
offer WiMAX based services on a trial basis, and acquired a WiMAX license in March 2007. Emtel has a WIMAX network with currently 11 base stations and an HSDPA network of 65 base stations. HSPA trials
are currently in progress. Implementation of the Telecommunications Directive (1 of 2008) to reduce interconnect tariffs to the state-owned fixed-line infrastructure has been implemented
in May 2008.

As
at December, 2008-, Emtel's GSM network comprised 196 base stations with the capacity to handle a maximum of 485,000 concurrent subscribers, and covered 98% of the total
population. As at the same date, Emtel's 3G network had 183 base stations with the capacity to handle 100,000 concurrent subscribers.

Senegal

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

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Real
GDP growth was estimated at 4.8% in 2008 and GDP per capita at $1,800. About half of the population continues to live under the poverty line. The government continues to support the
New Partnership for Africa's Development which, with the backing of the G8, aims to increase donor support and inflows of foreign direct investment to African countries in exchange for improvements in
governance. Senegal also continues to pursue a donor supported economic reform program as outlined in the IMF's three-year poverty reduction and growth facility approved in April 2003.
Senegal still relies heavily upon outside donor assistance. Under the IMF's Highly Indebted Poor Countries (HIPC) debt relief program, Senegal benefited from eradication of two-thirds of
its bilateral, multilateral, and private sector debt. In 2007, Senegal and the IMF agreed to a new, non-disbursing, Policy Support Initiative program.

The
country's key industries include agriculture and fishing, mining, fertilizer production and petroleum refining. High unemployment, however, continues to prompt illegal migrants to
flee Senegal in search of better job opportunities in Europe. Senegal was also beset by an energy crisis that caused widespread blackouts in 2008. Senegal became a member of the World Trade
Organization in 1995. In September 2005, the World Bank and the IMF agreed to support Senegal's accelerated growth strategy, combining the goals fixed under the poverty reduction and growth facility
with the goal of increasing real GDP growth from its current level to 8% p.a. by 2015. Senegal had a population of about 13 million in 2008.

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

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

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

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

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On
November 11, 2008 Millicom International Operations B.V. (MIO B.V.), a wholly-owned Millicom subsidiary and Sentel instituted arbitration proceedings with the
International Center for the Settlement of Investment Disputes (ICSID) against the Republic of Senegal under provisions of Sentel license and international law. MIO B.V. and Sentel seek
compensation for the purported expropriation of the Senegal license and monetary damages for breach of the license.

On
the same day, the Republic of Senegal instituted court proceedings in Senegal against Millicom and Sentel and has sought court approval for the revocation of Sentel's license and
sought damages against Sentel and Millicom. Millicom believes that the action filed by the Republic of Senegal is baseless and also ignores the agreement between Sentel and the Republic of Senegal to
submit any dispute concerning the license to an international arbitration forum.

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

As
of December 31, 2008 Millicom had a 100% equity interest in Sentel.

As
of December 31, 2008 Sentel' s GSM network comprised 527 radio base stations with the network capacity to handle a maximum of 2,3 million concurrent subscribers and
covered 82.8% of the urban population and 60.9% of the rural population.

Tanzania

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

Tanzania
is one of the poorest countries in the world. The economy depends heavily on agriculture, which accounts for almost 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 traditionally featured the processing of agricultural products and light consumer
goods, as well as tourism. The World Bank, the International Monetary Fund, and bilateral donors have provided funds to rehabilitate Tanzania's out-of-date economic
infrastructure and to alleviate poverty. The government and the IMF have agreed to replace the poverty reduction and growth facility (PRGF), which ran to August 2006, with a policy support instrument
(PSI), which provide extensive external monitoring of the government's reform efforts but would give no financial support, unlike the PRGF program. The PDI will continue to set the medium/term policy
framework and maintain macroeconomic stability while the government pushes ahead with its long-term five-year National Strategy for Growth and Reduction of Poverty (NSGRP),
usually referred to by its Swahili acronym (MKUKUTA), which is due to run to June 2010. Long-term growth through 2005 featured a pickup in industrial production and a substantial increase
in output of minerals, led by gold. Recent banking reforms have helped increase private-sector growth and investment. Continued donor assistance and solid macroeconomic policies supported real GDP
growth of almost 7% in 2007. Tanzania became a member of the World Trade Organization in 1995. Tanzania has a population of more than 39 million in 2007, with a growth of about 2%, 44% of the
population is under the age of 14. Its 2007 GDP per capita was estimated at $1,100 and in 2004 (latest available figure) about 35% of the population lived below the poverty line.

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

Following
the buy-out of the minority shareholder, Ultimate Communications Limited, in January 2006, Millicom owns 100% of MIC Tanzania Limited. Due to an attachment order on
all the shares in MIC Tanzania, the 15.6% shareholding acquired from the minority shareholder has yet to be registered at the local Companies Registrar's office. The attachment order is the result of
a lawsuit instituted in Tanzania by a disgruntled former employee. Millicom expects the issue of the judgment lifting the attachment order to occur during 2009. Although there is no assurance that the
judgment will be in Millicom's favor, we expect it to be as the legal basis for the order is erroneous. Millicom accounts for this operation as a subsidiary, i.e., using the full consolidation
accounting method.

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

The
other mobile telephony operators in Tanzania are:



In
January 1994 MIC Tanzania was awarded a 15-year license to operate a nationwide mobile network and, in January 2004, the company's license was extended to a
25-year license expiring in January 2019. MIC Tanzania does not have a WiMAX license, but it will obtain one as part of the migration to the new converged licensing framework. At the
moment its under negotioation since all spectrum has been awarded already.

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In May 2007 we migrated to the converged licensing framework which is technological neutral. MIC Tanzania has been issued with three separate licences for Network
facilities Services, Network Services and, Application Services. While the first two will last for 25 years, the last one will last for 5 years renewable.

The
GSM network comprises 937 base stations with a maximum capacity of handling 2,806,481 concurrent subscribers call attempts during busy hour. The network covers 59% of the total
population

ASIA

Millicom has three operations in Asia: Cambodia, Laos, and Sri Lanka. Millicom's Asian operations in Sri Lanka, Cambodia and Laos
covered approximately 42 million people as at December 31, 2007.

Cambodia

Cambodia is a constitutional monarchy. While the head of the state is King Norodom Sihamoni, the head of the Cambodian government
("GoC") is Prime Minister Hun Sen. Cambodia gained independence from France in 1954. Following over 20 years of political turmoil that ended in 1993, the country held its first democratic
elections in 1993. Cambodia has been run by a coalition led by the dominant Cambodian Peoples Party ("CPP") since 1998.

Cambodia
has 14 million inhabitants and GDP (PPP) of $2,100. The population is primarily rural based, hence, it is heavily dependent on subsistence farming. Population growth is
estimated at 2% p.a. The Cambodia Socio Economic Survey (CSES) of 2007 pegged the total labour force at about 7.5 million, or 56% of total population, with an approximated 0.2 million
people entering the labour market every year.

The
Cambodian economy recorded significant growth in recent years due to the GoC's efforts to stabilize the economy and reduce poverty. Such expansion has been driven largely by the
growth of the garment and tourism industries has produced a double digit GDP growth of 10 - 13% p.a. between 2004 and 2007. However, the growth for 2008 is estimated to be at 6.8% only due
to slower growth expected for garment industry and negative growth for the construction sector, despite tourism sector and financial sector remaining relatively strong. The downward trend is likely to
carry over to 2009. The anticipated launch of a Cambodia Stock Exchange Market by end of 2009 and exploitation of the extractive industries such as oil and gas continue to attract attention and draw
big investors. As such, the economic growth could be speeded up if significant progress is made in critical reforms.

Historically
low inflation rate averaging 3% between 2002 and 2004 has jumped to 20.2% for 2008. Increase of prices of crude oil and food price in international market and depreciation
of the US Dollars, as well as dependency on imported consumer goods, are the main reasons for this huge inflation. However, given the decrease in price of crude oil on international market, inflation
is expected to decrease in 2009.

The
Council for Development of Cambodia approved 50 investment projects worth US$4.4 billion in fixed assets, representing five-fold increase in value versus 2007
although there is a decrease of 3.8% in number of projects. Prospects are slim that the number of projects approved in 2009 will increase significantly given the current global financial crisis and
limited local skills and resources.

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Taxation
remains the main source of revenue for the GoC and is expected to account for 82.7% of total revenue and the GoC is still heavily reliant on multilateral aid to supplement its
budget. Cambodia has been promised foreign aid amounting to nearly US$1 billion for 2009 which will be invested directly into agriculture and health sectors, education and infrastructure
improvement. Although the GoC had made steps to diversify the economy, Cambodia remains heavily dependent on agricultural output. Furthermore, because of the high degree of dollarization of the
economy, the central bank is limited in its ability to use monetary policy tools to manage the economy. Lack of governance and corruption remain major issues. Poverty and unemployment remain high as
the economy is unable to absorb a rapidly growing labor force.

The
Cambodian market is characterized by low mobile (26.5% or 3.6 million subscribers). Cambodia's telecommunication sector is overseen by the Ministry of Post and
Telecommunication ("MPTC"), which is both the policy making body and the sector regulator. There is no telecommunications law in place in Cambodia and in the absence of such law, the sector is
governed by decrees and sub-decrees issued by MPTC and the Prime Minister. A draft telecommunications law has been in development over last several years by an independent consultant, with
assistance from the International Telecommunication Union ("ITU") and the Asian Development Bank ("ADB"). The draft law proposes to separate the regulatory and policy making functions by setting up a
regulator that will also assume traditional roles of license issuance, spectrum management, interconnection regulation, universal access, and numbering. The law also require that the provision of
network and provision of services to be separated into autonomous independent entities. The draft Telecoms Law was submitted to the National Assembly for review prior to ratification, but was
withdrawn without being reviewed. It is not clear when / if the Law will ever be ratified by the government.

During
the first half of 2006, the process was completed to split the MPTC's functions between two separate entities: a regulator still called MPTC, and an operational entity, Telecom
Cambodia. A number of other service providers are active in the market, an arrangement which was made possible through joint ventures with the MPTC or under MPTC-issued licenses. While
there have been plans to restructure the sector, the market has remained relatively unregulated thus far. Due to decades of war, there is very little telecommunications infrastructure remaining from
pre-Khmer Rouge days. As a result, Cambodia bypassed rebuilding fixed-line infrastructure and proceeded straight away to digital mobile technology.

Royal
Millicom Company Ltd ("RMC") owns 100% of the equity in CamGSM. The principal shareholders of RMC are Millicom Holdings Cambodia BV (61.5%) (represented by Millicom
International Cellular (58.4%) and a private business partner, Mr Muhammad Akhtar Zaman (3.1%); and the Royal Group of Companies (38.5%), represented by Mr. Neak Oknha Kith Meng.

In
April 1996, CamGSM was awarded a 25-year license to operate a nationwide GSM network, the first such license granted in Cambodia. In July 1999, the license was extended to
35 years. The license contains an option for CamGSM to extend license if it so desires.

Although
CamGSM launched commercial operations in 1997 as the fourth operator in Cambodia, it gained market leadership through early deployment of prepaid services and rapid network
roll-out, starting with services exclusively in Phnom Penh that have since been expanded to cover five regional capitals as well as all provinces and major towns. CamGSM led the market
with the introduction of new services and development of indirect distribution channels. In 2003, CamGSM succeeded in gaining a license to operate mobile broadband services in Cambodia.

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There
were three other mobile operators in Cambodia when CamGSM entered the market in 1997: Casacom (100% owned by Telekom Malaysia since late 2006), CamTel (wholly owned by Thai
conglomerate CP and only offering analogue postpaid mobile services) and Tricelcam (Malaysian). CamGSM established its market position through the introduction of quality services, development of
distribution outlets and branding aimed at the youth market segment. As a result, Tricelcam exited the market and CamTel has become unable to compete effectively with its AMPS platform. Shinawatra
entered the Cambodian mobile market in 1999, having previously operated in Cambodia with a wireless local loop license, and has competed primarily based on price, providing lower quality services and
coverage for lower-end users. Casacom has experienced erosion in its market share mainly due to slow adoption of prepaid services, failing to respond to price competition from Shinawatra,
and lack of innovation.. Applifone, a Kazakhstan-based company, and local partners has started services in late 2007. In 2008, new competitors in the market are Cadscomm (launched a 3G network in
March 2008 to target high end corporate clients but still with limited coverage) and Viettel (a Vietnamese operator launched in Q4 2008 and is aggressive in giving away free sims to military
personnel, government officials and university students). Two new operators are expected to launch in early 2009, Vimpelcom (Russia) and Latelz (Turkey).

Starting
in 2006, the MPTC, acting as regulator, issued new licenses, bringing the total number of licenses issued in Cambodia to 13, and is in the process of restructuring the spectrum
to accommodate the new operators. The restructuring saw CamGSM's frequency allocation reduced by 3.2MHz (to 9.3MHz), 5MHz (to 15MHz) 7MHz (to 15MHz) in the 900MHz, 1800MHz and 3G bands respectively.
MPTC has been further notified CamGSM that the operating frequency has been reduced to 6.3MHz within the 900MHz spectrum effective from 1st July 2008. As 76% of the cell sites are
operating on 900MHz spectrum, CamGSM needs to address the impact on existing infrastructure and all proposed expansion plans as the company may experience network outages and service degradation.

On
March 3, 2006 the MPTC advised CamGSM that it was increasing the revenue share associated with the license. CamGSM appealed the original sub-decree and on
March 22, 2006 satisfactorily resolved this issue with the regulator. The revenue share and related taxes associated with the license have increased from around 34% to 43% of revenues, and
should the ministry provide better terms to another operator in the future, the revenue share will be adjusted to match, in the spirit of a "most favored nations" clause. In Cambodia we also operate
an international gateway, a high-speed data business, and a TV station (2 channels; the new channel MyTV was launched on 9 January 2009).

At
December 31, 2008, CamGSM's GSM network comprised 1,436 base stations. Two new MSCs were implemented to increase network calling capacity to 2.8 million subscribers and
the whole of the CamGSM network was enabled to EGPRS (EDGE) with an average capability of MCS06 (up to 48kbps).

People's Democratic Republic of Lao (Laos)

Laos' is a one-party Communist state. It began decentralizing control and encouraging private enterprises in 1986. Initial
closer ties to Vietnam and socialization were replaced with a gradual return to private enterprise, a liberalization of foreign investment laws, and admission to ASEAN in 1997. Economic growth, as
measured by real GDP, has averaged approximately 6% per year since the late 1980s except during the Asian financial crisis in 1997. Real GDP growth was 6.5% in 2008.

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Key
industries in the country include mining, electricity generation, timber, agricultural processing, construction, garments and tourism. Despite this high growth rate, Laos remains a
country with relatively basic infrastructure facilities, particularly in the rural areas. It has no railroads, a rudimentary road system, and limited external and internal telecommunications, though
the government is sponsoring major improvements in the road system with support from Japan and China. Electricity is available in urban areas and in most rural districts. Subsistence agriculture,
dominated by rice, accounts for about 40% of GDP and provides 80% of total employment. The economy will continue to benefit from aid from international donors and from foreign investment in hydropower
and mining. Construction will be another strong economic driver, especially as hydroelectric dam and road projects gain steam. Laos is taking steps to join the World Trade Organization in the next few
years; the resulting trade policy reforms will improve the business environment. On the fiscal side, a pilot scheme for value-added tax regime has been introduced from January 2009 and it is expected
to help streamline the government's inefficient tax system. Over 31% of Laos' population was estimated to live below the poverty line in 2007. Real GDP per capita was about $2,100 in 2008. Laos had a
population of about 7 million in mid-2008.

In
April 2001, the Lao National Assembly adopted a new Telecommunications Act. One of the most significant changes has been the creation of a separate regulatory unit in the Ministry of
Communications, Transport, Post and Construction which was regarded as a first step in the setting up of an independent regulator. In late 2002 two consultancy projects were initiated in the country,
one funded by the Asian Development Bank and the other by the World Bank, for the purpose of assisting the government in preparing more detailed telecommunications regulations. In 2008, the government
of Laos has split the erstwhile Ministry of Communications, Transport, Post and Construction, in to (1) The Ministry of Public Work and Transport and (2) The National Authority of Post
and Communication (NAPT) which is the regulatory body for the telecommunications and directly controlled by the Prime Minister Association Office.

Following
Millicom's entry into neighboring Cambodia and Vietnam, Millicom started operations in Laos through its subsidiary Millicom Lao. In January 2002, Millicom Lao was awarded a
20-year license to operate a nationwide GSM network. Millicom has a 74% equity interest in Millicom Lao. The remaining equity interest in the company is owned by the government of Laos
with 22% and by a private partner, Mr Muhammad Akhtar Zaman, who owns 4%. Millicom accounts for this operation as a subsidiary using the full consolidation accounting method.

The
company obtained a 50 MHz spectrum license for the 2.5GHz WiMAX band and permission to operate as Internet service provider in Aug 2006. Additional to this, Millicom Lao was granted
an international gateway license in Jan 2008 to operate VoIP IDD calls.

Although
Millicom Lao entered the market as the fourth GSM operator, starting commercial service in April 2003, it has reached a market share of 20.0% as at December 31, 2008,
mainly by targeting the younger population, making it the third largest mobile operator in the country in 2008. TiGO® was launched in Laos in March 2007.

The
other mobile operators in Laos are:



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At
December 31, 2008, Millicom Lao's GSM network comprised 274 radio base stations with the capacity to handle a maximum of 300,000 concurrent subscribers and covered 25% of the
total population.

Sri Lanka

Sri Lanka, also known as The Democratic Socialist Republic of Sri Lanka achieved independence in 1948 following decades of occupation
by Portuguese, Dutch and the British. Sri Lanka is a South Asian country with a population of about 21 million and an estimated GDP (PPP) of $4,400 for 2008. Sri Lanka is a democratic country
with an elected Executive President and a Parliament of 225 members. The last presidential elections were held in November 2005, with the next Presidential and Parliament elections due in 2011 and
2010, respectively. The country has been plagued by years of conflict since 1983, when tensions between the Sinhalese majority and Tamil separatists erupted into a war. Although the government and the
rebels entered into a cease-fire in February 2002, violence between the Tamil Separatists (Liberation Tigers of Tamil Eelam, or LTTE, also known as the Tamil Tigers) and government forces
intensified again in 2006. The conflict has escalated to a new level due to the Tamil separatists' demonstration of their air power capacity by attacking a government air force base located near the
country's main international airport and some other targets in Colombo in 2007. In January 2008 the government formally withdrew from the cease-fire, and the violence has further
escalated. However since then the government forces have won back all major towns controlled by the LTTE. According to military reports the LTTE is said to be confined to a mere 50 sq.km land stretch
as of end Feb 2009 and the area under their control is further shrinking with the ongoing military advances. The government forces has also managed to reduce LTTEs Sea and Air powers drastically on
top of gaining ground.

In
1977, Sri Lanka opted for a more liberal economic policy, with export-oriented trade, and encouragement of foreign investments. Recent changes in government have brought some policy
reversals and the ruling Sri Lanka Freedom Party currently follows a more statist economic approach which seeks to reduce poverty by steering investment to disadvantaged areas, developing small and
medium enterprises, promoting agriculture, and expanding the already enormous civil service. The government has halted most privatizations. Although suffering from a brutal civil war that began in
1983. Sri Lanka saw GDP growth average 4.5% in the last ten years, with a brief interruption during the global downturn in 2001. In late December 2004, a major tsunami took about 31,000 lives, left
more than 6,300 persons missing and 443,000 displaced, and destroyed an estimated $1.5 billion worth of property.

Growth,
partly spurred by reconstruction after the tsunami, was 6% in 2005 and 7.4% in 2006. Government spending on development and fighting the LTTE drove growth to about 6% per year in
2006 - 08, but high government spending and high oil and commodity prices also pushed inflation past 20% in 2008. Sri Lanka's most dynamic sectors now are food processing, textiles and
apparel, food and beverages, port construction, telecommunications, and insurance and banking. In 2008, plantation crops made up only about 20% of exports (compared with more than 90% in 1970), while
textiles and garments accounted for more than 40%. About 1.5 million Sri Lankans work abroad, 90% of them in the Middle East. They send home more than $2.5 billion a year. The
25-year civil conflict between LTTE and the government of Sri Lanka has been a serious impediment to economic activities in the past. However with the government's military victories in
the North and East this could change for the better. The government has already established public administration in the East of Sri Lanka.

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Expansion
of telecommunication services in Sri Lanka first gained momentum after the liberalization of the sector in 1991 with the establishment of the Office of the Director General of
Telecommunications, the country's regulatory authority. Further momentum was gained after the part-privatization of Sri Lanka Telecom (SLT) in 1997. In the same year, the government also
established the Telecommunications Regulatory Commission (TRC), which took over from the Office of the Director General of Telecommunications to implement the targets of the National
Telecommunications Policy of 1994/95. The provision of basic telephone services in Sri Lanka was the sole responsibility of monopoly provider SLT until 1996, but to achieve the targets detailed in the
National Telecommunications Policy private-sector participation in the telecommunications market has been encouraged. The TRC has been tasked with the responsibility of facilitating and monitoring the
operational aspects of the various service providers, settling interconnection issues, recommending new licenses to operators, allocating radio frequencies and promoting the general interest of the
customer.

Sri
Lanka's telecommunications sector has been lagging behind in the development of a modern network infrastructure following almost two decades of violent political conflict. Due to the
lack of nationwide fixed-line telecommunications services, mobile services have played a key role in the development of the telecommunications sector in Sri Lanka. As a result of this
conflict, mainly in the north and east of Sri Lanka, mobile telephony operators have had to switch off telecommunication towers in the affected areas at regular intervals. This has hampered the
development of mobile telephony mainly in the North and East of the country and negatively impact mobile telephony operators, including Millicom's Tigo (Pvt) Limited (formerly Celltel Lanka Limited).

In
addition to Tigo, three other operators were active in the Sri Lankan mobile market: Dialog Telekom, Sri Lanka Telecom (SLT) owned Mobitel and Hutchison Telecom. There is one dominant
fixed-line operator (Sri Lanka Telecom) and two Wireless Local Loop service operators, Suntel and Lanka Bell. Airtel, the mobile company of Bharti Telecom of India entered the Sri Lankan
market in Jan 2009 as fifth mobile operator. Dialog, the market leader, started commercial operations of its CDMA network in 2007. The Sri Lanka telecommunications market is characterized by intense
price and non price competition. This has resulted in intense marketing and brand image building costs along with lower Rate Per Minute from all operators.

There
was no other mobile operator in Sri Lanka when Tigo (Pvt) Limited (Under the then brand name Celltel), entered the market in 1989. Until 1993, Celltel enjoyed a monopoly position
when Call Link (at the initial stages owned by Singapore Telecom) and Mobitel (at the initial stages owned by Telstra) entered the market as the second and third operators. In 1995, Dialog (owned by
Malaysia Telekom) entered the market as the fourth operator. After the privatization of Sri Lanka Telecom in 1997, SLT acquired 100% of Mobitel from Telstra. In 1998, Hutchison Telecom acquired Call
Link from Singapore Telecom.

Millicom
has a 100% equity interest in Tigo (Pvt) Limited and accounts for this operation as a subsidiary, i.e., using the full consolidation accounting method.

Tigo
(Pvt) Limited operates a GSM network on the 900 Mhz and 1800 Mhz bandwidths. Tigo (Pvt) Limited owns three different licenses, namely a Mobile telephony, an Internet services and an
External gateway operations license. Tigo now has a mobile telephone license valid until 2018. As at 31st December 2008, Tigo (Pvt) Limited's GSM network comprised of 940 base stations, and
exceeded the 2 million active subscriber base.

GPRS
and EDGE services are already available to Tigo customers. The Company rebranded to Tigo in January 2007 and effective April 2007 the Company name too was changed into Tigo Private
Limited.

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AMNET

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

Today,
Amnet has a large network in Central America with approximately 1.2 million homes passed, which together with Millicom's existing mobile network gives Millicom
opportunities for future growth along with cost efficiencies. Amnet has approximately 534 thousand Revenue Generating Units ("RGUs") across Central America with cable and broadband subscribers
in El Salvador, Honduras and Costa Rica as well as corporate data customers in Guatemala, Nicaragua, El Salvador and Honduras.

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

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

Costa Rica

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

Today,
Amnet provides cable TV services in Costa Rica. It also serves the internet market together with RACSA (a subsidiary of ICE group), the state owned telecommunications company
which holds the internet license. Using its fiber optic infrastructure, Amnet has been the main network provider to RACSA, which uses it to provide data services to corporate clients.

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

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El Salvador

Please see earlier section on El Salvador.

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

Guatemala

Please see earlier section on Guatemala.

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

Honduras

Please see earlier section on Honduras.

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

Nicaragua

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

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

DISCONTINUED AND DIVESTED OPERATIONS

In December 2008, Millicom decided to exit from its business in Sierra Leone. As a result Millicom's operation in Sierra Leone,
Millicom Sierra Leone Limited has been classified as a discontinued operation. Millicom has appointed an investment bank to dispose of this asset.

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In
2007, Millicom completed the sale of Millicom Paktel, for total proceeds of $284.8 million realising a net gain of $258.3 million. Millicom incurred costs of
$14.2 million on the transaction and of the net proceeds of $270.6 million, Millicom received $263.0 million in 2007 and the remaining $7.6 million in January 2008.

OTHER

Property, Plant and Equipment

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

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



Insurance

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

ITEM 4A.    UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS

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

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

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Operating Results

Millicom decided to dispose of its operation in Sierra Leone in December 2008, sold its two operations in Pakistan respectively in June
2006 and February 2007 and sold its operation in Peru in October 2006. These operations have been classified as discontinued operations. The below discussion focuses on the results from continuing
operations.

Years Ended December 31, 2008 and 2007

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

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

Percent
Change2008

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


3,412,380


2,623,854


788,526


30
%Cost of sales


(1,255,077
)

(973,560
)

(281,517
)

29
%Gross profit


2,157,303


1,650,294


507,009


31
%Sales and marketing


(690,698
)

(486,779
)

(203,919
)

42
%General and administrative expenses


(537,884
)

(418,863
)

(119,021
)

28
%Other operating expenses


(61,438
)

(72,949
)

11,511


(16
)%Operating profit


867,283


671,703


195,580


29
%Interest expense


(149,111
)

(190,410
)

41,299


(22
)%Interest and other financial income


32,922


56,378


(23,456
)

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


(55,593
)

10,213


(65,806
)

(644
)%Profit from associates


8,706


4,400


4,306


98
%Profit before tax from continuing
operations


704,207


552,284


151,923


28
%Charge for taxes


(277,369
)

(87,198
)

(190,171
)

218
%Profit for the year from continuing operations


426,838


465,086


(38,248
)

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


(22,397
)

245,898


(268,295
)

(109
)%Minority interests


113,075


(13,842
)

126,917


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


517,516


697,142


(179,626
)

(26
)%


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

Total
revenues increased by 30% for the year ended December 31, 2008 to $3,412 million from $2,624 million for the year ended December 31, 2007. The increase
is mainly due to growth in the number of mobile subscribers. Total mobile subscribers for the years ended December 31, 2008 and 2007 by segment were as follows:

Subscribers

2008

2007

GrowthCentral America


11,181,251


8,824,924


27
%South America


7,460,771


5,892,726


27
%Africa


9,048,652


5,568,148


63
%Asia


4,353,278


2,964,738


47
%Total


32,043,952


23,250,536


38
%


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As
of December 31, 2008, our worldwide total mobile subscriber base increased by 38% to 32,043,952 mobile subscribers from 23,250,536 mobile subscribers as of December 31,
2007.

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

Our
mobile attributable subscriber base increased to 27,552,430 subscribers as at December 31, 2008 from 19,748,986 subscribers as of December 31, 2007, an increase of 40%.
Prepaid subscribers accounted for 96% or 30,893,586 of the total mobile subscribers.

In
Central America, Honduras grew its mobile subscriber base by 45% year-on-year, Guatemala grew by 20% year-on-year and El Salvador by
14%. In South America, total mobile subscribers increased by 27% with Paraguay and Bolivia both showing increases of 33% and Colombia showing and increase of 20%. Growth was particularly strong in
Africa. The two best performing markets in terms of net mobile subscriber additions were Tanzania which grew by 93% year-on-year and DRC, which grew by 92%
year-on-year, to over 1 million mobile subscribers. Chad also showed a significant year-on-year net mobile subscriber growth of 67%. In Senegal,
net mobile subscribers increased by 66% year on year but this growth occurred mainly in the first half of 2008. The dispute with the Senegalese government about the license (see note 28) led to
a decline in mobile subscriber growth in the later part of the year. In Asia, mobile subscribers grew by 47% year-on-year, with Laos growing by 79% and Sri Lanka by 69%.

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

Revenue

2008

2007

GrowthUSD '000

USD '000Central America


1,376,848


1,149,368


20
%South America


1,019,332


809,881


26
%Africa


711,364


469,833


51
%Asia


261,821


194,772


34
%Amnet


43,015





Total


3,412,380


2,623,854


30
%


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

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

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

In
Bolivia there has been some price pressure in the market but Tigo has differentiated its offer by having low recharges, this to increase the perception of affordability. Also, in
terms of accessibility, Tigo has 37% e-PIN penetration and some 8,000 active e-PIN points of sale which makes its products attractive in terms of affordability.

Tigo
Colombia achieved a very positive development in its postpaid customer base in 2008 where it observed a 48% growth. In October 2008, Tigo became the second operator offering 3G
services in Colombia. Including 3G revenues, VAS experienced a very strong growth of 112% in 2008.

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

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

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

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

In
Senegal, mobile penetration was 43% and Tigo had 36% market share at year end but a third operator has entered the market in the last quarter of 2008. With the arrival of this
operator, the Senegalese government has re-opened the issue on the status of our license in Senegal. This uncertainty caused by Government action has had a negative impact on mobile
subscriber growth in the latter part of the year (see note 28).

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

AsiaRevenue
was up by 34% to $262 million for the year ended December 31, 2008, from $195 million for the year ended December 31, 2007.

Competition
in Cambodia increased with the acquisition of the fifth player in the market by TeliaSonera and the launch of services by Viettel and this market is expected to become
increasingly competitive in the future. In terms of capex, we have rolled out about 560 new sites in 2008, increasing our coverage to 62% of the population with over 1.4 thousand cell sites.

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In
Laos, Tigo was the fastest growing operator in 2008 and recently opened an International Gateway and launched Wimax broadband services. 99 new sites have been rolled out in 2008,
giving a total of 274 sites covering 20% of a much dispersed population.

In
Sri Lanka, Tigo reached the 2 million subscribers milestone and recently saw the launch of various products such as 'Bonus on Reload' and 'Copy-A-Tune',
which were innovative products that capture customers' imagination. Furthermore, recent independent market research showed that Tigo was the best mobile operator for customer satisfaction. In terms of
network, some 300 new sites were built in 2008, bringing the total to 940 and giving over 70% population coverage. Since the year-end Bharti has launched operations in Sri Lanka.

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

Further
revenue growth will likely come from all of our operations as we continue to implement our triple "A" strategy, particularly in the countries where Tigo® was most
recently launched. This strategy will continue to drive higher penetration rates in our markets. The average revenue per user (ARPU) will most likely fall over time as we penetrate deeper into the
populations and reach customers with less disposal income. However, this might not happen immediately as we continue to see price elasticity amongst our existing customers and as we continue to
develop our valued added services.

Cost of sales:Cost of sales increased by 29% for the year ended December 31, 2008 to $1,255 million from $974 million
for the
year ended December 31, 2007. The primary cost of sales incurred by us is in relation to the provision of telecommunication services relates to interconnection costs, roaming costs, leased
lines to connect the switches and main base stations, and the depreciation of network equipment. The interconnection and roaming costs are directly related to revenues and increased as a result of the
growth in revenues described above. The cost of leased lines increased as we continued to expand our networks and depreciation increased due to the higher capital expenditures on our networks. Gross
profit margin remained stable at 63% for the year ended December 31, 2008.

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

Sales and marketing:Sales and marketing expenses increased by 42% for the year ended December 31, 2008 to $691 million from
$487 million for the year ended December 31, 2007. Sales and marketing costs were comprised mainly of commissions to dealers for obtaining customers on our behalf and selling prepaid
reloads, general advertising and promotion costs for Tigo®, point of sales materials for the retail outlets, and staff costs. The increase in sales and marketing costs was mainly due to
higher dealer commissions related to the higher revenues and the increase in mobile subscribers, and to the increased spending on brand awareness and point of sales materials. As a percentage of
revenues, sales and marketing expenses increased from 19% for the year ended December 31, 2007 to 20% for the year ended December 31, 2008.

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

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General and administrative expenses:General and administrative expenses increased by 28% for the year ended December 31, 2008 to
$538 million from $419 million for the year ended December 31, 2007. This increase is mainly explained by the increase in network maintenance costs to support the expansion in our
mobile operations, but also higher staff costs from more employees needed to manage the growth of Millicom's business. As a percentage of revenues, general and administrative expenses remained stable
at 16% for the years ended December 31, 2008 and 2007.

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

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

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

Operating profit

2008

2007

GrowthUSD '000

USD '000Central America


642,851


526,369


22
%South America


149,848


106,591


41
%Africa


95,935


66,716


44
%Asia


49,061


41,041


20
%Amnet


6,537





Unallocated


(76,949
)

(69,014
)

11
%Total


867,283


671,703


29
%


Operating profit margin

2008

2007

Change
in % ptsCentral America


47
%

46
%

1South America


15
%

13
%

2Africa


13
%

14
%

(1
)Asia


19
%

21
%

(2
)Amnet


15
%


%

Total


25
%

26
%

(1
)


As
a general rule, the companies with the highest market share, which have already achieved critical mass, were able to improve their operating margins. It was the case for Millicom
operations in Central America (El Salvador, Guatemala and Honduras) and in South America (Bolivia and Paraguay).

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

Finally,
operating profit for Asia decreased from 21% to 19%.

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

Interest expense:Interest expense for the year ended December 31, 2008 decreased by 22% to $149 million the year ended
December 31, 2008, from $190 million for the year ended December 31, 2007. This mainly because Millicom reviewed in the third quarter of 2008 its position to early repay the
Notes. The Board of Directors decided not to early redeem the Notes but to keep them until the contractual maturity date (December 1, 2013). This decision impacted the future expected cash
flows and, as a result, the 5% premium accrued in 2007 was completely reversed and an interest income amounting to $29 million was recorded in 2008 (see note 24).

Interest and other income:Interest and other income for the year ended December 31, 2008 decreased by 42% to $33 million
from
$56 million for the year ended December 31, 2007. This was mainly due to the expenditure to acquire Amnet business (see note 4), that reduced the balance of cash and cash
equivalent available for the Group.

Other non operating income (expenses), net:Other non operating income (expenses), net was an income of $10 million for the year
ended
December 31, 2007 and was an expense of $56 million for the year ended December 31, 2008. This decrease was mainly the result of higher exchange losses, mainly on borrowings, as a
number of currencies weakened against the dollar in the last quarter of 2008.

Charge for taxes:The net tax charge for the year ended December 31, 2008 increased to $277 million from $87 million for
the
year ended December 31, 2007. This increase was mainly due to the impairment of the deferred tax asset booked in 2007 in our operation in Colombia.

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

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

As
a consequence, the Group's effective tax rate increased from 16% in 2007 to 39% in 2008.

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

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In
the future, as the business grows and the corporate staff increases its support to the operations, Millicom expects to be able to charge additional management fees and brand fees to
the operating companies as the revenues of the operating companies grow, thus increasing the corporate income. In addition, as the Group's profit before tax grows, it will further reduce the impact of
the net corporate expenses and interest on the Group's effective tax rate. In 2009 we expect that the beneficial impact of these three factors will likely be, at least partially, offset by the net
losses expected to be incurred by the Democratic Republic of Congo business, which may be non recoverable.

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

Net profit for the year attributable to equity holders of the company:The net profit for the year ended December 31, 2008 was
$517 million compared to a net profit of $697 million for the year ended December 31, 2007. Profit from continuing operations decreased to $427 million for the year ended
December 31, 2008 from $465 million for the year ended December 31, 2007 for the reasons stated above. The loss from discontinued operations for the year ended December 31,
2008 was $22 million compared to the profit from discontinued operations for the year ended December 31, 2007 of $246 million.

Operating Results

Years Ended December 31, 2007 and 2006

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

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

Percent
Change2007

2006(in thousands of U.S. dollars, except percentages)Revenues


2,623,854


1,570,086


1,053,768


67
%Cost of sales


(973,560
)

(609,888
)

(363,672
)

60
%Gross profit


1,650,294


960,198


690,096


72
%Sales and marketing


(486,779
)

(245,826
)

(240,953
)

98
%General and administrative expenses


(418,863
)

(240,936
)

(177,927
)

74
%Other operating expenses


(72,949
)

(37,613
)

(35,336
)

94
%Other operating income





4,036


(4,036
)

(100
)%Gain(loss) from sale of subsidiaries and joint ventures, net





8,099


(8,099
)

(100
)%Operating profit


671,703


447,958


223,745


50
%Interest expense


(190,410
)

(120,510
)

(69,900
)

58
%Interest and other financial income


56,378


36,383


19,995


55
%Other non operating expenses, net


10,213


(1,145
)

11,358


(992
)%Profit from associates


4,400


1,483


2,917


197
%Profit before tax from continuing operations


552,284


364,169


188,115


52
%Charge for taxes


(87,198
)

(117,587
)

30,389


(26
)%Profit for the year from continuing operations


465,086


246,582


218,504


89
%Loss for the year from discontinued operations, net of tax


245,898


(86,599
)

332,497


(384
)%Minority interests


(13,842
)

8,964


(22,806
)

(254
)%Net profit for the year attributable to equity holders


697,142


168,947


528,195


313
%


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Table of Contents

Subscribers:Total subscribers for the years ended December 31, 2007 and 2006 by segment were as follows:

Subscribers

2007

2006

GrowthCentral America


8,824,924


5,164,167


71
%South America


5,892,726


4,329,973


36
%Africa


5,568,148


3,383,625


65
%Asia


2,964,738


2,025,625


46
%Total


23,250,536


14,903,390


56
%


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

As
of December 31, 2007, our worldwide total mobile subscriber base increased by 56% to 23,250,536 mobile subscribers from 14,903,390 mobile subscribers as of December 31,
2006. Growth was particularly strong in Central America and Africa (71% and 65%, respectively). There were significant increases recorded in the following countries; the Democratic Republic of Congo
(986%), Honduras (88%), Chad (73%), Ghana (67%) and Guatemala (66%). This subscriber growth was driven by substantially higher capital expenditure in 2007. The higher capital expenditure resulted in
improvements in the quality of our networks and increased capacity and coverage which attracted additional subscribers. Expansion of the distribution network also helped drive subscriber growth by
increasing the points of sale where we sell our products, which makes the products more accessible. We are further driving higher penetration rates in our markets by continuing to drive down the entry
price for our services by using innovative distribution channels and techniques.

Our
attributable subscriber base increased to 19,748,986 mobile subscribers as at December 31, 2007 from 12,798,513 mobile subscribers as of December 31, 2006, an increase
of 54%.

Revenues:Revenues for the years ended December 31, 2007 and 2006 by segment were as follows:

Revenue

2007

2006

GrowthUSD '000

USD '000Central America


1,149,368


796,111


44
%South America


809,881


321,038


152
%Africa


469,833


306,091


53
%Asia


194,772


146,846


33
%Total


2,623,854


1,570,086


67
%


Total
revenues increased by 67% for the year ended December 31, 2007 to $2,624 million from $1,570 million for the year ended December 31, 2006. The increase
is mainly due to strong growth in the number of subscribers which increased by 56% to 23 million as of December 31, 2007 from 15 million as of December 31, 2006. Revenue
growth was seen throughout Millicom's segments and especially in South America where revenues increased by 152% for the year ended December 31, 2007, mainly as a result of having an additional
$357 million in revenue in Colombia as for 2007 there was a full year of revenues for Colombia compared to one quarter in 2006. We have also seen a very strong growth in revenue from
value-added services particularly in Paraguay. The increase in revenue for the year ended December 31, 2007 was 53% in Africa, 44% in Central America and 33% in Asia.

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Central
and South America were the key drivers of this growth reflecting the success of tigo® in its third year. tigo® represents our triple "A" operating
strategy of a quality and widely available network, ubiquitous distribution and affordable products and services. Implementing this strategy across all our operations has been the key to driving
revenue growth. This strategy drove higher penetration rates in our existing markets which increased the subscriber base. Furthermore, the existing subscribers increased their average airtime usage
through additional voice minutes as we made the products more affordable and through the take up of value-added services.

Cost of sales:Cost of sales increased by 60% for the year ended December 31, 2007 to $974 million from $610 million for
the
year ended December 31, 2006. The primary cost of sales incurred by us is in relation to the provision of telecommunication services relates to interconnection costs, roaming costs, leased
lines to connect the switches and main base stations, and the depreciation of network equipment. The interconnection and roaming costs are directly related to revenues and increased as a result of the
growth in revenues described above. The cost of leased lines increased as we continued to expand our networks and depreciation increased due to the higher capital expenditures on our networks. Lastly,
cost of sales was impacted by our Colombian business where we had a full year of costs in 2007 compared to one quarter in 2006. Gross profit margin increased slightly to 63% for the year ended
December 31, 2007 compared to 61% for the year ended December 31, 2006.

Sales and marketing:Sales and marketing expenses increased by 98% for the year ended December 31, 2007 to $487 million from
$246 million for the year ended December 31, 2006. Sales and marketing costs are comprised mainly of commissions to dealers for obtaining customers on our behalf and selling prepaid
reloads, general advertising and promotion costs for tigo®, point of sales materials for the retail outlets, and staff costs. The increase in sales and marketing costs was mainly due to
higher dealer commissions related to the higher revenues and the increase in subscribers, increased spending on brand awareness and point of sales materials, particularly where we were aggressively
rolling out tigo® in Africa and Asia, and increased sales and marketing costs in Colombia as Millicom rebranded this operation to tigo® at the end of 2006. Furthermore, for
2007 there was a full year of sales and marketing expenses for Colombia compared to one quarter in 2006. As a percentage of revenues, sales and marketing expenses increased from 16% for the year ended
December 31, 2006 to 19% for the year ended December 31, 2007.

General and administrative expenses:General and administrative expenses increased by 74% for the year ended December 31, 2007 to
$419 million from $241 million for the year ended December 31, 2006. This increase is mainly explained by the increase in network maintenance costs to support the expansion in our
operations, but also higher staff costs from more employees needed to manage the growth of the business. In addition, there was an increase in share compensation costs. Finally, for 2007 there was a
full year of general and administrative expenses for Colombia compared to one quarter in 2006. As a percentage of revenues, general and administrative expenses increased to 16% for the year ended
December 31, 2007, from 15% for the year ended December 31, 2006.

Other operating expenses:Other operating expenses increased by 94% for the year ended December 31, 2007 to $73 million from
$38 million for the year ended December 31, 2006. This increase is mainly explained by:



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Operating profit:Operating profit for the years ended December 31, 2007 and 2006 by segment was as follows:

Operating profit

2007

2006

GrowthUSD '000

USD '000Central America


526,369


334,923


57
%South America


106,591


49,657


115
%Africa


66,716


69,813


(4
)%Asia


41,041


36,070


14
%Unallocated


(69,014
)

(42,505
)

62
%Total


671,703


447,958


50
%




Operating profit margin

2007

2006

Change
in %ptsCentral America


46
%

42
%

4South America


13
%

15
%

(2
)Africa


14
%

23
%

(9
)Asia


21
%

25
%

(4
)Total


26
%

29
%

(3
)


Total
operating profit for the year ended December 31, 2007 was $672 million compared with $448 million for the year ended December 31, 2006. This increase in
operating profit was due to the higher revenues. The operating profit margin fell from 29% to 26% mainly due to Millicom's operation in Colombia which incurred an operating loss of $31 million
for the year ended December 31, 2007 compared to a operating loss of $5 million for the period from October 2, 2006, the date of acquisition by Millicom of this operation, to
December 31, 2006. In addition Millicom's operation in the Democratic Republic of Congo increased its operating losses from $16 for the year ended December 31, 2006 to $35 million
for the year ended December 31, 2007 as it aggressively rolls out the triple "A" operating strategy for the company, incurring sales and marketing and network rollout costs ahead of an increase
in revenues as a result of the 986% increase in subscribers between December 31, 2006 and December 31, 2007. The operating margin for the segments varied from 2006 to 2007 mainly as a
result of the different stages of implementation of the triple "A" operating strategy among the companies. In most cases, those where the triple "A" model was implemented before 2006, mainly Central
and South America (excluding Colombia), were able to improve their operating margins. Those where the model has been implemented later, most African countries and Sri Lanka, saw pressure on the
operating margins as they incurred costs ahead of revenues to implement the model, rebrand as tigo® and grow their businesses.

Interest expense:Interest expense for the year ended December 31, 2007 increased by 58% to $190 million from
$121 million for
the year ended December 31, 2006. This increase arose primarily as a result of Millicom's decision in the last quarter of 2007 to redeem its 10% Senior Notes in December 2008. Accordingly an
additional interest expense of $31 million was taken, representing the remaining balance of the amortised costs of the 10% Senior Notes and a 5% premium to redeem these Notes before maturity.
In addition interest expense increased as a result of the additional borrowings in the operations used to fund Millicom's increased capital expenditure

Interest and other income:Interest and other income for the year ended December 31, 2007 increased by 55% to $56 million from
$36 million for the year ended December 31, 2006. This increase was mainly due to the interest income on the higher cash balances.

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Other non operating expenses, net:Other non operating income (expenses), net increased from an expense of $1 million for the year
ended
December 31, 2006 to an income of $10 million for the year ended December 31, 2007. This increase was mainly as a result of higher exchange gains, mainly on borrowings, as a
number of currencies strengthened against the dollar offset by a charge of $5 million in respect of the repurchase by Millicom of part of the 10% Senior Notes.

Charge for taxes:The net tax charge for the year ended December 31, 2007 decreased to $87 million from $118 million in
the year
ended December 31, 2006. This decrease is due to recognition of a deferred tax benefit of $86 million in our operation in Colombia as a result of the net operating losses assumed as part
of the acquisition of this operation and the losses incurred since the acquisition date. This benefit was offset by the increased tax charge as a result of the increased profitability of our
operations in 2007. The Group's effective tax rate decreased from 32% in 2006 to 16% in 2007, mainly as a result of the recognition of the deferred tax assets in our operation in Colombia and a lower
proportion of net corporate expenses and interest to total Group profit before taxes.

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

The
Group effective tax rate is also impacted by operating companies that are taxed on revenues rather than profit before tax. In 2006, the Group effective rate benefited from these
situations.

Net profit for the year attributable to equity holders of the company:The net profit for the year ended December 31, 2007 was
$697 million compared to a net profit of $169 million for the year ended December 31, 2006. Profit from continuing operations increased to $465 million for the year ended
December 31, 2007 from $247 million for the year ended December 31, 2006 for the reasons stated above. The profit from discontinued operations for the year ended
December 31, 2007 was $245 million compared to the loss from discontinued operations for the year ended December 31, 2006 of $87 million and was significantly impacted by
the gain on the sale of Paktel.

Liquidity and Capital Resources

Overview

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

As
of December 31, 2008, Millicom's total consolidated outstanding debt and other financing was $2,158 million (2007: $1,834 million). Of this amount,
$453 million (2006: 659 million) represented the Company's indebtedness and $1,705 million (2007: $1,175 million) represented the consolidated indebtedness of our
subsidiaries and joint ventures.

Of
the total consolidated outstanding debt and other financing of $2,158 million:



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

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

Cash Upstreaming

The continued improvement in the operating and financial performance of our operations has allowed us to continue to upstream excess
cash to the Company, through a combination of dividends, technical service fees and shareholders' loans reimbursement. For the year ended December 31, 2008, we upstreamed $543 million
from 9 of the 16 countries in which we operate. This upstreamed cash will be used to service our corporate debt obligations and for further investment. In 2007, we upstreamed $656 million from
13 of 16 countries in which we operated. In 2006, we upstreamed $361 million from 15 of 16 countries in which we operated.

Cash Flows

Years Ended December 31, 2008 and 2007

For the year ended December 31, 2008, cash provided by operating activities was $1,147 million, compared to
$850 million for the year ended December 31, 2007. The increase is mainly due to the growth of the profitability, as described in the preceding paragraphs.

Cash
used by investing activities was $1,899 million for the year ended December 31, 2008, compared to $836 million for the year ended December 31, 2007. In
the year ended December 31, 2008 Millicom used $532 million in the acquisition of Amnet. Millicom also used $1,292 million to purchase property, plant and equipment compared to
$851 million for the same period in 2007.

Financing
activities provided total cash of $286 million for the year ended December 31, 2008, compared to $245 million for the year ended December 31, 2007.
In the year ended December 31, 2008, we repaid debt of $664 million while raising funds of $1,207 million through new financing and $3 million through the issuance of
shares.

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

Years Ended December 31, 2007 and 2006

For the year ended December 31, 2007, cash provided by operating activities was $850 million, compared to
$515 million for the year ended December 31, 2006. The increase is mainly due to the growth of the profitability, as described in the preceding paragraphs.

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Cash
used by investing activities was $836 million for the year ended December 31, 2007, compared to $503 million for the year ended December 31, 2006. In the
year ended December 31, 2007 Millicom used cash to purchase $851 million of property, plant and equipment compared to $439 million for the same period in 2006. In 2006, Millicom
used $35 million, net of cash acquired, to purchase investments in the Democratic Republic of Congo, Ghana, Honduras and Sierra Leone.

Financing
activities provided total cash of $245 million for the year ended December 31, 2007, compared to $127 million for the year ended December 31, 2006.
In the year ended December 31, 2007, we repaid debt of $316 million while raising funds of $546 million through new financing and $34 million through the issuance of
shares.

The
net cash inflow in year ended December 31, 2007 was $518 million compared to an inflow of $60 million for the year ended December 31, 2006. Millicom had
closing cash and cash equivalents balances of $1,175 million as at December 31, 2007 compared to $657 million as at December 31, 2006.

Investments, Acquisition, Divestments and Capital Expenditures

Investments

Millicom will continue to invest in its existing mobile operations, where we believe we can generate attractive returns. In addition,
we intend to increase our equity ownership in certain existing operations through opportunistic buy-outs of local partners. We may participate in consolidation within our markets through
the careful evaluation, selection and pursuit of strategic opportunities. We may also pursue new license opportunities in our adjacent markets where the investment offers group-wide
synergy potential. Such synergies include sharing information and best practices about services, human resources, technologies, market strategies, and the centralized negotiation of financings and
supply contracts for network and subscriber equipment.

Acquisitions

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

On
October 2, 2006, the Group acquired 50% plus one of the voting shares of Colombia Móvil S.A., a mobile operation in Colombia. The purchase price of
Colombia Móvil S.A. was $124 million, including acquisition costs of $2 million, and was financed through borrowings.

In
July, 2006, Millicom completed its purchase for a total consideration of $5 million of the remaining 4% ownership interest in Telefonica Celular del Paraguay S.A., its
subsidiary in Paraguay in which Millicom now has 100% ownership. The acquisition was approved by the regulatory authorities on July 12, 2006. Millicom recognised goodwill of $3 million
as a result of the acquisition of the minority interest, recorded under the caption "Intangible assets, net".

On
March 14, 2006, Millicom purchased for a total consideration of $35 million the remaining 25% ownership interest in Sentel GSM, its operation in Senegal in which
Millicom now has 100% ownership. Millicom recognised goodwill of $31 million as a result of the acquisition of the minority interest, recorded under the caption "Intangible assets, net".

On
January 23, 2006, Millicom purchased for a total consideration of $20 million the remaining 15.6% ownership interest in Millicom Tanzania Limited, its operation in
Tanzania in which Millicom now has 100% ownership. Millicom recognised goodwill of $16 million as a result of the acquisition of the minority interest, recorded under the caption "Intangible
assets, net".

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Divestments

The sale of Pakcom, one of Millicom's operations in Pakistan, was completed in June 2006 for $1. As part of the sale of Pakcom Limited,
Millicom transferred 10% of its ownership in Paktel Limited to the Arfeen group at no cost to the Arfeen group, reducing Millicom's ownership in Paktel Limited to 88.68%. No gain or loss was recorded
on this disposal. This operation has been classified as a discontinued operation in the 2006 financial statements.

Millicom
decided to exit from its remaining business in Pakistan, Paktel Limited, on November 13, 2006. The agreement relating to the sale of our 88.68% interest in Paktel Limited
to China Mobile Communications Corporation for an enterprise value of $460 million, resulting in net proceeds of approximately $284 million, was signed on January 21, 2007 and the
transaction was completed on February 13, 2007. Paktel Limited has been classified as a discontinued operation in the 2006 financial statements.

Millicom
had entered in October 2003 into a Management Agreement to manage a mobile telephony network for Rafsanjan Industrial Complex Islamic Cooperative Company ("RIC") in Iran. On
September 11, 2006, Millicom and RIC mutually agreed to terminate the Management Agreement, mainly because the business relationship with RIC had not developed as favorably as initially
expected.

Millicom
also had an option to acquire at book value an equity ownership in a new Iranian company that would operate the mobile network to be contributed by RIC. Between
February 9, 2004 and February 9, 2007 Millicom could acquire up to 47% of the equity of this company. After that date and until February 9, 2009, Millicom had the right to acquire
an additional 30% of the equity in addition to any shares acquired before that date, provided that the total percentage acquired did not exceed 47%. Millicom intended to exercise the option if, among
other conditions, RIC managed to negotiate a favorable interconnection agreement with Telecommunications Company of Iran ("TCI"), the incumbent Iranian telecommunications operator. As RIC failed to
obtain favorable interconnection terms from TCI and in consideration of other factors, Millicom irrevocably terminated its rights under the option agreement in November 2006.

In
May 2006, Millicom divested its wholly-owned subsidiary MIC-USA Inc. for $1. A net gain of $6.1 million was recognized from the sale and
MIC-USA Inc. ceased to be consolidated from the date of sale. As part of the sale of MIC-USA Inc., Millicom sold Great Universal Inc. and Modern
Holdings Inc. Although Great Universal Inc. and Modern Holdings Inc were wholly-owned by Millicom, they were not consolidated because of the existence of outstanding warrants that
enabled warrant holders to control Great Universal Inc. and Modern Holdings Inc. These entities were accounted for as financial assets available for sale. As a result, the revaluation
reserve was reversed and no gain or loss was recorded on their disposal in 2006.

Millicom
also sold other minor subsidiaries and other joint-ventures in 2006, including Millicom Peru S.A., its operation in Peru, which has been treated as a discontinued
operation, for $6.4 million net proceeds resulting in a gain of $2.7 million.

Millicom
has an 80% equity interest in Comvik International (Vietnam) AB ("Comvik") which had entered into a Business Cooperation Contract ("BCC") with a government-owned company to
operate a nationwide cellular GSM network in Vietnam (Mobifone). The BCC expired in May 2005 and Millicom had been negotiating with the Vietnamese government to convert the BCC into an equity
ownership interest. During the third quarter of 2006, Millicom concluded that it was unlikely that an acceptable agreement would be reached in the near future and therefore has classified Comvik as a
discontinued operation from that date. Millicom has no other continuing operation in Vietnam. As of December 31, 2006, Comvik has been presented as an abandoned operation. As such its assets
and liabilities are still included under the relevant individual balance sheet captions. There is likely to be limited financial impact from the closure of the BCC in 2007.

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Capital Expenditures

Our capital expenditure of property, plant and equipment, licenses and other intangibles by geographical and business segment for the
years ended December 31, 2008, 2007 and 2006 has been as follows:

2008

2007

2006Central America


294,011


291,678


202,649South America


369,167


325,077


73,649Africa


601,080


337,299


244,745Asia


154,686


93,948


110,084Amnet


11,548





Unallocated items and discontinued operations


12,199


7,600


127,054Total


1,442,691


1,055,602


758,181


We
expect to direct some of our capital expenditures towards our new operation in Rwanda and the roll out of tigo® across the rest of our African operations in 2009.

Commitments to Purchase Network Equipment within One Year

As of December 31, 2008, we had commitments to purchase network equipment, land and buildings and other fixed assets with a
value of $539 million from a number of suppliers, all of which was within one year except $15 million within two years. We expect to meet these commitments from our current cash balance
and from the cash generated from our operations.

As
of December 31, 2007, we had commitments to purchase network equipment, land and buildings and other fixed assets with a value of $400 million from a number of
suppliers, all of which was within one year except $28 million within two years.

Financing

We finance our operations on a project-by-project basis at both the operational and parent entity level. Once a
license is awarded, we make an initial investment in the form of equity and, in some cases, debt. The local operation typically is granted between six and 12 months to build out its initial
mobile telephone network. During this initial phase, we frequently supplement our investment with financing provided by equipment suppliers for the purchase of network equipment. Generally, such
financing covers a period of 18 months to three years and is often guaranteed by Millicom. We seek to refinance the vendor financing with longer-term borrowing from commercial banks
and international agencies. Where practicable, we endeavor to obtain financing in local currencies and without recourse to Millicom. However, Millicom may guarantee such project financing for an
initial period. We intend to continue to pursue a project-by-project approach to fund our systems. If additional investment is required, we seek, whenever possible, to fund
such investment through shareholder loans from the Company. As our local operations become more established and local financial markets become more developed, we are increasingly able to finance at
the operational level in the local currency on a non-recourse basis. As of December 31, 2008, 32% of our debt at the operating level was denominated in local currency.

Millicom's
total consolidated indebtedness as of December 31, 2008 was $2,158 million and our total consolidated net indebtedness (representing total consolidated
indebtedness after deduction of cash, cash equivalents, short-term time deposits) was $1,484 million. Our annual interest expense for the years ended December 31, 2008 and
2007 was $149 million and $190 million, respectively.

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10% Senior Notes

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

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

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

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

In
October 2007, Millicom decided that it would redeem the balance of the Notes in December 2008 and pay the contractual redemption premium of 5%. As a result, Millicom reclassified the
10% Senior Notes from non current to current and recorded an additional interest expense of $31 million for the year ended December 31, 2007, which represented the increase in financial
liabilities due to the recognition of the 5% pre-payment expense and an increase in the amortised cost of the Notes due to the earlier settlement date. Millicom reviewed its position to
early repay the Notes in September 2008 and the Board of Directors decided not to early redeem the Notes but to keep them until the contractual maturity date (December 1, 2013). This decision
impacted the future expected cash flows and, as a result, the 5% premium accrued in 2007 was completely reversed and an interest income amounting to $29 million was recorded in 2008. In
addition the 10% Notes were reclassified as non-current.

4% convertible Notes

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

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

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

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

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

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

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Other Debt and Financing

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

2008

2007US$ '000

US$ '000Amnet(i)


231,523


Bolivia(ii)


103,111


41,874Colombia(iii)


456,356


436,670Democratic Republic of Congo(iv)


63,256


60,877El Salvador(v)


192,045


199,715Ghana(vi)


138,999


108,244Honduras(vii)


90,817


56,961Paraguay(viii)


64,147


26,019Senegal(ix)


58,309


62,557Tanzania(x)


168,793


51,471Other


137,199


131,137Total other debt and financing


1,704,555


1,175,525Of which:due after more than 1 year


1,208,011


945,206due within 1 year


496,544


230,319


Significant
individual financing facilities are described below:

i)    Amnet

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

In
addition as at December 31, 2008, Amnet had other debt and financing of $2 million.

ii)    Bolivia

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

In
March 2008, Telecel Bolivia signed a 4 year and 9 months financing agreement for $30 million with the International Finance Corporation. The loan bears interest
at $LIBOR plus 2% and is fully guaranteed by the Company. This loan was fully drawn as at December 31,2008.

In
addition to the above, Telecel Bolivia also had vendor financings with Huawei (at interest rates of $LIBOR plus 2%) and FPLT totalling $32 million and $1 million of
other debt and financing outstanding as at December 31, 2008 (2007: $2 million).

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iii)    Colombia

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

In
October 2006, the Company acquired a majority ownership 50% plus 1 share in Colombia Movil. At the time of the acquisition the Company had a COP 168,539 million
($83 million) Hermes guaranteed export credit facility with Citigroup maturing in January 2012. This facility bears interest at IPC plus 6.30% and is 100% guaranteed by the minority
shareholders. As at December 31, 2008 $37 million (2007: $54 million) was outstanding under this facility. In addition at the time of acquisition Colombia Movil also had a COP
309,800 million (total of $154 million, of which $94 million outstanding as at December 31, 2007) loan facility arranged by BBVA which was settled in 2008. This facility
was bearing interest at DTF plus 4.15% and was 100% guaranteed by the minority shareholders.

Colombia
Movil S.A. E.S.P. also had local currency loans from the minority shareholders outstanding as at December 31, 2008 of $230 million (2007:
$230 million). These loans bear interest at DTF plus 4.15% and mature between 2011 and 2013.

In
addition, as at December 31, 2008 Colombia Movil S.A. E.S.P. had no outstanding amount in respect of local currency 60 day treasury credits from various banks
(2007: $57 million) and $16 million (2007: $2 million) of other debt and financing, in US$ and local currency.

iv)    Democratic Republic of Congo

In September 2006, Oasis S.P.R.L. ("Oasis"), Millicom's operation in the Democratic Republic of Congo, entered into a
$106 million, 7 year loan from the China Development Bank to finance equipment purchases from Huawei, an equipment supplier. The loan bears interest at $ LIBOR plus 2% and is repayable
over 17 equal quarterly installments commencing in 2009. This financing is 100% guaranteed by the Company. As of December 31, 2008, $59 million was outstanding under this facility (2007:
$56 million) and in addition Oasis had other debt and financing of $4 million (2007: $5 million).

v)    El Salvador

In September 2006, Telemovil El Salvador S.A., Millicom's operation in El Salvador, entered into a $200 million
5 year loan. The loan was syndicated amongst a group of local and international banks and was arranged by ABN AMRO, Citigroup and Standard Bank. The loan bears interest at $ LIBOR plus 1.75%.
As of December 31, 2008, $180 million of this facility was outstanding (2007: $200 million).

In
December 2008, Telemovil El Salvador S.A., entered into a $12 million 2 year loan with Banco Agrícola Comercial S.A. The loan bears interest
at $ LIBOR plus 6%. As of December 31, 2008, the loan was fully drawn.

vi)    Ghana

In December 2007 Millicom (Ghana) Limited, Millicom's operation in Ghana, entered into a $60 million local 5 year
club-deal Facility. The loan bears interest at Libor plus 2%. In parallel a $80 million offshore 7 year DFI (Development Finance Institution) financing which bears interest
at Libor plus 2.25% was arranged. As at December 31, 2008, $139 million (2007: $90 million) was outstanding under these facilities.

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In
July 2005, Millicom (Ghana) Limited entered into a $20 million loan agreement with Citibank N.A., 75% guaranteed by the Overseas Private Investment Corporation and 100%
guaranteed by the Company. This loan was bearing interest at $ LIBOR plus 2.5% and was repaid in 2008. As at December 31, 2007, $15 million was outstanding under this facility.

In
addition as at December 31, 2008, Ghana had no other debt and financing (2007: $3 million).

vii)    Honduras

Telefonica Celular S.A., Millicom's operation in Honduras, has facilities with several local banks maturing between 2009 and
2015. These facilities are in dollars and in Lempiras and are unsecured. Interest rates are either fixed or variable, ranging as of December 31, 2008 between 7.4% and 16% (2007: between 7.28%
and 10.25%). As at December 31, 2008, the outstanding debt under these facilities was $91 million (2007: $57 million).

viii)    Paraguay

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

In
addition as at December 31, 2008, Telefonica Cellular Del Paraguay had $14 million (2007: $26 million) of other debt and financing outstanding.

ix)    Senegal

In December 2005, Sentel GSM, Millicom's operation in Senegal entered into a XAF12,500 million loan agreement with
Crédit Lyonnais Sénégal ("CLS"). This loan bears a fixed interest rate of 8% and is fully repayable at maturity, in December 2010. The outstanding amount
in US$ as at December 31, 2008 was $26 million (2007: $28 million). Sentel GSM also entered into a 5 year additional Tranche of XAF7,500 million with CLS in July
2007. This tranche bears an 8.5% fixed interest rate and was fully drawn at the end of 2007. The outstanding amount under this additional Tranche in US$ as at December 31, 2008 was
$14 million (2007: $17 million). As at December 31, 2008 Sentel GSM was in breach of its debt covenants under the above facilities and as such these loans were reclassified as
current. Negotiations are in progress with the bank to maintain the facilities and to waive the covenants.

In
September 2006, Sentel GSM additionally entered into a XAF2,500 million bridge loan with the Compagnie Bancaire de l'Afrique Orientale (CBAO). This loan was bearing interest at
7% and was repaid in March 2008 (outstanding amount as at December 31, 2007 amounted to $1 million). Additionally in 2007, Sentel GSM entered into a new short term facility with CBAO
amounting in to XAF7,500 million maturing on October 31, 2008 and bearing fixed interest of 6.5%. The facility has been rolled over and the amount outstanding as at December 31,
2008 was $18 million (2007: $17 million).

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x)    Tanzania

In December 2008, Millicom Tanzania Limited, Millicom's operation in Tanzania entered into facilities totaling $228 million
comprising of a five year local currency syndicated tranche for TZS95 billion at the 180 days treasury Bill rate plus 3%, a seven year $116 million EKN guaranteed financing with
45% of the facility fixed at 4.1% and 55% of the facility at $LIBOR plus 0.665% and a seven year $40 million tranche with Proparco at $LIBOR plus 2.5%. All tranches are 100% guaranteed by the
Company. As at December 31, 2008, the amount outstanding under these facilities was $152 million.

In
March 2007 Millicom Tanzania Limited entered into a new 5 year Citi-Opic facilities, bearing interest rate of LIBOR plus 2.5%, composed of a $17.4 million $
Tranche and a Tranche in local currency up to the equivalent of $5 million. The outstanding US$ amount under these facilities as at December 31, 2008 amounted to $17 million
(2007: $23 million).

At
the same time Millicom Tanzania Limited entered into a 5 year $10 million Term Loan with Barclays bearing interest of LIBOR plus 3% and a 5 year
$16.5 million vendor financing with Ericsson credit AB, priced at LIBOR plus 2.5%. The amount outstanding as at December 31, 2008 was nil (2007: $8 million) under the Barclays
loan and nil (2007: $14 million) under the Ericsson loan.

Millicom
Tanzania Limited had no other debt and financing outstanding as at December 31, 2008 (2007: $6 million).

Guarantees

In the normal course of business, the Company has issued guarantees to secure some of the obligations of some of its operations under
bank financing agreements. As of December 31, 2008, the Company has issued $712 million of guarantees (2007: $206 million).

Pledged assets

The Group's share of total debt and financing secured by either pledged assets, pledged deposits issued to cover letters of credit or
guarantees issued by the Company is $1,313 million (2007: $739 million). The assets pledged by the Group for these debts and financings amount to $610 million (2007:
$449 million).

Effect of Exchange Rate Fluctuations

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

We
generally do not hedge our foreign currency exposures, because of lack of available intruments in the countries where we operate. Millicom had a net exchange loss of
$56 million for the year ended December 31, 2008, compared to a gain of $15 million for the year ended December 31, 2007.

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Trend Information

We believe there is a significant opportunity for rapid growth in our markets due to low mobile 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 operations to expand our market share and
reduce our operating costs. There is, however, a risk that, as new competitors enter our prepaid markets, as will be the case in Sri Lanka, Honduras and Ghana in 2009, and price competition
intensifies, our prepaid customers may be more likely to move from one mobile operator to another than our postpaid customers. This also has the effect of driving prices down, thus eroding the
profitability of the mobile operators. In addition, there is the risk of additional taxes, expecially in those countries that face budget constraints. In that event, we believe our strong service
coverage and increasing use of non-traditional distribution channels, competitive tariffs and brand awareness will enable us to compete effectively in our prepaid markets. However, this
may not always be the case and, if we determine that the business is not sustainable, we may decide to exit the relevant market.

Research and Development, Patents and Licenses, etc.

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

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

Off-balance Sheet and Other Arrangements

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

Critical Accounting Policies

The consolidated financial statements as of December 31, 2008 are prepared in accordance with consolidation and accounting
policies consistent with those of the previous financial years.

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

Basis of Consolidation

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

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Functional and presentation currencies

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic
environment in which the entity operates ("the functional currency"). The functional currency of each subsidiary, joint venture and associates reflects the economic substance of the underlying events
and circumstances of these entities. The Company is located in Luxembourg and its subsidiaries, joint ventures and associates operate in different currencies. The Group's consolidated financial
statements are presented in U.S. dollar (the "presentation currency"). The functional currency of the Company is the U.S. dollar because of the significant influence of the U.S. dollar on its
operations.

Goodwill

Goodwill represents the excess of cost of an acquisition over the Group's share in the fair value of the identifiable assets less the
liabilities and contingent liabilities of the acquired subsidiary, joint venture or associate at the date of transaction. If the fair value of the identifiable assets, liabilities or contingent
liabilities or the cost of the acquisition can be determined only provisionally, then Millicom initially accounts for the goodwill using these provisional values. Within twelve months of the
acquisition date, Millicom then recognises any adjustments to these provisional values once the fair value of the identifiable assets, liabilities and contingent liabilities and the cost of the
acquisition have been finally determined. Adjustments to the provisional fair values are made as if the adjusted fair values had been recognised from the acquisition date. Goodwill on acquisition of
subsidiaries and joint ventures is included in "intangible assets, net". Goodwill on acquisition of associates is included in "investments in associates". Following initial recognition, goodwill is
measured at cost less any accumulated impairment losses. Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

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

For
the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date, allocated to each of the Group's cash generating units or groups of
cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or
groups of units. Each unit or group of units to which the goodwill is so allocated:



Impairment
is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units), to which the goodwill relates. Where
the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. Where goodwill forms
part of a cash-generating unit (group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed
of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative
values of the operation disposed and the portion of the cash-generating unit retained. Impairment losses related to goodwill cannot be reversed in future periods.

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Trademarks and Subscriber bases

Trademarks and subscriber bases are recognised as intangible assets only when acquired in business combinations or ownership increase
transactions in joint ventures. Their cost corresponds to the fair value as at the date of acquisition. Trademarks and subscriber bases have a finite useful life and are carried at cost less
accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of the trademarks and subscriber bases over their estimated useful lives. The
estimated useful life for trademarks and subscriber bases are based on the specifications of the market in which they exist. Trademarks and subscriber bases are recorded under the caption "Intangible
assets, net".

Impairment of Non-current Assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists,
or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. The Group determines the recoverable amount based on the higher of its fair
value less cost to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Where no comparable market
information is available, the fair value less cost to sell is determined based on the estimated future cash flows discounted to their present value using a discount rate that reflects current market
conditions of the time value of money and the risk specific to the asset. In addition to the evaluation of possible impairment to the assets carrying value, the foregoing analysis also evaluates the
appropriateness of the expected useful lives of the assets. Impairment losses of continuing operations are recognised in the consolidated statements of profit and loss in those expense categories
consistent with the function of the impaired asset.

An
assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. Other than for goodwill, a previously recognised impairment loss is reversed if there has been a change in the estimate used to determine the
asset's recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. The increased amount cannot
exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss.
After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful
life.

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

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Trade receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment. A provision for impairment of trade receivable is established when there is objective evidence that the Group will not be able to collect all amounts due
according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or
delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of
estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the consolidated statements of profit and loss within "Cost of sales".

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

Non-current assets (or disposal groups) are classified as assets held for sale and stated at the lower of carrying amount
and fair value less costs to sell if their carrying amount is expected to be recovered principally through a sale transaction rather than through continuing use. The liabilities of disposal groups are
classified as "Liabilities directly associated with assets held for sale".

Borrowings and borrowing costs

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statements of profit and loss over the period of the borrowing using the
effective interest method.

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

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

Borrowing
costs which are not capitalised are recognised as an expense when incurred.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, if it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects
some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current
pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as an
interest expense.

Revenue Recognition

Revenue comprises the fair value of consideration received or receivable for the sale of goods and services, net of value added tax,
rebates and discounts and after eliminating sales within the Group.

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



These revenues consist of the sale of handsets and accessories on a stand alone basis (if sold with other services, multiple element
arrangements accounting would then apply). Revenue is recognised when the significant risks and rewards of ownership of handsets and accessories have been passed to the buyer.



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

Subscription
products and services are deferred and amortised over the estimated life of the customer relationship. Related costs are also deferred, to the extent of the revenues
deferred, and amortised over the estimated life of the customer relationship. The estimated life of the customer relationship is calculated based on the percentage of disconnections for the same type
of customer which has occurred historically.



Prepayments allow the forward purchase of a specified amount of airtime by customers. Revenues are recognised as credit is used.
Unutilised airtime is carried in the balance sheet and is included under deferred revenue within "other current liabilities".



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



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

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Share-based Compensation

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

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

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

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

Deferred tax

Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax base of
assets and liabilities and their carrying amount for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except where the deferred tax
liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.

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

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

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Deferred
income tax assets and liabilities are measured at the tax rate expected to apply to the year when the assets is realised or the liability is settled, based on tax rates and tax
laws that have been enacted or substantively enacted at the balance sheet date. Income tax relating to items recognised directly in equity is recognised in equity and not in the consolidated
statements of profit and loss. Deferred tax assets and deferred tax liabilities are offset, if legally enforceable rights exist to set off current tax assets against current tax liabilities and the
deferred taxes relate to the same taxable entity and the same taxation authority.

Discontinued operations

Revenues and expenses associated with discontinued operations are presented in a separate line on the consolidated statements of profit
and loss. Comparative figures in the consolidated statements of profit and loss representing the discontinued operations are also reclassified to a separate line. Discontinued operations are those
with identifiable operations and cash flows (for both operating and management purposes) and represent a major line of business or geographic unit which has been disposed of or is available for sale.

Recent Accounting Developments

IFRS Developments

The following new and amended IFRIC interpretations were effective during the year. They did not have any effect on the financial
performance or position of the Group.



The
following IFRS and IFRIC interpretations were issued with an effective date for annual periods beginning on or after July 1, 2008. The Group has chosen not to early adopt
these standards and interpretations.



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Tabular Disclosure of Contractual Obligations

Contractual Obligations

We have various contractual obligations to make future payments, including debt agreements, payables for license fees and lease
obligations. The following table summarizes our obligations under these contracts due by period as of December 31, 2008.

Within
1 year

Within
2 - 5 years

After
5 years

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


496,544


1,573,444


88,038


2,158,026Future interest commitments


169,116


408,065


10,980


588,161Operating leases


43,113


140,581


143,644


327,338Capital expenditure


523,416


15,375





538,791Total


1,232,189


2,137,465


242,662


3,612,316


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The following table summarizes our obligations under these contracts due by period as of December 31, 2007.

Within
1 year

Within
2 - 5 years

After
5 years

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


889,085


806,936


138,270


1,834,291Future interest commitments


100,180


137,916


8,679


246,775Operating leases


25,732


101,191


110,918


237,841Capital expenditure


372,116


28,038





400,154Total


1,387,113


1,074,081


257,867


2,791,061


ITEM 6.    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Board of Directors

Directors

Millicom's directors are as follows:

Name

Position

Independent

Year
Elected

Date of
Expiration
of TermDaniel Johannesson

Chairman

Yes


2003


May 2009Kent Atkinson

Member

Yes


2007


May 2009Mia Brunell Livfors

Member

No


2007


May 2009Donna Cordner

Member

No


2004


May 2009Michel Massart

Member

Yes


2003


May 2009Marten Pieters(i)

Member

Yes


2008


May 2009Allen Sangines-Krause

Member

Yes


2008


May 2009






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

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

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

Donna Cordner (born 1956)Non-executive Director.Ms. Cordner was elected to the Board of Millicom in May 2004. She
was formerly a Managing Director and Global Head of Telecommunications and Media Structured Finance group at Citigroup. She has also held senior management positions at
Société Générale and ABN Amro Bank N.V. in the U.S. and Europe, including as Director of ABN's Latin American Telecommunications
Project Finance and Advisory Group. Until July 2005, Ms. Cordner was the Chief Executive Officer of HOFKAM Limited, which is the largest rural microfinance company in Uganda, and continues to
advise HOFKAM as a consultant. She was named Executive Vice President of Corporate Finance and Treasury for Tele2AB effective March 2007 and was named as Market Area Director and Chief Executive
Officer for Russia in March 2008.

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

Marten Pieters (born 1953)Non-executive Director, Member of the Audit Committee and Member of the Nomination
Committee.Mr. Pieters was elected to the Board of Millicom in May 2008. He was Chief Executive Officer of MSI, which became Celtel, from 2003 through its
acquisition by MTC in early 2007. During this time, he was a driving force in Celtel's development as one of the leading pan-African telecommunications operators, serving some
20 million customers in 14 countries. Previously, from 1989 to 2003, Mr. Pieters worked at KPN, where, from 2000, he was a member of the executive management board of KPN Telecom with
specific responsibility for KPN's Business Solutions Division. Prior to this he was Executive Vice President, KPN International Operations, covering Central and Eastern Europe, Asia and the US. Before
this he was Managing Director of one Telecoms district, having joined KPN as Secretary to the Board of Management. Before starting his career in telecommunications, Mr. Pieters worked for
11 years at Royal Smilde Foods as Director of Finance and Strategic Planning and eventually as Chief Executive Officer in the Netherlands. On February 6, 2009, Mr. Pieters
resigned from the Board of Millicom.

Allen Sangines-Krause (born 1959)Non-executive Director.Mr. Sangines-Krause was elected to the Board of Millicom in
May 2008. He worked for Goldman Sachs between 1993 and 2007, working in a variety of senior positions from Chief Operating Officer for Latin America based in Mexico City and New York and most recently
as Managing Director out of London. Prior to joining Goldman Sachs, Mr. Sangines-Krause was with Casa de Bolsa Inverlat, in Mexico, and before that he was a Founding Partner of Fidem, S.C., a
Mexican investment bank, which was acquired by Casa de Bolsa Inverlat in 1991. Mr. Sangines-Krause currently sits on the Board of Investment AB Kinnevik and is Chairman of Rasaland, a real
estate investment fund. He is a member of the Council of the Graduate School of Arts and Sciences of Harvard University.

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Board Practices

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

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

The
Board held 6 meetings in person and 5 meetings by way of telephone conference during 2008.

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



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

Audit Committee.Millicom's directors have established an Audit Committee that convenes at least four times a year, comprising three
directors,
Mr. Massart (Chairman and financial expert), Mr. Atkinson and Mr. Pieters. On February 6, 2009, Mr. Pieters resigned from the Audit Committee and was replaced by
Mr. Johannesson. This committee has responsibility for planning and reviewing the financial reporting process together with the preparation of the annual and quarterly financial reports and
accounts and the involvement of external auditors in that process. The Audit Committee focuses particularly on compliance with legal requirements (including compliance with Sarbanes-Oxley Act) and
accounting standards, independence of external auditors, audit fees, the internal audit function, the fraud risk assessment, the risk management and ensuring that an effective system of internal
financial controls exists. The ultimate responsibility for reviewing and approving Millicom's annual report and accounts remains with the Board. The Audit Committee met 8 times during 2008 and
Millicom's external auditors participated in each such meeting.

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

The
Compensation Committee reviews and makes recommendations to the Board regarding the compensation of the Chief Executive Officer, reviews the compensation of the other senior
executives and oversees management succession planning. Millicom's share options program terminated in May 2006 and was replaced by grants of restricted shares to management under a new
Long-Term Incentive Plan. The grants of restricted shares to management under this plan are determined by the Committee and approved by the Board.

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

Nominations Committee.Millicom's Nominations Committee is chaired by Mr. Johannesson. The two other members are Mr. Massart,
who
replaced Ms. Cordner on February 13, 2007, and Mr. Pieters, who became a member on May 28, 2008. On February 6, 2009, Mr. Pieters resigned from the
Nominations Committee and was replaced by Mr. Sangines-Krause. The Nominations Committee's main task is to recommend directors for election to the Board by the shareholders at the AGM. At the
AGM, shareholders may vote for or against the directors proposed for election or may elect different directors. The Nominations Committee also reviews and recommends the fees and the grants of shares
to directors, which are presented to the Board and voted on by the shareholders at the AGM.

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

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

Remuneration of Directors

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

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The
remuneration charge for the Board for the years ended December 31, 2008, 2007 and 2006 was as follows:

Chairman

Other members of the boardTotalNo. of shares
and share
options

US$ '000

No. of shares
and share
optionsUS$ '000

US$ '0002008Fees





100





410


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


1,446


165


4,927


562


727Total





265





972


1,2372007Fees





82





305


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


960


82


4,074


350


432Total





164





655


8192006Fees





75





415


490Share based compensation:(i)Restricted shares(ii)


1,122


50


8,976


400


450Charge for share options





164





1,104


1,268Total





289





1,919


2,208




The number of shares and share options beneficially owned by the Board as at December 31, 2008 and 2007 was as follows:

Chairman

Other
members of
the Board

Total2008Shares


28,528


71,619


100,147Share options


20,000


55,000


75,0002007Shares(i)


2,082


2,100,753


2,102,835Share options


45,000


55,000


100,000






Senior Management and Employees

Senior Management

Name

PositionMikael Grahne

President and Chief Executive Officer (from March 2, 2009)Marc Beuls

President and Chief Executive Officer (up to March 2, 2009)Francois Xavier Roger

Chief Financial OfficerMario Zanotti

Head of Latin AmericaRegis Romero

Head of AfricaOsmar Coronel

Chief Officer OperationsCarel Maasland

Chief tigo People


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

Marc Beuls, born 1956, former President and Chief Executive Officer. Marc Beuls was President and CEO of Millicom from January 1998 till
February 2009. He was formerly Senior Vice President Finance. Mr. Beuls joined Millicom in March 1992. From 1982 to 1992, he worked for Générale de Banque of
Belgium. Marc Beuls has a degree in Economics from Limburg Business School in Belgium, with specialization in Finance and Accounting.

François-Xavier Roger, born 1962, Chief Financial Officer. François-Xavier Roger joined Millicom in
September 2008 from Groupe Danone where he served as Vice-President Corporate Finance since 2006 and previously as Chief Financial Officer for Danone Asia from 2000 to 2005. Prior to this
he worked at Sanofi Aventis and at Hoechst Marion Roussel where he managed businesses for Hoechst in Asia, Africa and Latin America. He majored in Marketing for his MBA at The Ohio State University
and has a Master's degree in Major Accounting from Audencia Business School in France.

Mario Zanotti,born 1962, Chief of Latin America. Mario Zanotti was appointed Chief of Latin America in 2008 having previously been Head
of Central America since 2002 having joined Millicom in 1992 as a General Manager of Telecel in Paraguay. In 1998 he became Managing Director of Tele2 Italy and in 2000 he was appointed Chief
Executive Officer of YXK Systems. Before joining Millicom he worked as an electrical engineer at the Itaipu Hydroelectric Power Plant and later as Chief Engineer of the biggest electrical contractor
company in Paraguay. He has a degree in Electrical Engineering from the Pontificia Universidade Catolica in Porto Alegre, Brazil and an MBA from INCAE and the Universidad Catolica de Asuncion,
Paraguay.

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

Osmar Coronel,born 1964, Chief Officer Operations. Osmar Coronel was appointed Chief Officer Operations of Millicom in 2008. He was
previously the Chief Technical Officer of Millicom and prior to that Chief Technical Manager of Millicom's operations in Paraguay and Guatemala since 2002. Prior to joining Millicom, he was a Division
Manager of the Paraguay PTT. He was awarded a Fulbright Scholarship (1992/93). Osmar Coronel is an MBA from Northwestern University's Kellogg School of Management, U.S., has a degree in
Electrical Engineering from the National University of Asuncion, Paraguay and a Master's degree in Electrical Engineering from Southern Illinois University, U.S.

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

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Remuneration of Officers

The remuneration of the Officers of the Company ("Officers") comprises of an annual base salary, an annual bonus, share-based
compensation, social security contributions, pension contributions and other benefits. The bonus and share-based compensation plans are based on actual performance (including individual and Group
performance). Up until May 2006, the Officers were issued share options. Subsequent to May 2006, the Officers were issued restricted shares. Share-based compensation is granted once a year by the
Compensation Committee of the Board. For 2006, the annual base salary and other benefits of the Chief Executive Officer ("CEO") was proposed by the Compensation Committee and approved the Board and
the annual base salary and other benefits of the Chief Operating Officer ("COO") and Chief Financial Officer ("CFO") were set by the CEO and approved by the Board.

The
remuneration charge for the Officers for the year ended December 31, 2008, 2007 and 2006 was as follows:

Chief Executive
Officer

Chief Operating
Officer

Chief Financial
Officer(vi)US$ '000

US$ '000

US$ '0002008Base salary


2,406


750


920Bonus


1,309


882


125Pension








85Other benefits





231


7Total


3,715


1,863


1,137Share based compensation:(i)Shares issued/charge under long term incentive plans(ii)


3,737


1,410


958Charge for share options


59


29


2402007Base salary


2,351


629


690Bonus


2,008


547


500Pension








83Other benefits





138


Total


4,359


1,314


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


2,076


850


539Charge for share options


104


54


1712006Base salary


1,982


624


568Bonus(iii)


1,669


712


468Pension








73Other benefits





138


Total


3,651


1,474


1,109Share based compensation:(i)Restricted shares(iv)


104


62


48Charge for long term incentive plans(v)


1,031


397


265Share options granted/charge for share options


240


113


228




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The number of shares, share options and unvested share awards beneficially owned by the senior management as at December 31, 2008 and 2007 was as follows:

Chief
Executive
Officer

Chief
Operating
Officer

Chief
Financial
Officer

Total2008Shares


1,695,175


592,308





2,287,483Share options


30,000


15,040





45,040Share awards not vested


146,678


63,342


4,500


214,5202007Shares


1,664,770


578,897


9,700


2,253,367Share options


45,000


22,560


100,000


167,560Share awards not vested


96,488


38,561


24,951


160,000


Severance Payments

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

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



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

Employees

The average number of permanent employees during the years ended December 31, 2008, 2007 and 2006 was as follows:

2008

2007(i)

2006(i)Continuing operations


6,509


4,692


3,192Discontinued operations


98


76


501Total average number of permanent employees


6,607


4,768


3,693






Long-Term Incentive Plans

In May 2006 at the AGM a long term incentive plan ("2006 LTIP") was approved although the terms and conditions of the plan were not
finalized until 2007. This long term incentive plan was based on a target share award granted to eligible Millicom employees, limited to Millicom senior-level employees, key high potential employees
and certain critical new recruits. The shares granted are subject to a one-year holding period once the shares are vested.

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

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The plan has been designed so that the shares normally vest at the end of the three-year performance period. However, for the performance period from
2006 through 2008 only, the shares granted vest 20% on December 31, 2006, 20% on December 31, 2007 and 60% on December 31, 2008. In addition at the end of the
third-year performance period there was an additional 32% of shares that vested, because performance targets relating to Millicom's share price growth compared to a peer group index,
revenue growth, EBITDA margin, and profit margin were achieved.

The
total charge for the above plan was $23 million which was recorded over the service period.

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

The
shares awarded under the performance share plan will vest at the end of a three year period, subject to performance conditions related to Millicom's "earnings per share". The
achievement of a certain level of each condition, measured at the end of the three years, yields a specific percentage of shares awarded to each employee at the grant date.

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

As
at December 31, 2008, the total charge for the above plans was estimated at $13 million for the 2008 LTIP and at $15 million for the 2007 LTIP, both to be
recorded over the service periods.

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

Matching
share award
plan 2008

Performance
shares 2008

Matching
share award
plan 2007

Performance
shares 2007

Performance
shares 2006Maximum share awards


168,396


223,829


187,470


253,489


446,600Revision for expected forfeitures


(37,061
)

(3,991
)

(59,021
)

(15,817
)

(109,509
)Revision for expectations in respect of performance conditions





(195,850
)




(142,588
)

(25,520
)Shares issued














(108,760
)Share awards expected to vest


131,335


23,988


128,449


95,084


202,811




The following table summarizes information about share options outstanding at December 31, 2008. The market price of the
Company's shares as at December 31, 2008 was $44.91 (2007: $117.94).

Options outstanding

Options exercisableRange of exercise price $

Weighted
average
exercise price

Number
outstanding at
December 31, 2008

Weighted
average
exercise price

Number
exercisable at
December 31, 20083.32 - 3.75


3.54


5,332


3.54


5,33220.56


20.56


300,567


20.56


59,07125.05 - 29.75


26.82


88,225


26.82


88,22531.88 - 35.91


34.06


99,996


34.06


99,9963.32 - 35.91


24.23


494,120


27.73


252,624


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

Date issued

Number of options
outstanding as at
December 31, 2008

Exercise price $

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


173,328


25.05 - 35.91

Exercisable immediately. Options have an indefinite life.May 2005


35,000


20.56

Exercisable immediately. Options have a twenty year life.December 2002, May 2003 and May 2004


20,225


3.32 - 25.05

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


165,567


20.56

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


100,000


20.56

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


ITEM 7.    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Principal Shareholders

The table below sets out certain information known to Millicom as at February 28, 2009, unless indicated otherwise, with respect
to beneficial ownership of Millicom common share, par value $1.50 each, by:



Shareholder

Amount of Shares

PercentageInvestment AB Kinnevik


37,835,438


35
%The Bank of New York Mellon Corporation


8,466,387


8
%The Stenbeck Family(1)


958,424


1
%






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

Related Party Transactions

Kinnevik

The Company's principal shareholder is Investment AB Kinnevik ("Kinnevik") and subsidiaries. Kinnevik is a Swedish holding company with
interests in the telecommunications, media, publishing, paper industries and financial services. As of December 31, 2008, Kinnevik owned approximately 35% of Millicom (2007: 37%).

During
2008 and 2007, Kinnevik did not purchase any Millicom shares.

Services purchased and sold to related companies

For the year ended December 31, 2008 the Group made purchases for an amount of $3 million (2007: $4 million; 2006:
$5 million) and had outstanding balances as at December 31, 2008 of $1 million (as at December 31, 2007: $1 million) with related parties. These related parties are
companies where Kinnevik is the principal shareholder. The services purchased and supplied covered fraud detection, network and IT support, acquisition of assets and customer care systems. These
purchases were made on an arm's length basis.

There
were no sales to related companies. As of December 31, 2008 and 2007, Millicom had no receivables from related parties.

ITEM 8.    FINANCIAL INFORMATION

Financial Statements and Other Information

We file our financial statements under Item 18.

Legal Proceedings

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

Dividend Policy

Holders of Millicom common share are entitled to receive dividends ratably when, as and if declared by the Company's Board of
Directors, subject to Luxembourg legal reserve requirements. Millicom paid its first cash dividend to its shareholders in 2008. In the past, Millicom retained any earnings for use in the operation and
expansion of its business. The Group has not yet established a formal dividend policy. Any future dividends will be based on the free cash flows of the Group going forward.

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Significant Changes

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

ITEM 9.    THE OFFER AND LISTING

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

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

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

High

LowYear ended December 31, 2003

$
20.23

$
0.99Year ended December 31, 2004

$
28.51

$
14.15Year ended December 31, 2005

$
27.09

$
15.60Year ended December 31, 2006

$
63.82

$
27.38Year ended December 31, 2007

$
127.40

$
60.21First Quarter 2007

$
82.04

$
60.21Second Quarter 2007

$
95.91

$
79.16Third Quarter 2007

$
99.81

$
66.00October 2007

$
119.27

$
82.38November 2007

$
124.66

$
98.50December 2007

$
127.40

$
104.50Year ended December 31, 2008

$
122.97

$
24.75First Quarter 2008

$
120.21

$
86.10Second Quarter 2008

$
122.97

$
87.00Third Quarter 2008

$
103.52

$
60.27October 2008

$
67.91

$
24.75November 2008

$
46.98

$
28.18December 2008

$
46.35

$
33.43January 2009

$
51.50

$
36.02February 2009

$
47.26

$
36.17


On
March 30, 2009, the closing market price for Millicom common stock on the NASDAQ National Market was $36.99.

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

NASDAQ Corporate Governance Exemption

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

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ITEM 10.    ADDITIONAL INFORMATION

Articles of Association

Registration and Object

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

The
articles of incorporation of Millicom define its purpose as follows: "[...] to engage in all transactions pertaining directly or indirectly to the acquisition
of participating interests in any business enterprise, including but not limited to, the administration, management, control and development of any such enterprise, and to engage in all other
transactions in which a company created under the laws of Luxembourg may engage".

Directors

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

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

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

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

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

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

Shares

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



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

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

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

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

Changes to Shareholder's Rights

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

Shareholders' Meetings

General meetings of shareholders are convened by convening notice published in the Luxembourg official Gazette and in a Luxembourg
newspaper, twice with an interval of eight days, at least eight days prior to the meeting. If all the shares are registered shares, a convening notice may, as an alternative to the publication, be
sent to each shareholder by registered mail at least eight days before the annual general meeting (AGM). According to article 17 of the articles of incorporation of Millicom, the board of
directors determines in the convening notice the formalities to be observed by each shareholder for admission to the AGM. An AGM must be convened every year on the date provided for in the articles of
incorporation, which is the last Tuesday in May each year. The 2009 AGM will take place in Luxembourg on May 26, 2009 at 4:00 p.m. Other meetings can be convened as necessary.

Limitation on Securities Ownership

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

Change of Control

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

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Disclosure of Shareholder Ownership

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

Material Contracts



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

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

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

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

In
October 2007, Millicom decided that it would redeem the balance of the Notes in December 2008 and pay the contractual redemption premium of 5%. As a result, Millicom reclassified the
10% Senior Notes from non current to current and recorded an additional interest expense of $31 million for the year ended December 31, 2007, which represented the increase in financial
liabilities due to the recognition of the 5% pre-payment expense and an increase in the amortised cost of the Notes due to the earlier settlement date. Millicom reviewed its position to
early repay the Notes in September 2008 and the Board of Directors decided not to early redeem the Notes but to keep them until the contractual maturity date (December 1, 2013). This decision
impacted the future expected cash flows and, as a result, the 5% premium accrued in 2007 was completely reversed and an interest income amounting to $29 million was recorded in 2008. In
addition the 10% Notes were reclassified as non-current.



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

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

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

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

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

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

Exchange Controls

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



Luxembourg Taxation

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

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

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

Luxembourg withholding tax on distributions

Dividends distributed by the Company will in principle be subject to a withholding tax at a rate of 15% of the gross amount except
(i) if exemption from that withholding tax is applicable under Luxembourg domestic tax law (e.g., based on the implementation of the EU Parent-Subsidiary Directive) or (ii) if a
lower rate or an exemption applies under any applicable double taxation treaty.

Luxembourg income tax on dividends and capital gains

Luxembourg Corporate Holders

Dividends received by Luxembourg Corporate Holders, are in principle, subject to income tax. However, such dividends may benefit, under
certain conditions from a full or 50% exemption.

Capital
gains realized by Luxembourg Corporate Holders are subject to income tax at ordinary rates, unless the conditions of the Grand Ducal Decree of December 21, 2001 (as
amended) are fulfilled.

Luxembourg Individual Holders

Dividends received by Luxembourg Individual Holders who act in the course of the management of either their private wealth or their
professional or business activity, are subject to income tax at the progressive ordinary rate (i.e. currently at a maximum rate of 38.95%). However, 50% of the gross amount of dividends
received by such holders may be exempt from income tax under the conditions of article 115 15. a. of the Luxembourg Income Tax Law ("LITL") .

Capital
gains realized on the sale of the shares by Luxembourg Individual Holders who act in the course of the management of their private wealth are only taxable, if the shares are sold
within six months after their acquisition or if the holder together with his/her spouse, life partner or minor children holds a direct or indirect participation exceeding 10% of the Company's share
capital at the date of the sale or during the 5 years preceding the date of the sale.

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Non-Luxembourg Individual Holders

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

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

Non-Luxembourg Corporate Holders

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

Dividends
received and capital gains realized on the sale of shares by Non-Luxembourg Corporate Holders, having a permanent establishment, fixed place of business or
permanent representative in Luxembourg are subject to income tax in Luxembourg. However, such dividends and gains may be exempt provided that the Luxembourg participation exemption conditions are met.

Furthermore,
the permanent establishment, fixed place of business or permanent representative of a Non-Luxembourg Corporate Holder may under certain conditions benefit from a
50% exemption on dividends received if the conditions of the Luxembourg participation exemption are not met.

Luxembourg Net Wealth Tax

Luxembourg imposes an annual Net Wealth Tax (hereafter: "NWT") of 0.5% on the net asset value of corporate taxpayers as of
January 1. The net asset value will be reduced by the value of substantial participations (as defined in § 60 of the NWT law). As from the year 2006 NWT has been abolished
for resident and non-resident individuals. In general Luxembourg resident companies subject to NWT are taxed on their worldwide net wealth (unless a double tax treaty provides for an
exemption). Luxembourg non-resident companies subject to NWT are only taxable on their Luxembourg wealth.

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Luxembourg inheritance and gift tax

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

Gift
tax may be due on a gift or donation of the Company's shares if embodied in a Luxembourg deed or otherwise registered in Luxembourg.

U.S. Federal Income Tax Considerations

The following is a discussion of certain U.S. federal income tax consequences of owning and disposing of Millicom shares by the U.S.
Holders described below, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a particular person's decision to hold Millicom shares. This
discussion does not address U.S. state, local and non-U.S. tax consequences. The discussion applies only to U.S. Holders who hold shares as capital assets for U.S. federal income tax
purposes and it does not address special classes of holders, such as:



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

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

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

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

Taxation of Distributions

Distributions received by a U.S. Holder on shares, including the amount of any Luxembourg taxes withheld, other than certain pro rata
distributions of shares to all shareholders, will constitute foreign source dividend income to the extent paid out of our current or accumulated earnings and profits (as determined for U.S. federal
income tax purposes). Because the Company does not maintain calculations of its earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be
reported to U.S. Holders as dividends. The amount of the dividend a U.S. Holder will be required to include in income will equal the U.S. dollar value of the euro, calculated by reference to the
exchange rate in effect on the date the payment is received by the holder, regardless of whether the payment is converted into U.S. dollars on the date of receipt. If the dividend is converted into
U.S. dollars on the date of receipt, a U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign
currency gain or loss if the amount of the dividend is not converted into U.S. dollars on the date of receipt. If a U.S. Holder realizes gain or loss on a sale or other disposition of euros, it will
be U.S. source ordinary income or loss. Corporate U.S. Holders will not be entitled to claim the dividends-received deduction with respect to dividends paid by the Company. Subject to applicable
limitations, dividends paid by certain "qualified foreign corporations" to certain non-corporate U.S. Holders in taxable years beginning before January 1, 2011 will be taxable at a
maximum rate of 15%. Millicom expects to be considered a qualified foreign corporation. Non-corporate U.S. Holders should consult their own tax advisors to determine whether they are
subject to any special rules that limit their ability to be taxed at this favorable rate.

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

Sale and Other Disposition of Shares

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

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Passive Foreign Investment Company Considerations

Millicom believes that it was not a PFIC for U.S. federal income tax purposes for its 2008 taxable year. In general, a
non-U.S. company will be considered a PFIC for U.S. federal income tax purposes for any taxable year in which (i) 75% or more of its gross income consists of passive income (such as
dividends, interest, rents and royalties) or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. As
PFIC status depends upon the composition of our income and assets and the market value of our assets (including, among other things, any equity investments in less than 25%-owned entities) from time
to time, there can be no assurance that Millicom will not be considered a PFIC for any taxable year. In particular, the market value of our assets may be determined in large part by the market price
of our shares, which is likely to fluctuate.

If
the Company were to be treated as a PFIC for any taxable year during which a U.S. Holder held shares, certain adverse U.S. federal income tax rules would apply on a sale or other
disposition (including certain pledges) of shares by the U.S. Holder. In general, under those rules, gain recognized by the U.S. Holder on a sale or other disposition of shares would be allocated
ratably over the U.S. Holder's holding period for the shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before Millicom became a PFIC would be taxed as
ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an
interest charge would be imposed on the amount allocated to each such taxable year. Further, the same rule would apply to any distribution in respect of shares in excess of 125% of the average of the
annual distributions on shares received by the U.S. Holder during the preceding three years or the U.S. Holder's holding period, whichever is shorter. Certain elections may be available that would
result in alternative treatments (such as a mark-to-market treatment) of the shares. U.S. Holders should consult their tax advisors to determine whether any such elections are
available and, if so, what the consequences of the alternative treatments would be in those holders' particular circumstances.

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

Information Reporting and Backup Withholding

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

Documents on Display

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

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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 generally arises from borrowings. Borrowings issued at floating rates expose the Group to cash flow interest
rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group's exposure to the risk for changes in market interest rates relates to both of the above. To
manage the risk, the Group's policy is to maintain a combination of fixed and floating rate debt in which neither category of debt falls below 25% of the total debt. The Group actively monitors its
borrowings to ensure the compliance with this policy. At December 31, 2008, approximately 26% of the Group's borrowings are at a fixed rate of interest (2007: 43%).

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

Amounts due within1 year

1 - 2 years

2 - 3 years

3 - 4 years

4 - 5 years

>5 years

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


108,815


5,209


754


774


454,246


1,398


571,196Average nominal interest rate


8.0
%

7.8
%

9.7
%

9.1
%

10.0
%

6.3
%

9.6
%Floating rate


387,729


200,841


334,352


313,519


263,749


86,640


1,586,830Average nominal interest rate


6.0
%

8.6
%

9.1
%

8.7
%

8.4
%

7.8
%

8.0
%Total


496,544


206,050


335,106


314,293


717,995


88,038


2,158,026Average nominal interest rate


6.4
%

8.6
%

9.1
%

8.7
%

9.4
%

7.8
%

8.4
%


The
table below summarizes, as at December 31, 2007, our fixed rate debt and floating rate debt:

Amounts due within1 year

1 - 2 years

2 - 3 years

3 - 4 years

4 - 5 years

>5 years

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


716,916


13,260


43,328


11,400


8,262


2,289


795,455Average nominal interest rate


8.5
%

8.5
%

8.6
%

8.6
%

8.6
%

6.3
%

8.5
%Floating rate


172,169


172,657


152,222


270,746


135,061


135,981


1,038,836Average nominal interest rate


10.8
%

9.9
%

8.4
%

9.5
%

9.9
%

9.5
%

9.7
%Total


889,085


185,917


195,550


282,146


143,323


138,270


1,834,291Average nominal interest rate


8.9
%

9.8
%

8.4
%

9.5
%

9.8
%

9.4
%

9.1
%


A one hundred basis point fall or rise in market interest rates for all currencies in which the group had borrowings at December 31, 2008,
would increase or reduce profit before tax for the year by approximately $16 million (2007: $10 million).

We
have not historically used interest rate swaps, forward rate agreements or other futures contracts but instead have mainly managed our interest exposure by diversifying our debt
between fixed and floating-rate loans. In the future, we 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.

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Foreign Currency Risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures where the Group
operates. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.

Millicom
seeks to reduce its foreign currency exposure through a policy of matching, as far as possible, assets and liabilities denominated in foreign currencies. In some cases, Millicom
may borrow in US dollars because it is either advantageous for joint ventures and subsidiaries to incur debt obligations in US dollars or because US dollar denominated borrowing is the only funding
source available to a joint venture or subsidiary. In these circumstances, Millicom has currently decided to accept the remaining currency risk associated with the financing of its joint ventures and
subsidiaries, principally because of the relatively high cost of forward cover, when available, in the currencies in which the Group operates.

Millicom
had a net exchange loss of $56 million for the year ended December 31, 2008, compared to a gain of $15 million for the year ended December 31, 2007.

To
some extent, the broad mix of currencies in which we conduct our businesses and the geographic spread of our operations provide us with some measure of protection against specific
exchange rate movements and reduces the overall sensitivity of our results to specific exchange rate fluctuations. We do not generally hedge our foreign currency exposure mainly by lack of available
instruments in the currencies we trade into.

The
following table summarizes our debt detailing the balances at December 31, 2008 and 2007, that were denominated in US$ and in other local currencies.

2008

2007US$ '000

US$ '000US$


1,466,494


1,226,332Colombia


456,356


435,615Honduras


48,199


41,352Senegal


58,309


62,557Sri Lanka


37,007


48,016Tanzania


74,536


5,516Others


17,125


14,903Total local currency


691,532


607,959Total


2,158,026


1,834,291


ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable for Annual Report filing.

107

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Table of Contents

PART II

ITEM 13.    DEFAULTS, DIVIDENDS ARREARAGES AND DELINQUENCIES

Not applicable.

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

Not applicable.

ITEM 15.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of December 31, 2008, the Group, under the supervision and with the participation of the Group's management, including the
Chief Executive Officer and the Chief Financial Officer, performed an evaluation of the effectiveness of the Group's disclosure controls and procedures. The Group's disclosure controls and procedures
are designed to ensure that information required to be disclosed under the Securities Exchange Act of 1934 is accumulated and communicated to the Group's management to allow timely decisions regarding
required disclosures. The Group's management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature can provide only reasonable
assurance regarding management's control objectives. Based on this evaluation, the Group's Chief Executive Officer and the Chief Financial Officer concluded that as at December 31, 2008 the
Group's disclosure controls and procedures are effective at the reasonable assurance level for recording, processing, summarizing and reporting the information the Group is required to disclose in the
reports it files under the Securities Exchange Act of 1934 within the time periods specified in the SEC's rules and forms.

Management's annual report on internal control over financial reporting

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

Changes in internal control over financial reporting

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

Attestation report of the registered public accounting firm

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

ITEM 16A.    AUDIT COMMITTEE FINANCIAL EXPERT

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

108

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Table of Contents

ITEM 16B.    CODE OF ETHICS

Millicom has adopted a Code of Ethics applicable to all Millicom's employees and to Directors. The text of this code is available free
of charge upon written request addressed to: General Counsel, Millicom International Cellular S.A., 15 rue Leon Laval, L-3372 Leudelange, Grand-Duchy of Luxembourg, fax: +352
27 759 353. Millicom will make its Code of Ethics available in 2009 on its website www.millicom.com.

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, 2008 and 2007.

2008

2007US$ '000

US$ '000Audit Fees


4,276


3,801Audit-Related Fees


15


14Tax Fees


52


54All Other Fees


5


12Total


4,348


3,881


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

Audit Committee Pre-approval Policies

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

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

Not applicable.

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

Not applicable.

ITEM 16F.    CHANGES IN CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G.    SIGNIFICANT DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES

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



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

109

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Table of Contents

PART III

ITEM 17.    FINANCIAL STATEMENTS

Not applicable.

ITEM 18.    FINANCIAL STATEMENTS

See pages F-1 through F-66.

ITEM 19.    EXHIBITS

| |      |  |                                                                                                                                                                                                                                                                                                                                      
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.1  |  | Articles of Association of Millicom International Cellular S.A.                                                                                                                                                                                                                                                                      
| | 2.1  |  | Indenture, dated January 7, 2005 between Millicom International Cellular S.A. and The Bank of New York, as Trustee.*                                                                                                                                                                                                                 
| | 2.2  |  | Indenture, dated as of November 24, 2003 between Millicom International Cellular S.A. and The Bank of New York, as Trustee, as amended (incorporated by reference to Exhibits 4.1 and 4.3 of the Company's
registration statement on Form F-4 (File No. 333-112948) filed on February 19, 2004 and January 31, 2005, respectively).**
| | 12.1 |  | Certification of Mikael Grahne required by Securities Exchange Act of 1934, as amended ("Exchange Act"), Rule 13a 14(a).                                                                                                                                                                                                             
| | 12.2 |  | Certification of Francois-Xavier Roger required by Exchange Act Rule 13a 14(a).                                                                                                                                                                                                                                                      
| | 13.1 |  | Certification of Mikael Grahne required by Exchange Act Rule 13a 14(b).                                                                                                                                                                                                                                                              
| | 13.2 |  | Certification of Francois-Xavier Roger required by Exchange Act Rule 13a 14(b).                                                                                                                                                                                                                                                      

---

110

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Table of Contents

SIGNATURES

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

Dated: March 24, 2009

MILLICOMINTERNATIONALCELLULARS.A.By:

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

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


111

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Table of Contents

INDEX TO FINANCIAL STATEMENTS



Audited Consolidated Financial Statements of Millicom and its Subsidiaries for the Years Ended December 31, 2008, 2007 and
2006Management's Report on Internal Control Over Financial Reporting

F-2Report of Independent Registered Public Accounting Firm

F-3Consolidated Statements of Profit and Loss for the Years ended December 31, 2008, 2007 and
2006

F-5Consolidated Balance Sheets as of December 31, 2008 and 2007

F-6Consolidated Statements of Cash Flows for the Years ended December 31, 2008, 2007 and
2006

F-8Consolidated Statements of Changes in Equity for the Years ended December 31, 2008, 2007 and
2006

F-9Notes to the Consolidated Financial Statements

F-11


F-1

---



Table of Contents



Management's Report on Internal Control Over Financial Reporting

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

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

Management
has assessed the effectiveness of Millicom International Cellular S.A. internal control over financial reporting as of December 31, 2008. In making its
assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal ControlIntegrated Framework. Management
concluded that based on its assessment, Millicom International Cellular S.A. internal control over financial reporting was effective as of December 31, 2008.

Management's
assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal control of Amnet Telecommunications Holding Ltd,
Continental Programming Services Ltd, Teleservicios Centroamericanos Ltda and its subsidiaries, a group acquired in October 2008, which is included in the 2008 consolidated financial statements of
Millicom International Cellular S.A. and represented total assets of $739 million at December 31, 2008 and $43 million of revenues for the period from the acquisition in
October 2008 to December 31, 2008.

PricewaterhouseCoopers
S.à.r.l has issued an unqualified report on our 2008 financial statements as a result of the audit and also has issued an unqualified report on our
internal control over financial reporting which is attached hereto.

March 24, 2009

By:

/s/ MIKAEL GRAHNEName:

Mikael GrahneTitle:

Chief Executive OfficerBy:

/s/ FRANCOIS XAVIER ROGERName:

Francois Xavier RogerTitle:

Chief Financial Officer


F-2

---



Table of Contents



Report of Independent Registered Public Accounting Firm

To
the Shareholders of
Millicom International Cellular S.A.

In
our opinion, the accompanying consolidated balance sheets and the related consolidated statements of profit and loss, changes in shareholders' equity and cash flows present fairly, in
all material respects, the financial position of Millicom International Cellular S.A. (the "Company") and its subsidiaries (together the "MIC Group") at December 31, 2008 and 2007, and
the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 in conformity with International Financial Reporting Standards as issued
by the International Accounting Standards Board and in conformity with International Financial Reporting Standards as adopted by the European Union. Also in our opinion, the MIC Group maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal ControlIntegrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's Board of Directors is responsible for these financial statements, for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in "Management's Report on Internal Control Over Financial Reporting"
appearing on page F-2. Our responsibility is to express opinions on these financial statements and on the MIC Group's internal control over financial reporting based on our
integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all
material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.

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

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

F-3

---



Table of Contents

As
described in "Management's Report on Internal Control Over Financial Reporting", management has excluded Amnet Telecommunications Holdings Ltd, a limited liability company
organized under the laws of Bermuda, Continental Programming Services Ltd, a limited liability company organized under the laws of Bermuda, and Teleservicios Centroamericanos Ltda, a
limited liability company organized under the laws of El Salvador, and their subsidiaries (together "Amnet") from its assessment of internal control over financial reporting as of December 31,
2008 because it was acquired by MIC Group in a purchase business combination in October 2008. We have also excluded Amnet from our audit of internal control over financial reporting. Amnet is a
wholly-owned group of companies whose total assets and total revenues represent $739 million and $43 million, respectively, of the related consolidated financial statement amounts as of
and for the year ended December 31, 2008.

|                                                       |  |                           
|------------------------------------------------------ |  | --------------------------
|
|PricewaterhouseCoopers S.à r.l.
Réviseur d'entreprises |  | Luxembourg, March 24, 2009

F-4

---



Table of Contents



Millicom International Cellular S.A.

Consolidated statements of profit and loss
for the years ended December 31, 2008, 2007 and 2006

Notes

2008

2007(i)

2006(i)US$ '000

US$ '000

US$ '000Revenues


9


3,412,380


2,623,854


1,570,086Cost of sales





(1,255,077
)

(973,560
)

(609,888
)Gross profit





2,157,303


1,650,294


960,198Sales and marketing





(690,698
)

(486,779
)

(245,826
)General and administrative expenses





(537,884
)

(418,863
)

(240,936
)Other operating expenses





(61,438
)

(72,949
)

(37,613
)Other operating income











4,036Gain from sale of subsidiaries and joint ventures, net


5








8,099Operating profit


9, 10


867,283


671,703


447,958Interest expense





(149,111
)

(190,410
)

(120,510
)Interest and other financial income





32,922


56,378


36,383Other non operating (expenses) income, net


12


(55,593
)

10,213


(1,145
)Profit from associates


17


8,706


4,400


1,483Profit before tax from continuing operations





704,207


552,284


364,169Charge for taxes


13


(277,369
)

(87,198
)

(117,587
)Profit for the year from continuing operations





426,838


465,086


246,582(Loss)/profit for the year from discontinued operations, net of tax


6


(22,397
)

245,898


(86,599
)Net profit for the year





404,441


710,984


159,983Attributable to:Equity holders of the company





517,516


697,142


168,947Minority interest





(113,075
)

13,842


(8,964
)404,441


710,984


159,983Earnings per share for the year


14(expressed in US$ per common share)Basicprofit from continuing operations attributable to equity holders





5.01


4.46


2.55(loss) profit from discontinued operations attributable to equity holders





(0.21
)

2.44


(0.87
)profit for the year attributable to equity holders





4.80


6.90


1.68Dilutedprofit from continuing operations attributable to equity holders





4.98


4.33


2.52(loss) profit from discontinued operations attributable to equity holders





(0.21
)

2.28


(0.85
)profit for the year attributable to equity holders





4.77


6.61


1.67




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

F-5

---



Table of Contents



Millicom International Cellular S.A.

Consolidated balance sheets
as of December 31, 2008 and 2007

Notes

2008

2007US$ '000

US$ '000ASSETSNON-CURRENT ASSETSIntangible assets, net


15


990,350


467,502Property, plant and equipment, net


16


2,787,224


2,066,122Investments in associates


17


21,087


11,234Deferred taxation


13


14,221


97,544Other non-current assets





23,195


19,855TOTAL NON-CURRENT ASSETS





3,836,077


2,662,257CURRENT ASSETSInventories





58,162


82,893Trade receivables, net


18


257,455


223,579Amounts due from joint venture partners





40,228


65,348Prepayments and accrued income





82,303


71,175Current tax assets





21,597


8,982Supplier advances for capital expenditure





142,369


76,514Other current assets


19


87,859


48,481Cash and cash equivalents


20


674,195


1,174,597TOTAL CURRENT ASSETS





1,364,168


1,751,569Assets held for sale


6


20,563


TOTAL ASSETS





5,220,808


4,413,826


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

F-6

---



Table of Contents

Millicom International Cellular S.A.

Consolidated balance sheets
as of December 31, 2008 and 2007 (Continued)

Notes

2008

2007US$ '000

US$ '000EQUITY AND LIABILITIESEQUITYShare capital and premium


21


642,544


417,352Other reserves


23


(47,174
)

45,557Retained profits





565,032


127,856Profit for the year attributable to equity holders





517,516


697,1421,677,918


1,287,907Minority interest





(25,841
)

80,429TOTAL EQUITY





1,652,077


1,368,336LIABILITIESNon-current LiabilitiesDebt and other financing10% Senior Notes


24


453,471


Other debt and financing


24


1,208,012


945,206Provisions and other non-current liabilities


25


70,008


55,601Deferred taxation


13


81,063


42,414Total non-current liabilities





1,812,554


1,043,221Current LiabilitiesDebt and other financing10% Senior Notes


24





479,8264% Convertible NotesDebt component


24





178,940Other debt and financing


24


496,543


230,319Payables and accruals for the purchase of property, plant and equipment





501,978


460,533Other trade payables(i)





240,576


226,292Amounts due to joint venture partners





49,921


60,914Accrued interest and other expenses





159,539


128,426Current tax liabilities





93,416


82,028Provisions and other current liabilities(i)


25


207,106


154,991Total current liabilities





1,749,079


2,002,269Liabilities directly associated with assets held for sale


6


7,098


TOTAL LIABILITIES





3,568,731


3,045,490TOTAL EQUITY AND LIABILITIES





5,220,808


4,413,826




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

F-7

---



Table of Contents



Millicom International Cellular S.A.

Consolidated statements of cash flows
for the years ended December 31, 2008, 2007 and 2006

Notes

2008

2007(i)

2006(i)US$ '000

US$ '000

US$ '000Cash flows from operating activitiesProfit before taxes from continuing operations





704,207


552,284


364,169AdjustmentsInterest expense





149,111


190,410


120,510Interest and other financial income





(32,922
)

(56,378
)

(36,383
)Other non operating expenses (income), net


12


55,593


(10,213
)

1,145Profit from associates


17


(8,706
)

(4,400
)

(1,483
)Operating profit





867,283


671,703


447,958Adjustments for non-cash items:Depreciation and amortization


9,10,15,16


515,908


351,500


227,236Loss on disposal and impairment of property, plant and equipment


10


9,384


3,737


1,861Reduction of goodwill


10, 15





23,358


Gain from sale of subsidiaries and joint ventures, net


5, 10








(8,099
)Share-based compensation


22


13,619


19,228


12,850Other non cash items








1,000


1,406,194


1,070,526


681,806Increase in trade receivables, prepayments and other current assets





(10,935
)

(24,046
)

(34,887
)Decrease (increase) in inventories





24,648


(25,126
)

(22,284
)Increase in trade and other payables





47,905


94,003


73,019Changes to working capital





61,618


44,831


15,848Interest expense paid





(150,523
)

(156,628
)

(112,527
)Interest received





33,852


55,830


29,075Taxes paid





(204,605
)

(164,881
)

(99,601
)Net cash provided by operating activities





1,146,536


849,678


514,601Cash flows from investing activitiesAcquisition of subsidiaries and JV, net of cash acquired


4


(532,181
)




(34,768
)Proceeds from disposal of subsidiaries and JV, net of cash disposed


5








(958
)Purchase of intangible assets and license renewals


15


(114,216
)

(25,816
)

(40,469
)Purchase of property, plant and equipment


16


(1,292,486
)

(850,600
)

(439,462
)Proceeds from sale of property, plant and equipment





19,842


3,853


Cash provided by other investing activities





19,694


36,777


12,327Net cash used by investing activities





(1,899,347
)

(835,786
)

(503,330
)Cash flows from financing activities:Proceeds from issuance of shares





3,179


33,626


14,227Proceeds from issuance of debt and other financing





1,206,607


545,351


308,785Repayment of debt and financing





(664,294
)

(315,955
)

(191,430
)Payment of dividends





(259,704
)

(18,286
)

(4,873
)Net cash provided by financing activities





285,788


244,736


126,709Transfer of cash to assets held for sale





(521
)




(7,135
)Cash (used) provided by discontinued operations


6


(23,776
)

251,209


(73,289
)Exchange (losses) gains on cash and cash equivalents





(9,082
)

8,068


2,569Net (decrease) increase in cash and cash equivalents





(500,402
)

517,905


60,125Cash and cash equivalents at the beginning of the year





1,174,597


656,692


596,567Cash and cash equivalents at the end of the year





674,195


1,174,597


656,692




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

F-8

---



Table of Contents



Millicom International Cellular S.A.

Consolidated statements of changes in equity
for the years ended December 31, 2008, 2007 and 2006

Attributable to equity holdersNumber
of Shares

Number
of shares
held
by the
Group

Share
Capital(i)

Share
Premium(i)

Treasury
shares

Retained
profits/
(accumulated
losses)(ii)

Other
reserves(iii)

Total

Minority
interest

Total
equity'000

'000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000Balance as of January 1, 2006


99,704


(655
)

149,555


315,602


(8,833
)

(141,502
)

(15,217
)

299,605


34,179


333,784Profit for the year

















168,947





168,947


(8,964
)

159,983Dividends paid to minority shareholders


























(4,873
)

(4,873
)Shares issued via the exercise of share options


913


655


1,369


5,574


8,833





(1,549
)

14,227





14,227Minority interest following acquisition of subsidiaries


























52,500


52,500Share based compensation(iv)


67





101


2,262








10,487


12,850





12,850Transfer to accumulated losses











(101,937
)




101,937











Fair value adjustment on financial assets




















(3,308
)

(3,308
)




(3,308
)Currency translation differences




















12,553


12,553


4,672


17,225Balance as of December 31, 2006


100,684





151,025


221,501





129,382


2,966


504,874


77,514


582,388Profit for the year

















697,142





697,142


13,842


710,984Dividends paid to minority shareholders


























(18,286
)

(18,286
)Shares issued via the exercise of share options


1,626





2,440


34,186








(3,838
)

32,788





32,788Shares issued as payment of bonuses(vi)


13





20


980











1,000





1,000Share based compensation(iv)


9





14


741








18,473


19,228





19,228Issuance of shares2006 LTIP(iii)


58





87


4,436








(4,523
)







Issuance of shares(vii)


9





14


824











838





838Conversion of part of the 4% Convertible Notes(v)


29





43


1,041








(196
)

888





888Transfer to legal reserve

















(1,526
)

1,526








Currency translation differences




















31,149


31,149


7,359


38,508Balance as of December 31, 2007


102,428





153,643


263,709





824,998


45,557


1,287,907


80,429


1,368,336


F-9

---



Table of Contents

Millicom International Cellular S.A.

Consolidated statements of changes in equity
for the years ended December 31, 2008, 2007 and 2006 (Continued)

Attributable to equity holdersNumber
of
Shares

Number
of shares
held
by the
Group

Share
Capital(i)

Share
Premium(i)

Treasury
shares

Retained
Profits(ii)

Other
reserves(iii)

Total

Minority
interest(viii)

Total
equity'000

'000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000Balance as of December 31, 2007


102,428





153,643


263,709





824,998


45,557


1,287,907


80,429


1,368,336Profit for the year

















517,516





517,516


(113,075
)

404,441Dividends paid to shareholders

















(259,704
)




(259,704
)




(259,704
)Shares issued via the exercise of share options


169





252


3,894








(937
)

3,209





3,209Shares issued as payment of bonuses(vi)


11





17


1,208











1,225





1,225Share based compensation(iv)




















11,666


11,666





11,666Issuance of shares(vii)


9





14


1,025











1,039





1,039Issuance of shares2006 LTIP(iii)


52





76


3,887








(3,963
)







Directors shares(iv)


6





10


717











727





727Conversion of the 4% Convertible Notes(v)


5,622





8,434


205,658








(38,913
)

175,179





175,179Transfer to legal reserve

















(262
)

262








Currency translation differences




















(60,846
)

(60,846
)

6,805


(54,041
)Balance as of December 31, 2008


108,297





162,446


480,098





1,082,548


(47,174
)

1,677,918


(25,841
)

1,652,077




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

F-10

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Table of Contents



Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006

1. CORPORATE INFORMATION

Millicom International Cellular S.A. (the "Company"), a Luxembourg Société Anonyme, and its subsidiaries, joint ventures and associates (the "Group"
or "Millicom") is a global telecommunications group with mobile telephony operations in the world's emerging markets. It also operates cable and broadband businesses in five countries in Central
America. The Group was formed in December 1990 when Investment AB Kinnevik ("Kinnevik"), formerly named Industriförvaltnings AB Kinnevik, a company established in Sweden, and Millicom
Incorporated ("Millicom Inc."), a corporation established in the United States of America, contributed their respective interests in international mobile joint ventures to form the Group.

As
of December 31, 2008, Millicom had 16 mobile operations in 16 countries focusing on emerging markets in Central America, South America, Africa and Asia. Millicom operates its
mobile businesses in El Salvador, Guatemala and Honduras in Central America; in Bolivia, Colombia and Paraguay in South America; in Chad, the Democratic Republic of Congo, Ghana, Mauritius, Senegal,
Sierra Leone and Tanzania in Africa; and in Cambodia, Laos and Sri Lanka in Asia.

In
2008, Millicom acquired 100% interest in Amnet Telecommunications Holding Limited (see note 4), provider of broadband and cable television services in Costa Rica, Honduras and
El Salvador, of fixed telephony in El Salvador and Honduras, and of corporate data services in the above countries as well as Guatemala and Nicaragua. In addition, in December 2008 Millicom was
successful in the tender for the third national mobile license in Rwanda.

The
Company's shares are traded on the NASDAQ National Market under the symbol MICC and on the Stockholm stock exchange under the symbol MIC. The Company has its registered office at
15, Rue Léon Laval, L-3372, Leudelange, Grand-Duchy of Luxembourg and is registered with the Luxembourg Register of Commerce under the number RCS B
40 630.

The
Board of Directors approved these consolidated financial statements on March 24, 2009. The consolidated financial statements will be ratified by the Annual General Meeting.

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES

2.1    Basis of preparation

The consolidated financial statements of the Group are presented in US dollars and all values are rounded to the nearest thousand
($000) except when otherwise indicated. The consolidated financial statements have been prepared on a historical cost basis except for certain financial assets and liabilities that have been measured
at fair value.

In
accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards, the
consolidated financial statements for the year ended December 31, 2008 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

F-11

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

As
of December 31, 2008, International Financial Reporting Standards as adopted by the European Union are similar to those published by the International Accounting Standards
Board ("IASB"), except for IAS 39Financial Instrumentsthat has been partially adopted by the European Union, for
IFRIC 12Service Concession Arragementsthat has not been endorsed by the European Union and for new standards and interpretations
that will be effective in future periods. Since the provisions that have not been adopted by the European Union are not applicable to the Group, the consolidated financial statements comply with both
International Financial Reporting Standards as adopted by the European Union and International Financial Reporting Standards as issued by the IASB.

The
preparation of financial statements in conformity with International Financial Reporting Standards ("IFRS") requires management to exercise its judgment in the process of applying
the Group's accounting policies. It also requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on
management's best knowledge of current events and actions, actual results ultimately may differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 3.

2.2    Consolidation

The consolidated financial statements of the Group are comprised of the financial statements of the Company and its subsidiaries and
joint ventures as at 31 December each year. The financial statements of the subsidiaries and joint ventures are prepared for the same reporting year as the Company, using consistent accounting
policies.

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

Subsidiaries

Subsidiaries are those entities including Special Purpose Entities over which the Group has the power to govern the financial and
operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are presently exercisable or presently
convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and continue to be
consolidated until the date that control ceases.

The
acquisition 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, equity
instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets, liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair values at the acquisition date, irrespective of any minority interest. The excess of the cost of acquisition over the fair value of the
Group's share of identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the Group's share of identifiable net assets of the subsidiary
acquired, the difference is recognised directly to the consolidated statements of profit and loss (see accounting policy for Goodwill).

F-12

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

Minority interests

The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group.
Disposals to minority interests result in gains and losses for the Group that are recorded in the consolidated statements of profit and loss. Purchases from minority interests result in goodwill,
being the difference between any consideration paid and the carrying value of the relevant share acquired of the net assets of the subsidiary.

Joint ventures

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

Entities
that are jointly controlled are consolidated using the proportionate method which only includes the Group's share of the assets, liabilities, income and expenses of the joint
ventures in which the Group has an interest in the consolidated financial statements.

The
Group recognizes the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other parties in the joint venture. The Group does
not recognise its share of profits or losses that results from the purchase of assets by the Group from the joint venture until it resells the assets to an independent party. However, if a loss on the
transaction provides evidence of a reduction in the net realizable value of current assets or an impairment loss, the loss is recognised immediately.

Associates

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

Investments
in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group's investment in associates includes goodwill (net of any
accumulated impairment loss) identified on acquisition.

The
Group's share of the post-acquisition profits or losses of associates is recognised in the consolidated statements of profit and loss, and its share of
post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the
Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless the Group has
incurred obligations or made payments on behalf of the associates.

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

F-13

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

2.3    Foreign currency translation

Functional and presentation currencies

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic
environment in which the entity operates ("the functional currency"). The functional currency of each subsidiary, joint venture and associates reflects the economic substance of the underlying events
and circumstances of these entities. The Company is located in Luxembourg and its subsidiaries, joint ventures and associates operate in different currencies. The Group's consolidated financial
statements are presented in U.S. dollar (the "presentation currency"). The functional currency of the Company is the U.S. dollar because of the significant influence of the U.S. dollar on its
operations.

Transactions and balances

Transactions denominated in a currency other than the functional currency are translated into the functional currency using the
exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end
exchange rates of monetary assets and liabilities denominated in currencies other than the functional currency are recognised in the consolidated statements of profit and loss, except when deferred in
equity as qualifying cash flow hedges and qualifying net investment hedges.

Translation
differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss if applicable. Translation differences on
non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in the consolidated statements of profit and loss as part of the
fair value gain or loss. Translation differences on non-monetary financial assets such as investments classified as available for sale are included in the fair value reserve in equity.

Translation into presentation currency

The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are translated into the presentation currency as follows:



F-14

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)



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

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

The
following is a table of the principal currency translation rates to the U.S. dollar as of December 31, 2008 and 2007 and the average rates for the year ended
December 31, 2008.

Country

Currency

2008
Average rate

2008
Year-end rate

2007
Year-end rateBolivia

Boliviano


7.25


7.03


7.64Chad

CFA Franc


448.70


471.84


448.66Colombia

Peso


1,994.75


2,249.50


2,017.23Costa Rica

Colon Costa Rica


528.26


555.47


Ghana

Cedi


1.09


1.27


0.97Guatemala

Quetzal


7.59


7.78


7.66Honduras

Lempira


18.90


18.90


18.90Laos

Kip


8,871.62


8,600.00


9,459.00Luxembourg

Euro


0.68


0.72


0.69Mauritius

Rupee


28.41


31.62


28.48Nicaragua

Gold Cordoba


19.41


19.85


Paraguay

Guarani


4,373.46


4,885.00


4,750.01Senegal

CFA Franc


448.70


471.84


448.66Sierra Leone

Leone


2,983.24


3,042.23


2,977.59Sri Lanka

Rupee


108.65


113.00


108.65Sweden

Krona


6.63


7.86


6.47Tanzania

Shilling


1,203.62


1,317.50


1,153.99


The
effect of exchange rate changes on cash and cash equivalents held or due in a foreign currency is reported in the cash flow statement in order to reconcile cash and cash equivalents
at the beginning and end of the year.

2.4    Segment Reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns
that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and
returns that are different from those of segments operating in other economic environments (see note 9).

F-15

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

2.5    Property, plant and equipment

Property, plant and equipment is stated at cost, less accumulated depreciation and accumulated impairment in value. Depreciation is
calculated using the straight-line method over the shorter of the estimated useful life of the asset and the remaining life of the license associated with the assets, unless the renewal of
the license is contractually possible and is expected without significant cost. All repairs and maintenance expenditures are expensed as incurred.

Estimated
useful lives are:

Buildings

40 years or life of lease if lowerNetworks (including civil works)

5 to 15 yearsOther

2 to 7 years


The
carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The
assets' residual value and useful life is reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the
asset's carrying amount is greater than its estimated recoverable amount.

Construction
in progress consists of the cost of assets, labour and other direct costs associated with property, plant and equipment being constructed by the Group. Once the assets
become operational, the related costs are transferred from construction in progress to the appropriate asset category and start to be depreciated.

Subsequent
costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the consolidated statements of profit and loss during the financial
period in which they are incurred.

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

Borrowing
costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of that asset when it is probable that such
costs will result in future economic benefits for the Group and the costs can be measured reliably.

F-16

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

2.6    Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business
combination is fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.
Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is charged to the income statement in the year in which expenditure is incurred.
Intangible assets are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the
amortisation method for an intangible asset with finite useful life is reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The
amortisation expense on intangible assets with finite lives is recognised in the consolidated statements of profit and loss in the expense category consistent with the function of the intangible
assets.

Goodwill

Goodwill represents the excess of cost of an acquisition over the Group's share in the fair value of the identifiable assets less the
liabilities and contingent liabilities of the acquired subsidiary, joint venture or associate at the date of transaction. If the fair value of the identifiable assets, liabilities or contingent
liabilities or the cost of the acquisition can be determined only provisionally, then Millicom initially accounts for the goodwill using these provisional values. Within twelve months of the
acquisition date, Millicom then recognises any adjustments to these provisional values once the fair value of the identifiable assets, liabilities and contingent liabilities and the cost of the
acquisition have been finally determined. Adjustments to the provisional fair values are made as if the adjusted fair values had been recognised from the acquisition date. Goodwill on acquisition of
subsidiaries and joint ventures is included in "intangible assets, net". Goodwill on acquisition of associates is included in "investments in associates". Following initial recognition, goodwill is
measured at cost less any accumulated impairment losses. Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

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

For
the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date, allocated to each of the Group's cash generating units or groups of
cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or
groups of units. Each unit or group of units to which the goodwill is so allocated:



F-17

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)



Impairment
is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units), to which the goodwill relates. Where
the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. Where goodwill forms
part of a cash-generating unit (group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed
of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative
values of the operation disposed and the portion of the cash-generating unit retained. Impairment losses related to goodwill cannot be reversed in future periods.

Licenses

Licences are shown at historical cost unless acquired in a business combination where the cost is the fair value as at the date of
acquisition. Licenses have a finite useful life and are carried at cost less accumulated amortization and any accumulated impairment losses. Amortisation is calculated using the
straight-line method to allocate the cost of the licenses over their estimated useful lives.

The
terms of the licenses, which have been awarded for various periods, are subject to periodic review for, amongst other things, rate setting, frequency allocation and technical
standards. Licenses are initially measured at cost and are amortised from the date the network is available for use using the straight-line basis over periods of 5 to 20 years
depending on the term of the license. Licenses held, subject to certain conditions, are usually renewable and are generally non-exclusive. When determining the useful life of the licenses,
management usually does not consider renewal periods since there is no guarantee that the license will be renewed without significant cost (or at no cost). Under the terms of the respective licenses,
the joint ventures and subsidiaries are generally entitled to enter into interconnection agreements with operators of both landline and other mobile networks.

Trademarks and subscriber bases

Trademarks and subscriber bases are recognised as intangible assets only when acquired in business combinations or ownership increase
transactions in joint ventures. Their cost corresponds to the fair value as at the date of acquisition. Trademarks and subscriber bases have a finite useful life and are carried at cost less
accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of the trademarks and subscriber bases over their estimated useful lives. The
estimated useful life for trademarks and subscriber bases are based on the specifications of the market in which they exist. Trademarks and subscriber bases are recorded under the caption "Intangible
assets, net".

F-18

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

2.7    Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists,
or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. The Group determines the recoverable amount based on the higher of its fair
value less cost to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Where no comparable market
information is available, the fair value less cost to sell is determined based on the estimated future cash flows discounted to their present value using a discount rate that reflects current market
conditions of the time value of money and the risk specific to the asset. In addition to the evaluation of possible impairment to the assets carrying value, the foregoing analysis also evaluates the
appropriateness of the expected useful lives of the assets. Impairment losses of continuing operations are recognised in the consolidated statements of profit and loss in those expense categories
consistent with the function of the impaired asset.

An
assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. Other than for goodwill, a previously recognised impairment loss is reversed if there has been a change in the estimate used to determine the
asset's recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. The increased amount cannot
exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss.
After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful
life.

2.8    Other assets

Other assets include financial assets at fair value through profit or loss, loans and receivables, held to maturity investments or
available for sale financial assets, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit
or loss, directly attributable costs. Millicom determines the classification of its financial assets upon initial recognition and, where allowed and appropriate, re-evaluates this
designation at each financial year-end.

All
regular purchases and sales of financial assets are recognised on the trade date, the date on which the Group commits to purchase or sell the asset. Investments are derecognised when
the rights to receive the cash flows from the investment have expired or have been transferred and the Group has transferred substantially all the risks and rewards.

F-19

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in income when the loans and receivables are derecognised or impaired, as
well as through the amortisation process.

Financial assets at fair value through profit or loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so
designated as such by management. Derivatives are also included in this category unless they are designated as hedges. Assets in this category are classified as current assets if they are either held
for trading or are expected to be realised within 12 months of the balance sheet date.

Held to maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held to maturity
when Millicom has the intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Investments that are intended to be
held to maturity are measured at amortised cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective
interest method of any difference between the initially recognised amount and the maturity amount. For investments carried at amortised cost, gains and losses are recognised in income when the
investments are derecognised or impaired, as well as through the amortisation process.

Available for sale financial assets

Available for sale financial assets are those non-derivative financial assets that are designated as available for sale or
are not classified in any of the three preceding categories. After initial recognition, available for sale financial assets are measured at fair value with gains or losses being recognised as a
separate component of equity until the investment is derecognised or until the investment is determined to be impaired at which time the cumulative gain or loss previously reported in equity is
included in the consolidated statement of profit and loss.

The
fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market prices at the close of business on the balance sheet
date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm's length market transactions, reference to the
current market value of a substantially similar instrument, discounted cash flow analysis and option pricing models.

F-20

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

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

Non-current assets (or disposal groups) are classified as assets held for sale and stated at the lower of carrying amount
and fair value less costs to sell if their carrying amount is expected to be recovered principally through a sale transaction rather than through continuing use. The liabilities of disposal groups are
classified as "Liabilities directly associated with assets held for sale".

2.10    Inventories

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

2.11    Trade receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment. A provision for impairment of trade receivable is established when there is objective evidence that the Group will not be able to collect all amounts due
according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or
delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of
estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the consolidated statements of profit and loss within "Cost of sales".

2.12    Time deposits

Cash deposits with banks with maturities of more than 3 months that generally earn interest at market rates are classified as
time deposits.

2.13    Cash and cash equivalents

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

2.14    Derivative financial instruments

Derivatives are initially recorded at cost and then re-measured to fair value through the consolidated statements of profit
and loss.

A
derivative embedded in a financial instrument 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 unrealised gains and losses reported in the statements of profit and loss.

F-21

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

2.15    Impairment of financial assets

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets
is impaired. Impairment losses recognised in the consolidated statements of profit and loss on equity instruments are not reversed through the consolidated statements of profit and loss.

2.16    Share capital

Common shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction from the proceeds.

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

2.17    Borrowings and borrowing costs

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statements of profit and loss over the period of the borrowing using the
effective interest method.

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

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

Borrowing
costs which are not capitalised are recognised as an expense when incurred.

2.18    Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an
assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

Finance
leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair
value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.

F-22

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

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

Operating
lease payments are recognised as an expense in the consolidated statements of profit and loss on a straight-line basis over the lease term.

2.19    Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, if it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects
some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current
pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as an
interest expense.

2.20    Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortized cost using the effective interest method
where the effect of the passage of time is material.

2.21    Revenue recognition

Revenue comprises the fair value of consideration received or receivable for the sale of goods and services, net of value added tax,
rebates and discounts and after eliminating sales within the Group.

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

Revenues from provision of telecom services

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

Subscription
products and services are deferred and amortised over the estimated life of the customer relationship. Related costs are also deferred, to the extent of the revenues
deferred, and amortised over the estimated life of the customer relationship. The estimated life of the customer relationship is calculated based on the percentage of disconnections for the same type
of customer which has occurred historically.

F-23

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

Prepayments

Prepayments allow the forward purchase of a specified amount of airtime by customers. Revenues are recognised as credit is used.
Unutilised airtime is carried in the balance sheet and is included under deferred revenue within "other current liabilities".

Value added services

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

Equipment revenues

These revenues consist of the sale of handsets and accessories on a stand alone basis (if sold with other services, multiple element
arrangements accounting would then apply). Revenue is recognised when the significant risks and rewards of ownership of handsets and accessories have been passed to the buyer.

Multiple-element arrangements

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

2.22    Cost of sales

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

Cost
of sales also includes the depreciation and impairment of network equipment.

2.23    Customer acquisition costs

Specific customer acquisition costs, including dealer commissions and handset subsidies, are charged to sales and marketing when the
subscriber is activated.

2.24    Employee benefits

Pension obligations

Pension obligations can result from either a defined contribution plan or a defined benefit plan.

F-24

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

A
defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Millicom has no further payment obligations once the contributions
have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the
future payments is available.

A
defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit pension plans define an amount of pension benefit that an employee will
receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognised in the balance sheet in respect of the defined benefit pension
plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past
service costs. The defined benefit obligation is calculated annually by independent actuaries. The present value of the defined benefit obligation is determined by discounting the estimated future
cash outflows using an appropriate discount rate based on the maturities of the related pension liability.

Share-based compensation

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

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

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

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

F-25

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

2.25    Taxation

Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rate and tax laws used to compute the amount are those enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax base of
assets and liabilities and their carrying amount for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except where the deferred tax
liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.

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

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

Deferred
income tax assets and liabilities are measured at the tax rate expected to apply to the year when the assets is realised or the liability is settled, based on tax rates and tax
laws that have been enacted or substantively enacted at the balance sheet date. Income tax relating to items recognised directly in equity is recognised in equity and not in the consolidated
statements of profit and loss. Deferred tax assets and deferred tax liabilities are offset, if legally enforceable rights exist to set off current tax assets against current tax liabilities and the
deferred taxes relate to the same taxable entity and the same taxation authority.

2.26    Discontinued operations

Revenues and expenses associated with discontinued operations are presented in a separate line on the consolidated statements of profit
and loss. Comparative figures in the consolidated statements of profit and loss representing the discontinued operations are also reclassified to a separate line. Discontinued operations are those
with identifiable operations and cash flows (for both operating and management purposes) and represent a major line of business or geographic unit which has been disposed of or is available for sale.

F-26

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)

2.27    Changes in accounting policies

The consolidated financial statements as of December 31, 2008 are prepared in accordance with consolidation and accounting
policies consistent with those of the previous financial years.

The
following new and amended IFRIC interpretations were effective during the year. They did not have any effect on the financial performance or position of the Group.



The
following IFRS and IFRIC interpretations were issued with an effective date for annual periods beginning on or after July 1, 2008. The Group has chosen not to early adopt
these standards and interpretations.



F-27

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)



F-28

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

2. SUMMARY OF CONSOLIDATION AND ACCOUNTING POLICIES (Continued)



3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

10% Senior Notes

In October 2007, Millicom decided that it would redeem the balance of the 10% Senior Notes in December 2008, and pay the contractual
redemption premium of 5% (see note 24). Millicom reviewed its estimates of future cash flows and, as a result, an additional interest expense of $31 million was recorded for the year
ended December 31, 2007. The 10% Senior Notes was also reclassified from non-current to current.

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

F-29

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (Continued)

Contingent liabilities

Contingent liabilities are potential liabilities that arise from past events whose existence will be confirmed only by the occurrence
or non occurrence of one or more uncertain future events not wholly within the control of Millicom. Provisions for liabilities are recorded when a loss is considered probable and can be reasonably
estimated. The determination of whether or not a provision should be recorded for any potential liabilities is based on management's judgment.

Estimates

Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. Because of the inherent uncertainties in this evaluation process, actual losses may be different from the originally estimated provision. In
addition, significant estimates are involved in the determination of impairments, provisions related to taxes and litigation risks. These estimates are subject to change as new information becomes
available and changes subsequent to these estimates may significantly affect future operating results.

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

Deferred
tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant
management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax
planning strategies (see note 13).

For
our critical accounting estimates reference is made to the relevant individual notes to these consolidated financial statements, more specifically
note 4Acquisition of subsidiaries, joint ventures and minority interests; note 13Taxes; note 15Intangible assets,
note 16Property, plant and equipment, note 18Trade receivables, note 22Share based compensation (relating to the long term incentive plan)
and note 28Commitments and contingencies.

4. ACQUISITIONS OF SUBSIDIARIES, JOINT VENTURES AND MINORITY INTERESTS

Year ended December 31, 2008

In 2008, Millicom acquired 100% interest in Amnet Telecommunications Holding Limited.

F-30

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

4. ACQUISITIONS OF SUBSIDIARIES, JOINT VENTURES AND MINORITY INTERESTS (Continued)

Amnet Telecommunications Holding Limited

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

Millicom
completed the allocation of the purchase price to the assets acquired, liabilities assumed and contingent liabilities during the year ended December 31, 2008. The final
determined fair value of the identifiable assets and liabilities acquired were as follows:

Recognised on
acquisition

Carrying valueUS$ '000

US$ '000Intangible assets, net(i)


162,383


26,631Property, plant and equipment, net


71,197


67,911Other non-current assets


3,093


3,093Financial assets


7,502


7,502Inventories


1,454


1,454Trade receivables


8,052


8,052Prepayments and accrued income


2,960


2,960Current tax assets


3,728


3,728Other current assets(ii)


27,899


3,989Cash and cash equivalents


13,497


13,497301,765


138,817Non-current debt and other financing


116


116Other non-current liabilities(iii)


43,337


1,810Current debt and other financing


3,271


3,271Trade payables


9,992


9,992Accrued interest and other expenses


5,950


5,950Current tax liabilities


7,057


7,057Other current liabilities(ii)


26,294


2,38496,017


30,580Fair value of net assets acquired and contingent liabilities (100%)


205,748Goodwill arising on acquisition


339,982Acquisition cost


545,730






F-31

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

4. ACQUISITIONS OF SUBSIDIARIES, JOINT VENTURES AND MINORITY INTERESTS (Continued)



The goodwill is attributable to the profitability potential of the acquired business and the synergies expected to arise from the Group's acquisition of Amnet.
The fair value of the subscriber bases was ascertained using the discounted excess earnings method and the fair value of the trademark was ascertained using the relief from royalty approach. The fair
value of the non-compete agreements was ascertained using the incremental cash flow approach. Acquisition cost of Amnet was $546 million, including acquisition costs of
$4 million and was funded through a one-year bridge loan facility with two commercial banks and cash (see note 24).

The
acquired business contributed revenues of $43 million and net profit of $4 million for the period from acquisition to December 31, 2008. If the acquisition had
occurred on January 1, 2008, unaudited pro forma Group revenue from continuing operations would have been $3,534 million, and the unaudited pro forma profit for the year from continuing
operations would have been $437 million. These amounts have been calculated using the Group accounting policies.

Year ended December 31, 2007

Millicom did not acquire any subsidiaries, joint ventures or minority interests during the year ended December 31, 2007.

Year ended December 31, 2006

Millicom acquired the following subsidiaries, joint ventures and minority interests during the year ended December 31, 2006:

Net acquisition
cost

Net cash
acquired

Net cash
used for
acquisitionsUS$ '000

US$ '000

US$ '000Colombia Móvil S.A.


(124,148
)

151,080


26,932Telefonica Celular del Paraguay S.A.


(5,000
)




(5,000
)Sentel GSM


(35,200
)




(35,200
)Millicom Sierra Leone Limited


(1,500
)




(1,500
)Millicom Tanzania Limited


(20,000
)




(20,000
)Total


(185,848
)

151,080


(34,768
)


F-32

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

4. ACQUISITIONS OF SUBSIDIARIES, JOINT VENTURES AND MINORITY INTERESTS (Continued)

Colombia Móvil S.A.

On October 2, 2006, the Group acquired 50% plus one of the voting shares of Colombia Móvil S.A., a mobile
operation in Colombia. Millicom completed the allocation of the purchase price to the assets acquired, liabilities assumed and contingent liabilities during the year ended December 31, 2006.
The final determined fair value of the identifiable assets and liabilities acquired were as follows:

Recognised on
acquisition

Carrying valueUS$ '000

US$ '000Intangible assets, net(i)


176,124


71,124Property, plant and equipment, net(ii)


245,285


274,937Financial assets(iii)


15,411


167Inventories


15,297


15,297Trade receivables


31,195


31,195Prepayments and accrued income


14,954


14,954Current tax assets


5,991


5,991Other current assets


14,740


14,740Cash and cash equivalents(iv)


151,080


28,566670,077


456,971Non-current debt and other financing


165,530


165,530Other non-current payables


19,705


19,705Current debt and other financing


238,160


238,160Trade payables


59,276


59,276Accrued interest and other expenses


20,227


20,227Current tax liabilities


20,588


20,588Other current liabilities


7,523


7,523Contingent liabilities(iii)


15,244


546,253


531,009Fair value of net assets acquired and contingent liabilities (100%)


123,824Fair value of net assets acquired and contingent liabilities (50% acquired)


61,912Goodwill arising on acquisition


62,236Acquisition cost


124,148






F-33

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

4. ACQUISITIONS OF SUBSIDIARIES, JOINT VENTURES AND MINORITY INTERESTS (Continued)



The goodwill is attributable to the profitability potential of the acquired business and the synergies expected to arise from the Group's
acquisition of Colombia Movil S.A. The fair value of the subscriber bases was ascertained using the discounted excess earnings method and the fair value of the trademark was ascertained using
the relief from royalty approach. The acquisition cost of Colombia Movil S.A. was $124 million, including acquisition costs of $2 million and was financed through borrowings.

The
acquired business contributed revenues of $90 million and net losses of $14 million for the period from acquisition to December 31, 2006. If the acquisition had
occurred on January 1, 2006, unaudited pro forma Group revenue from continuing operations would have been $1,823 million, and the unaudited pro forma profit for the year from continuing
operations would have been $176 million. These amounts have been calculated using the Group accounting policies.

In
2007, the Group reversed $23 million of goodwill as a result of the recognition of deferred tax assets in respect of tax losses carried forward (see note 13).

Telefonica Celular del Paraguay S.A

In July, 2006, Millicom completed its purchase for a total consideration of $5 million of the remaining 4% ownership interest in
Telefonica Celular del Paraguay S.A., its subsidiary in Paraguay in which Millicom now has 100% ownership. The acquisition was approved by the regulatory authorities on July 12, 2006.
Millicom recognised goodwill of $3 million as a result of the acquisition of the minority interest, recorded under the caption "Intangible assets, net".

Sentel GSM

On March 14, 2006, Millicom purchased for a total consideration of $35 million the remaining 25% ownership interest in
Sentel GSM, its operation in Senegal in which Millicom now has 100% ownership. Millicom recognised goodwill of $32 million as a result of the acquisition of the minority interest, recorded
under the caption "Intangible assets, net".

Millicom Sierra Leone Limited

On February 1, 2006, Millicom paid $2 million as the second instalment in respect of the acquisition on
December 16, 2005 of 30% of the shares in Millicom Sierra Leone Limited.

F-34

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

4. ACQUISITIONS OF SUBSIDIARIES, JOINT VENTURES AND MINORITY INTERESTS (Continued)

Millicom Tanzania Limited

On January 23, 2006, Millicom purchased for a total consideration of $20 million the remaining 15.6% ownership interest
in Millicom Tanzania Limited, its operation in Tanzania in which Millicom now has 100% ownership. Millicom recognised goodwill of $16 million as a result of the acquisition of the minority
interest, recorded under the caption "Intangible assets, net".

5. DISPOSALS OF SUBSIDIARIES AND JOINT VENTURES

The gains from sales of subsidiaries and joint ventures during the years ended December 31, 2008, 2007 and 2006 were as follows:

2008

2007

2006US$ '000

US$ '000

US$ '000From continuing operations








8,099From discontinued operations





258,346


738Total





258,346


8,837


Year ended December 31, 2008

In 2008, Millicom did not dispose of any subsidiary or joint venture.

Year ended December 31, 2007

In 2007, Millicom completed the sale of Paktel Limited, for total proceeds of $285 million realising a net gain of
$258 million. Millicom incurred costs of $14 million on the transaction and of the net proceeds of $271 million, Millicom received $263 million in 2007 and the remaining
$8 million in January 2008 (see note 6).

Year ended December 31, 2006

As part of the sale of Pakcom Limited (see note 6), Millicom transferred in 2006 for $1 of consideration 10% of its ownership in
Paktel Limited to the Arfeen Group, reducing Millicom's ownership in Paktel Limited to 88.9%. No gain or loss was recorded on the disposal.

In
May 2006, Millicom disposed of its wholly-owned subsidiary MIC-USA Inc. for $1. A net gain of $6 million was recognised from the sale and
MIC-USA Inc. ceased to be consolidated from the date of sale. As part of the disposal of MIC-USA Inc., Millicom disposed of Great Universal Inc. and Modern
Holdings Inc. Although Great Universal Inc. and Modern Holdings Inc. were wholly-owned by Millicom, they were not consolidated because of the existence of outstanding warrants
that enabled the warrant holder to control Great Universal Inc. and Modern Holdings Inc. These entities were accounted for as financial assets available for sale. Upon disposal, the
revaluation reserve was reversed and no gain or loss was recorded on their disposal in 2006.

Millicom
sold other minor subsidiaries and other joint-ventures, including its operation in Peru which has been treated as a discontinued operation, for $6 million net proceeds
resulting in a gain of $3 million. Cash disposed in the sale of those companies amounted to $2 million.

F-35

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

6. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

Discontinued operations

The results of discontinued operations for the years ended December 31, 2008, 2007 and 2006 are presented below:

2008

2007(i)

2006(i)US$ '000

US$ '000

US$ '000Revenues


8,917


12,890


75,139Operating expenses(ii)(iii)(iv)


(30,585
)

(20,715
)

(119,477
)Gain from disposal





258,346


738Operating profit (loss)


(21,668
)

250,521


(43,600
)Non-operating expenses, net


(729
)

(4,744
)

(42,481
)Profit (loss) before tax


(22,397
)

245,777


(86,081
)Tax benefit (charge)





121


(518
)Profit (loss) for the year attributable to equity holders


(22,397
)

245,898


(86,599
)






The cash (used) provided by discontinued operations for the years ended December 31, 2008, 2007 and 2006 is presented below:

2008

2007(i)

2006(i)US$ '000

US$ '000

US$ '000Net cash used by operating activities


(5,141
)

(7,061
)

(34,506
)Net cash (used) provided by investing activities


(8,614
)

258,093


(59,612
)Net cash (used) provided by financing activities


(10,021
)

177


20,829Cash (used) provided by discontinued operations


(23,776
)

251,209


(73,289
)






F-36

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

6. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE (Continued)



The following table gives details of non cash investing and financing activities of discontinued operations for the years ended December 31, 2008, 2007 and
2006:

2008

2007(i)

2006(i)US$ '000

US$ '000

US$ '000Investing activitiesAcquisition of property, plant and equipment








(62,177
)Acquisition of licenses








Financing activitiesVendor financing








62,177License payable















Millicom Sierra Leone Limited

In December 2008, Millicom decided to dispose of its business in Sierra Leone, Millicom Sierra Leone Limited, and, as a result, this
operation has been classified as a discontinued operation. In addition as at December 31, 2008 the assets and liabilities of Millicom Sierra Leone Limited are disclosed under the captions
"Assets held for sale" and "Liabilities directly associated with assets held for sale". Millicom operation in Sierra Leone was previously disclosed under the segment "Africa".

Pakcom Limited and Paktel Limited

In November 2006, Millicom decided to exit from its remaining business in Pakistan, Paktel Limited, and, as a result Paktel Limited and
Pakcom Limited, which was sold in June 2006, have been classified as discontinued operations. In addition, as at December 31, 2006, the assets and liabilities of Paktel Limited were disclosed
under the captions "Assets held for sale" and "Liabilities directly associated with assets held for sale". The sale of Paktel Limited was completed in February 2007. Pakcom Limited and Paktel Limited
were both previously disclosed under the segment "Asia".

Comvik International (Vietnam) A.B.

Millicom has an 80% equity interest in Comvik International (Vietnam) AB ("Comvik") which had entered into a Business Cooperation
Contract ("BCC") with a government-owned company to operate a nationwide cellular GSM network in Vietnam (Mobifone). The BCC expired in May 2005 and Millicom has been negotiating with the Vietnamese
government to convert the BCC into an equity ownership interest since before the expiry of the BCC. During the third quarter of 2006, Millicom concluded that it was unlikely that an acceptable
agreement would be reached in the near future and therefore classified Comvik as a discontinued operation from that date. Millicom has no other continuing operation in Vietnam. As of
December 31, 2006, Comvik was presented as an abandoned operation. As such its assets and liabilities were included under the relevant individual balance sheet captions. All the remaining
assets and liabilities were realised and settled in 2007. Comvik International (Vietnam) A.B. was previously disclosed under the segment "Asia".

F-37

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

6. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE (Continued)

Other

Other operations have been classified as discontinued operations in 2006, consisting mainly of Millicom Peru S.A. All these
operations were divested in the second half of 2006 (see note 5).

Assets held for sale

During the fourth quarter of 2008, Millicom began the marketing activities to sell its operation in Sierra Leone and therefore it was
classified as a disposal group held for sale as of December 31, 2008. As of that date, Millicom measured all assets and liabilities of Millicom Sierra Leone at the estimated fair value less
cost to sell, resulting in an impairment charge of $11 million, recorded in December 2008.

The
major classes of assets and liabilities classified as held for sale as at December 31, 2008 and 2007 are as follows:

2008

2007US$ '000

US$ '000AssetsProperty, plant and equipment, net


17,977


Trade receivables, net


553


Inventories


357


Other current assets


1,155


Cash and cash equivalents


521


Assets held for sale


20,563


LiabilitiesOther non-current liabilities


691


Trade payables


3,023


Other current liabilities


3,286


Current debt and other financing


57


Non-current debt and other financing


41


Liabilities directly associated with assets held for sale


7,098


Net assets directly associated with the disposal group


13,465





F-38

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

7. SUBSIDIARIES

The Group has the following significant subsidiaries, which are consolidated:

Name of the company

Country

Holding
December 31,
2008

Holding
December 31,
2007% of ownership interest

% of ownership interestCentral AmericaTelemovil El Salvador S.A.

El Salvador


100.0


100.0South AmericaTelefonica Celular de Bolivia S.A.

Bolivia


100.0


100.0Telefonica Celular del Paraguay S.A.(i)

Paraguay


100.0


100.0Colombia Movil S.A. E.S.P.(i)

Colombia


50.0 + 1 share


50.0 + 1 shareAfricaMillicom Ghana Company Limited

Ghana


100.0


100.0Sentel GSM S.A.(i)

Senegal


100.0


100.0Millicom (S.L.) Limited(ii)

Sierra Leone


100.0


100.0MIC Tanzania Limited(i)

Tanzania


100.0


100.0Oasis S.P.R.L.

Democratic Republic of Congo


100.0


100.0Millicom Tchad S.A.

Chad


87.5


87.5Millicom Rwanda Limited(iii)

Rwanda


87.5


AsiaMillicom Lao Co. Limited

Lao People's Democratic Republic


74.1


74.1Tigo (Pvt) Limited

Sri Lanka


99.9


99.9AmnetAmnet Telecommunications Holding Limited(i)

Bermuda


100.0


UnallocatedMillicom International Operations S.A.

Luxembourg


100.0


100.0Millicom International Operations B.V.

Netherlands


100.0


100.0MIC Latin America B.V.

Netherlands


100.0


100.0Millicom Africa B.V.

Netherlands


100.0


100.0Millicom Holding B.V.

Netherlands


100.0


100.0Millicom Ireland Limited

Ireland


100.0







8. INTERESTS IN JOINT VENTURES

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

Name of the company

Country

Holding
December 31,
2008

Holding
December 31,
2007% of ownership interest

% of ownership interestCentral AmericaComunicaciones Celulares S.A.

Guatemala


55.0


55.0Telefonica Celular S.A.

Honduras


66.7


66.7AfricaEmtel Limited

Mauritius


50.0


50.0AsiaCam GSM Company Limited

Cambodia


58.4


58.4


F-39

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

8. INTERESTS IN JOINT VENTURES (Continued)

The share of assets and liabilities of the jointly controlled entities at December 31, 2008 and 2007, which are included in the
consolidated financial statements, are as follows:

2008

2007US$ '000

US$ '000Current assets


194,994


184,202Non-current assets


644,550


489,301Total assets


839,544


673,503Current liabilities


282,492


263,876Non-current liabilities


112,116


96,207Total liabilities


394,608


360,083


The share of revenues and operating expenses of the jointly controlled entities for the years ended December 31, 2008, 2007 and 2006, which are included in
the consolidated financial statements, are as follows:

2008

2007

2006US$ '000

US$ '000

US$ '000Revenues


1,130,702


901,564


625,544Total operating expenses


(617,121
)

(483,430
)

(365,826
)Operating profit


513,581


418,134


259,718


9. SEGMENT INFORMATION

The Group operates in the mobile telephony segment, apart from its Amnet business, which is cable, broadband and fixed telephony. The primary segment reporting format is therefore
determined to be both geographic and by business. Group's risks and rates of return for its mobile operations are affected predominantly by the fact that it operates in different countries in
different geographical areas. The mobile operating businesses are organised and managed according to the geographical areas, which represent the basis on which the information is presented to the
Board of Directors and executive management to evaluate past performance and for making decisions about the future allocation of resources.

For
segmental information on investment in associates and profit from associates (see note 17).

Primary Reporting FormatGeographical and Business Segments

The Group operates its mobile business in 16 countries within four regions: Central America, South America, Africa and Asia. It
operates the Amnet business in Central America.

F-40

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

9. SEGMENT INFORMATION (Continued)

The following tables present revenues, operating profit/ (loss) and other segment information for the years ended December 31, 2008, 2007 and 2006:

December 31, 2008

Central
America

South
America

Africa

Asia

Amnet

Unallocated
items

Total
continuing
operations

Discontinued
operations
(note 6)

Elimination

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000Revenues


1,376,848


1,019,332


711,364


261,821


43,015





3,412,380


8,917





3,421,297Operating profit (loss)


642,851


149,848


95,935


49,061


6,537


(76,949
)

867,283


(21,668
)




845,615Add back:Depreciation and amortization


112,296


198,861


140,094


52,188


11,518


951


515,908


5,069





520,977Loss (gain) of disposal and impairment


3,865


2,816


1,551


218


(7
)

941


9,384


10,831





20,215Share based compensation

















13,619


13,619








13,619Corporate costs

















61,438


61,438








61,438Adjusted operating profit (loss)(i)


759,012


351,525


237,580


101,467


18,048





1,467,632


(5,768
)




1,461,864Total Assets(ii)


1,242,421


1,260,230


1,484,841


388,551


738,554


389,669


5,504,266


20,563


(304,021
)

5,220,808Total Liabilities


556,799


1,071,739


1,396,189


294,837


174,959


927,215


4,421,738


74,953


(927,960
)

3,568,731Additions to:Property, plant and equipment


283,255


351,134


510,836


152,863


11,164


1,298


1,310,550


10,766





1,321,316Intangible assets


10,756


18,033


90,244


1,823


384


135


121,375








121,375Capital expenditure


294,011


369,167


601,080


154,686


11,548


1,433


1,431,925


10,766





1,442,691




December 31, 2007

Central
America

South
America

Africa

Asia

Unallocated
items

Total
continuing
operations

Discontinued
operations
(note 6)

Elimination

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000Revenues


1,149,368


809,881


469,833


194,772





2,623,854


12,890





2,636,744Operating profit (loss)


526,369


106,591


66,716


41,041


(69,014
)

671,703


250,521





922,224Add back:Depreciation and amortization


80,695


144,704


87,935


37,927


239


351,500


3,440





354,940Loss (gain) of disposal and impairment


1,083


1,937


173


588


(44
)

3,737


78





3,815Reduction of goodwill





23,358











23,358








23,358Share based compensation














19,228


19,228








19,228Corporate costs














49,591


49,591








49,591Gain on disposal of subsidiaries and joint ventures, net




















(258,346
)




(258,346
)Adjusted operating profit (loss)(i)


608,147


276,590


154,824


79,556





1,119,117


(4,307
)




1,114,810Total Assets


1,086,366


1,143,305


1,046,669


299,976


1,087,774


4,664,090





(250,264
)

4,413,826Total Liabilities


521,285


859,455


947,234


227,936


875,084


3,430,994





(385,504
)

3,045,490Additions to:Property, plant and equipment


282,312


319,861


333,976


93,354


926


1,030,429


5,731





1,036,160Intangible assets


9,366


5,216


3,323


594


943


19,442








19,442Capital expenditure


291,678


325,077


337,299


93,948


1,869


1,049,871


5,731





1,055,602


F-41

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

9. SEGMENT INFORMATION (Continued)



December 31, 2006

Central
America

South
America

Africa

Asia

Unallocated
items

Total
continuing
operations

Discontinued
operations
(note 6)

Elimination

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000Revenues


796,111


321,038


306,091


146,846





1,570,086


75,139





1,645,225Operating profit (loss)


334,923


49,657


69,813


36,070


(42,505
)

447,958


(43,600
)




404,358Add back:Depreciation and amortization


79,242


68,335


54,758


24,701


200


227,236


30,521





257,757Loss (gain) of disposal and impairment


1,265


26


72


357


141


1,861


(5,256
)




(3,395
)Share based compensation














12,850


12,850








12,850Corporate costs














37,413


37,413








37,413Gain on disposal of subsidiaries and joint ventures, net














(8,099
)

(8,099
)







(8,099
)Other items




















3,340





3,340Adjusted operating profit (loss)(i)


415,430


118,018


124,643


61,128





719,219


(14,995
)




704,224Total Assets


771,553


941,133


699,532


209,022


468,000


3,089,240


428,663


(196,909
)

3,320,994Total Liabilities


363,829


641,522


585,753


153,585


887,255


2,631,944


540,968


(434,306
)

2,738,606Additions to:Property, plant and equipment


176,769


71,495


244,515


104,596


68


597,443


126,965





724,408Intangible assets


25,880


2,154


230


5,488





33,752


21





33,773Capital expenditure


202,649


73,649


244,745


110,084


68


631,195


126,986





758,181




10. ANALYSIS OF OPERATING PROFIT

The Group's operating income and expenses from continuing operations analysed by nature of expense is as follows:

2008

2007(i)

2006(i)US$ '000

US$ '000

US$ '000Revenues


3,412,380


2,623,854


1,570,086Cost of rendering telecommunication services


(831,925
)

(686,260
)

(431,211
)Depreciation and amortization (notes 9,15 and 16)


(515,908
)

(351,500
)

(227,236
)Dealer commissions


(303,435
)

(214,202
)

(119,875
)Employee related costs (note 11)


(206,455
)

(167,762
)

(95,944
)Phone subsidies


(143,881
)

(112,700
)

(56,695
)Advertising and promotion


(143,634
)

(111,801
)

(45,962
)Utilities


(74,157
)

(44,647
)

(24,410
)Operating lease expense (note 28)


(66,350
)

(47,339
)

(23,156
)Network maintenance


(58,814
)

(46,794
)

(24,347
)External services


(53,383
)

(51,497
)

(31,575
)Reduction of goodwill (notes 9 and 15)





(23,358
)

Loss on disposal of assets (note 9)


(8,632
)

(2,064
)

(1,503
)Impairment of assets (notes 9 and 16)


(752
)

(1,673
)

(358
)Other operating income








4,036Gain from sale of subsidiaries and joint ventures, net








8,099Other expenses


(137,771
)

(90,554
)

(51,991
)Operating profit


867,283


671,703


447,958




F-42

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

11. EMPLOYEE RELATED COSTS

Employee related costs are comprised of the following:

2008

2007(i)

2006(i)US$ '000

US$ '000

US$ '000Wages and salaries


(152,538
)

(117,394
)

(64,608
)Social security


(18,352
)

(13,533
)

(6,453
)Share based compensation (see note 22)


(13,619
)

(19,228
)

(12,850
)Other employee related costs(ii)


(21,946
)

(17,607
)

(12,033
)Total


(206,455
)

(167,762
)

(95,944
)






The average number of permanent employees during the years ended December 31, 2008, 2007 and 2006 was as follows:

2008

2007(i)

2006(i)Continuing operations


6,509


4,692


3,192Discontinued operations


98


76


501Total average number of permanent employees


6,607


4,768


3,693






12. OTHER NON-OPERATING INCOME (EXPENSES), NET

The Group's other non-operating income (expenses), net is comprised of the following:

2008

2007(i)

2006(i)US$ '000

US$ '000

US$ '000Valuation movement on financial assets:Tele2 A.B."B" shares








(36,386
)Embedded derivative on the 5% Mandatory Exchangeable Notes








66,095Other financial derivatives








(785
)Exchange gain/(loss) on the 5% Mandatory Exchangeable Notes








(35,616
)Loss on repurchase of the 10% Senior Notes (see note 24)





(4,961
)

Other exchange gains/(losses)


(55,593
)

15,174


5,547Other non operating income (expenses), net


(55,593
)

10,213


(1,145
)




F-43

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

13. TAXES

Group taxes are mainly comprised of income taxes of subsidiaries and joint ventures. As a Luxembourg commercial company, the Company is subject to all taxes applicable to a Luxembourg
Société Anonyme. Due to losses incurred and brought forward, no taxes based on Luxembourg-only income have been computed for 2008, 2007 or 2006.

The
effective tax rate on continuing operations is approximately 39% (2007: 16%, 2006: 32%). Currently Millicom operations are in jurisdictions with income tax rates of 10% to 40% (2007
and 2006: 10% to 40%).

The
reconciliation between the weighted average statutory tax rate and the effective average tax rate is as follows:

2008

2007(i)

2006(i)%

%

%Weighted average statutory tax rate(ii)


22


23


24Derecognition (recognition) of previously unrecorded tax losses


10


(11
)

(1
)Unrecognised current year tax losses(iii)


10


10


10Non taxable income and non deductible expenses, net


(1
)

(2
)

(2
)Taxes based on revenue


(8
)

(10
)

(5
)Income taxes at other than statutory tax rates


3


2


2Withholding taxes on transfers between operating and non operating entities


3


4


4Effective tax rate(iv)


39


16


32




In October 2006, the Group acquired Colombia Móvil (see note 4). At the time of acquisition, Colombia Móvil had tax loss
carry forwards. When completing the purchase price allocation, Millicom assessed that it was not probable that these tax loss carry-forwards would be used. Thus no deferred tax asset was recognized on
acquisition. Given the 2007 actual results of Colombia Móvil and its forecasted performance, Colombia Móvil was expected to be profitable in a foreseeable future.
Accordingly, an amount of $86 million was recorded in deferred tax assets corresponding to $39 million related to tax losses after the acquisition and $47 million related to tax
losses prior to the acquisition. Management estimated that these tax losses were to be used against future taxable profit. As part of these losses existed at the time of acquisition some of the
goodwill recorded at acquisition was reversed resulting in an expense of $23 million in 2007 recorded under the caption "other operating expenses".

F-44

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

13. TAXES (Continued)

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

The
charge for income taxes from continuing operations is shown in the following table and recognises that revenue and expense items may affect the financial statements and tax returns
in different periods (temporary differences):

2008

2007(i)

2006(i)US$ '000

US$ '000

US$ '000Current income tax charge


(196,924
)

(172,186
)

(117,128
)Net deferred income tax charge benefit


(80,445
)

84,988


(459
)Charge for taxes


(277,369
)

(87,198
)

(117,587
)






The tax effects of significant items comprising the Group's net deferred income tax asset and liability as of December 31, 2008 and 2007 are as follows:

Consolidated
balance sheet

Consolidated
income statement2008

2007

2008

2007(i)US$ '000

US$ '000

US$ '000

US$ '000Deferred income tax assets:Loss carryforwards





85,812


(85,812
)

85,812Temporary differences:Provision for doubtful debtors


1,866


1,117


749


115Temporary differences between book and tax basis of intangible assets and property, plant and equipment


9,187


3,621


5,566


2,659Temporary differences between book and tax basis of other assets and liabilties


3,168


6,994


(3,826
)

5,25214,221


97,544Deferred income tax liabilities:Deferred tax liabilities recognized as part of the acquisition of Amnet (see note 4)


(41,527
)







Temporary differences between book and tax basis of fixed assets


(54,458
)

(42,825
)

(11,633
)

(7,469
)Provision for doubtful debtors


1,536


1,008


528


(517
)Other temporary differences


13,386


(597
)

13,983


(864
)(81,063
)

(42,414
)Deferred income tax (expense) benefit








(80,445
)

84,988




F-45

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

13. TAXES (Continued)

Deferred income tax assets and liabilities reflect temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.

No
deferred tax liability was recognised in respect of $2,022 million (2007:$1,095 million) of unremitted earnings of subsidiaries, joint ventures and associates, because
the Group was in a position to control the timing of the reversal of the temporary difference and it was unlikely that such differences would reverse in a foreseeable future. Furthermore, it was not
practicable to estimate the amount of unrecognized deferred tax liabilities in respect of these unremitted earnings.

Unrecognised
net operating losses and other tax loss carryforwards relating to continuing operations amounted to $610 million as at December 31, 2008 (2007:
$120 million, 2006: $295 million) with expiry periods of between 1 and 6 years except for $256 million where the losses do not expire. In addition the Company has
unrecognized net operating losses of $1,823 million (2007: $1,940 million) which do not expire.

14. EARNINGS PER SHARE

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to equity holders of the Company by the weighted average number of ordinary shares
outstanding during the year.

Diluted
earnings per share amounts are calculated by dividing the net profit for the year attributable to equity holders of the Company (after deducting interest on the convertible notes
if the conversion of these notes would be dilutive) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of dilutive potential shares.

The
following reflects the net profit and share data used in the basic and diluted earnings per share computations:

2008

2007(i)

2006(i)US$ '000

US$ '000

US$ '000BasicNet profit attributable to equity holders from continuing operations


539,913


451,244


255,546Net (loss) profit attributable to equity holders from discontinued operations


(22,397
)

245,898


(86,599
)Net profit attributable to equity holders used to determine the basic earnings per share


517,516


697,142


168,947DilutedNet profit attributable to equity holders from continuing operations


539,913


451,244


255,546Interest expense on convertible debt (note 24)


760


16,640


Net profit attributable to equity holders from continuing operations used to determine the diluted earnings per share


540,673


467,884


255,546Net (loss) profit attributable to equity holders from discontinued operations


(22,397
)

245,898


(86,599
)Net profit attributable to equity holders used to determine the diluted earnings per share


518,276


713,782


168,947


F-46

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

14. EARNINGS PER SHARE (Continued)



2008

2007

2006'000

'000

'000Weighted average number of ordinary shares (excluding treasury shares) for basic earnings per share


107,869


101,088


100,361Effect of dilution:Potential incremental shares as a result of share options


434


1,250


1,010Assumed conversion of convertible debt(ii)


343


5,709


Weighted average number of ordinary shares (excluding treasury shares) adjusted for the effect of dilution


108,646


108,047


101,371




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

15. INTANGIBLE ASSETS

The movements in intangible assets in 2008 were as follows:

Goodwill

Licences

Other

TotalUS$ '000

US$ '000

US$ '000

US$ '000Opening balance, net


183,857


154,854


128,791


467,502Change in the composition of the Group (note 4)(i)


339,982


252


162,131


502,365Additions(iv)





107,377


13,998


121,375Amortisation charge(ii)





(34,158
)

(32,033
)

(66,191
)Impairment(iii)


(2,892
)







(2,892
)Other movements





5,011


(5,819
)

(808
)Exchange rate movements


(13,652
)

(9,658
)

(7,691
)

(31,001
)Closing balance, net


507,295


223,678


259,377


990,350As at December 31, 2008Cost or valuation


507,295


309,480


328,865


1,145,640Accumulated amortisation





(85,802
)

(69,488
)

(155,290
)Net


507,295


223,678


259,377


990,350




F-47

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

15. INTANGIBLE ASSETS (Continued)

The movements in intangible assets in 2007 were as follows:

Goodwill

Licences

Other

TotalUS$ '000

US$ '000

US$ '000

US$ '000Opening balance, net


196,178


165,222


121,375


482,775Additions





7,064


12,378


19,442Amortisation charge(i)





(24,918
)

(24,087
)

(49,005
)Reduction of goodwill(i) (notes 9 and 13)


(23,358
)







(23,358
)Other movements








7,780


7,780Exchange rate movements


11,037


7,486


11,345


29,868Closing balance, net


183,857


154,854


128,791


467,502As at December 31, 2007Cost or valuation


183,857


213,043


170,909


567,809Accumulated amortisation





(58,189
)

(42,118
)

(100,307
)Net


183,857


154,854


128,791


467,502




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

2008

2007(i)

2006(i)US$ '000

US$ '000

US$ '000Additions


121,375


19,442


33,773Additions from Discontinued Operations








(21
)Subtotal


121,375


19,442


33,752License installments





6,374


6,717License acquisition costs, paid in shares in Millicom Rwanda Limited


(7,159
)




Cash used from continuing operations for additions from intangible assets


114,216


25,816


40,469




Impairment test of goodwill

For the year ended December 31, 2008, management tested all goodwill for impairment. The Group determines whether goodwill is
impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating unit to which the goodwill is allocated.

F-48

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

15. INTANGIBLE ASSETS (Continued)

The
recoverable amount of a cash-generating unit is determined based on discounted cash flow calculation. The cash flow projections used (EBITDA margins, income tax, working
capital, capital expenditure and license renewal cost) are extracted from financial budgets approved by the management covering a period of 3 years. The planning horizon reflects industry
practice in the countries where the Group operates. Cash flows beyond this period are extrapolated using a perpetual growth rate of 1.5%. Apart from Millicom's operation in Sierra Leone (see
note 6), no impairment losses were recorded on goodwill for the years ended December 31, 2008 and 2007.

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

2008

2007US$ '000

US$ '000Millicom's operations in:Amnet Group (see note 4)


339,982


Colombia(i)


44,595


49,731El Salvador


42,053


42,053Ghana


14,281


18,780Senegal


36,541


38,430Tanzania


14,219


16,233Other


15,624


18,630Total goodwill


507,295


183,857






The recoverable amounts have been determined for the cash generating units based on the following discount rates for the years ended December 31, 2008 and
2007:

Discount rate after tax2008

2007Central America, including Amnet for 2008

9.6% - 12.8%

11.9% - 13.1%South America

10.2% - 16.5%

11.0% - 14.1%Africa

10.7% - 15.4%

12.8% - 16.1%Asia

15.5% - 16.1%

13.0% - 15.3%


Any significant change in the assumptions used to compute the recoverable amounts could have an adverse impact on the value of the cash generating units.

F-49

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

16. PROPERTY, PLANT AND EQUIPMENT

The movements in 2008 were as follows:

Network
equipment

Land and
Buildings

Construction in
Progress

Other(i)

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000Opening balance, net


1,557,003


51,979


381,984


75,156


2,066,122Change in the composition of the Group (note 4)(iv)


55,040


2,751


8,167


5,239


71,197Additions


52,071


1,536


1,204,621


63,088


1,321,316Disposals


(25,486
)

(646
)

(1,153
)

(1,190
)

(28,475
)Impairments(ii)


(8,544
)










(8,544
)Depreciation charge(iii)


(418,221
)

(4,804
)




(31,761
)

(454,786
)Asset retirement obligations


12,505











12,505Transfers


1,204,341


15,490


(1,235,501
)

15,670


Transfer to assets held for sale


(14,747
)

(132
)

(636
)

(2,462
)

(17,977
)Exchange rate movements


(119,357
)

(2,369
)

(47,007
)

(5,401
)

(174,134
)Closing Balance


2,294,605


63,805


310,475


118,339


2,787,224As at December 31, 2008Cost or valuation


3,443,381


78,602


310,475


222,662


4,055,120Accumulated depreciation


(1,148,776
)

(14,797
)




(104,323
)

(1,267,896
)Net


2,294,605


63,805


310,475


118,339


2,787,224


The movements in 2007 were as follows:

Network
equipment

Land and
Buildings

Construction in
Progress

Other(i)

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000Opening balance, net


933,381


32,628


231,638


69,512


1,267,159Additions


62,765


3,336


948,238


21,821


1,036,160Disposals


(5,551
)

(139
)




(227
)

(5,917
)Impairments(ii)


(1,722
)







(29
)

(1,751
)Depreciation charge(iii)


(286,497
)

(1,385
)




(18,053
)

(305,935
)Asset retirement obligations


10,690





4,615





15,305Other movements


(7,780
)










(7,780
)Transfers


792,292


16,199


(808,491
)




Exchange rate movements


59,425


1,340


5,984


2,132


68,881Closing Balance


1,557,003


51,979


381,984


75,156


2,066,122As at December 31, 2007Cost or valuation


2,228,969


64,883


381,984


130,300


2,806,136Accumulated depreciation


(671,966
)

(12,904
)




(55,144
)

(740,014
)Net


1,557,003


51,979


381,984


75,156


2,066,122




F-50

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

16. PROPERTY, PLANT AND EQUIPMENT (Continued)

The amount of borrowing costs capitalized for the year ended December 31, 2008 was $9 million (2007: $5 million).

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

2008

2007(i)

2006(i)US$ '000

US$ '000

US$ '000Additions


1,321,316


1,036,160


724,408Additions from discontinued Operations


(10,766
)

(5,731
)

(126,965
)Subtotal


1,310,550


1,030,429


597,443Suppliers advances


71,609


19,561


40,171Change in capex payable


(32,466
)

(170,968
)

(127,782
)Vendor financing (see note 27)


(48,632
)

(23,041
)

(65,870
)Capitalised interests


(8,575
)

(5,381
)

(4,500
)Cash used from continuing operations for purchase of property, plant and equipment


1,292,486


850,600


439,462




17. INVESTMENT IN ASSOCIATES

As at December 31, 2008 and 2007 the principal associates are Navega.com S.A., which is unlisted, and Metrored S.A., which is a subsidiary of Navega.com S.A.

F-51

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

17. INVESTMENT IN ASSOCIATES (Continued)

Navega.com S.A.
is 45% owned by Millicom's joint venture in Guatemala of which Millicom holds 55.0% (see note 8). Metrored S.A. is 51% owned by
Navega.com S.A. and 49% owned by Millicom's joint venture in Honduras of which Millicom holds 66.7% (see note 8). The following table provides summarised financial information of the
Group's investment in associates:

2008

2007US$ '000

US$ '000Opening balance(i)


11,234


6,838Share of profit(i),(ii)


8,706


4,400Acquisitions(iii)


1,153


Exchange rate movements


(6
)

(4
)Closing balance(i)


21,087


11,234






The Group's share of revenues and net profits of its principal associate and its share of the assets and liabilities are as follows:

Name

Country of
incorporation

Assets

Liabilities

Revenues

ProfitUS$ '000

US$ '000

US$ '000

US$ '0002008Navega.com S.A and its subsidiaries

Guatemala


36,471


16,531


22,365


8,7062007Navega.com S.A and its subsidiaries

Guatemala


27,777


16,543


15,674


4,400


18. TRADE RECEIVABLES

2008

2007US$ '000

US$ '000Gross trade receivables


290,580


259,522Less: provisions for impairment of receivables


(33,125
)

(35,943
)Trade receivables, net


257,455


223,579


F-52

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

18. TRADE RECEIVABLES (Continued)

The nominal value less impairment of trade receivables is assumed to approximate their fair values.

As
at December 31, 2008 and 2007, the ageing analysis of trade receivables is as follows:

Past due but not impairedTotalNeither past
due nor
impaired



30 - 90 days<30 days

>90 days

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '0002008Telecom operators


68,052


27,498


91,572


1,873


188,995Own subscribers


28,155


9,286


2,789





40,230Others


19,902


5,210


2,990


128


28,230Total


116,109


41,994


97,351


2,001


257,4552007Telecom operators


72,249


27,735


21,069


47,726


168,779Own subscribers


21,698


6,099


2,148


3,017


32,962Others


16,277


3,045


1,952


564


21,838Total


110,224


36,879


25,169


51,307


223,579


19. OTHER CURRENT ASSETS

Other current assets are comprised as follows:

2008

2007US$ '000

US$ '000VAT tax sales receivables


30,083


20,444Pledged deposits


11,031


8,233Receivables from the sale of Paktel(i)





7,593Other(ii)


46,745


12,211Total other current assets


87,859


48,481






20. CASH AND CASH EQUIVALENTS

Cash and cash equivalents are comprised as follows:

2008

2007US$ '000

US$ '000Cash and cash equivalents in U.S. dollars


439,515


1,050,919Cash and cash equivalents in other currencies


234,680


123,678Total cash and cash equivalents


674,195


1,174,597


Our cash is diversified among leading international and domestic banks within the countries where we operate.

F-53

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

21. SHARE CAPITAL

Share capital and share premium

The authorised share capital of the Company totals 133,333,200 registered shares (2007: 133,333,200). As at December 31, 2008,
the total subscribed and fully paid-in share capital and premium was $643 million (2007: $417 million) consisting of 108,297,507 (2007: 102,428,260) registered common shares
at a par value of $1.50 (2007: $1.50) each.

In
2008, the Company issued a total of 5,869,247 new shares (2007: 1,744,380 new shares), resulting from:



22. SHARE BASED COMPENSATION

Share options

Up until May 30, 2006, share options were granted to directors, senior executives, officers and selected employees. The exercise
price of the granted options was equal to or higher than the market price of the shares on the date of grant. The options were conditional on the employee or Director completing one to five years
service (the vesting period). The options were exercisable starting from one year to five years from the grant date. The options have a contractual option term of six years from the grant date for
employees and of twenty years for directors (amended in 2005). Share options grants for directors prior to 2005 had an indefinite life. Shares issued when share options are exercised have the same
rights as common shares.

The
following table summarizes information about share options outstanding at December 31, 2008. The market price of the Company's shares as at December 31, 2008 was $44.91
(2007: $117.94).

Options outstanding

Options exercisableRange of exercise price $

Weighted
average
exercise price

Number
outstanding at
December 31, 2008

Weighted
average
exercise price

Number
exercisable at
December 31, 20083.32 - 3.75


3.54


5,332


3.54


5,33220.56


20.56


300,567


20.56


59,07125.05 - 29.75


26.82


88,225


26.82


88,22531.88 - 35.91


34.06


99,996


34.06


99,9963.32 - 35.91


24.23


494,120


27.73


252,624


F-54

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

22. SHARE BASED COMPENSATION (Continued)

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

Date issued

Number of options
outstanding as at
December 31, 2008

Exercise price $

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


173,328


25.05 - 35.91

Exercisable immediately. Options have an indefinite life.May 2005


35,000


20.56

Exercisable immediately. Options have a twenty year life.December 2002, May 2003 and May 2004


20,225


3.32 - 25.05

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


165,567


20.56

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


100,000


20.56

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


The following table summarizes the Company's share options as of December 31, 2008, 2007 and 2006, and changes during the years then ended:

2008

2007

2006Average
exercise
price in $
per share

Number of
options

Average
exercise
price in $
per share

Number of
options

Average
exercise
price in $
per share

Number of
optionsOutstanding at beginning of year


22.60


708,003


21.04


2,380,305


15.96


3,812,387Granted














20.56


50,000Expired/forfeited(i)


19.02


(44,827
)

20.83


(46,430
)

28.53


85,539Exercised


18.79


(169,056
)

20.37


(1,625,872
)

9.08


(1,567,621
)Outstanding at end of year


24.23


494,120


22.60


708,003


21.04


2,380,305Exercisable at end of year


27.73


252,624


24.59


358,574


20.91


1,807,796




F-55

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

22. SHARE BASED COMPENSATION (Continued)

The range of fair value of options granted determined using option pricing models was $6.30 to $8.31 for 2006. The significant inputs into the model were share
price of $19.21 for 2006 at the grant date, exercise price as disclosed above, expected exercise date based on previous exercise behavior for employees and for directors between 1 and 20 years,
option contractual term as previously disclosed, annual risk-free interest rate of 3.74% for 2006 and expected share price volatility of 46.5% for 2006 based on statistical analysis of
daily share prices over the last 2 years amended for the change in the debt levels of the Company over the same period of time. No new options were granted in 2008 and 2007.

In
May 2006 at the Annual General Meeting, it was agreed to accelerate the vesting period for share options held by the directors from three years to one year to correspond to the
directors' one-year term in office. It was also agreed to change the term of the share options so that they no longer expire when a director is no longer a member of the board. In
addition, the directors entered into an agreement with Millicom, whereby if Millicom is subject to a change of control the directors' share options will vest immediately and the restricted shares will
become unrestricted upon the change of control.

For
the year ended December 31, 2008 Millicom recorded a charge of $1 million (2007: $1 million; 2006: $3 million) related to share options.

Restricted share grants

Starting on May 30, 2006, the grant of options was replaced by the grant of restricted shares whereby these shares cannot be
sold or transferred for 12 months. Grants to directors and employees in 2008 were as follows:

Number of
shares

Share price at
date of grant

2008
Expense(US$ '000)Directors


6,373


114.07


727Total


6,373





727


Grants to directors and employees in 2007 were as follows:

Number of
shares

Share price at
date of grant

2007
Expense(US$ '000)Directors


5,034


85.86


432Employee share grants relating to 2006


4,017


80.39


323Total


9,051





755


Compensation expense for the total number of shares awarded in 2008 to directors was measured on the grant dates, the date of the Annual General Meeting of
Shareholders on May 27, 2008 and on May 29, 2007, using Millicom's closing share price as quoted on the NASDAQ National Market on that dates.

F-56

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

22. SHARE BASED COMPENSATION (Continued)

Compensation
expense for the total number of shares awarded to employees was measured on the grant date, the date the employees were notified of their individual share allocations on
April 4, 2007, using Millicom's closing share price as quoted on the NASDAQ National Market on that date. The shares are subject to a restriction of a one-year holding period. As
the shares related to services provided in 2006, they vested immediately on the grant date.

Long term incentive plans

In May 2006 at the Annual General Meeting a long term incentive plan ("2006 LTIP") was approved although the terms and conditions of
the plan were not finalized until 2007. This long term incentive plan was based on a target share award granted to eligible Millicom employees, limited to Millicom senior-level employees, key high
potential employees and certain critical new recruits. The shares granted are subject to a one-year holding period once the shares are vested.

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

The
plan has been designed so that the shares normally vest at the end of the three-year performance period. However, for the performance period from 2006 through 2008 only,
the shares granted vest 20% on December 31, 2006, 20% on December 31, 2007 and 60% on December 31, 2008. In addition at the end of the third-year performance period
there was an additional 32% of shares that vested, because performance targets relating to Millicom's share price growth compared to a peer group index, revenue growth, EBITDA margin, and profit
margin were achieved.

The
total charge for the above plan was $23 million which was recorded over the service period.

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

The
shares awarded under the performance share plan will vest at the end of a three year period, subject to performance conditions related to Millicom's "earnings per share". The
achievement of a certain level of each condition, measured at the end of the three years, yields a specific percentage of shares awarded to each employee at the grant date.

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

F-57

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

22. SHARE BASED COMPENSATION (Continued)

As
at December 31, 2008, the total charge for the above plans was estimated at $13 million for the 2008 LTIP and at $15 million for the 2007 LTIP, both to be
recorded over the service periods.

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

Matching
share award
plan 2008

Performance
shares 2008

Matching
share award
plan 2007

Performance
shares 2007

Performance
shares 2006Maximum share awards


168,396


223,829


187,470


253,489


446,600Revision for expected forfeitures


(37,061
)

(3,991
)

(59,021
)

(15,817
)

(109,509
)Revision for expectations in respect of performance conditions





(195,850
)




(142,588
)

(25,520
)Shares issued














(108,760
)Share awards expected to vest


131,335


23,988


128,449


95,084


202,811


Bonus shares

A charge of $1 million was recorded in 2008 (2007 and 2006: nil) as bonus shares.

Total share-based compensation expense

Total share-based compensation for years ended December 31, 2008, 2007 and 2006 was as follows:

2008

2007

2006US$ '000

US$ '000

US$ '000Share options


364


627


2,781Restricted share grants


727


755


2,3632006 LTIP


4,087


10,971


7,7062007 LTIP


2,979


6,875


2008 LTIP


4,237





Bonus shares


1,225





Total share-based compensation expense


13,619


19,228


12,850


F-58

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

23. OTHER RESERVES

Legal
reserve

Equity-settled
transaction
reserve

Equity
component
convertible
notes

Currency
translation
reserve

Revaluation
reserve

TotalUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000As at January 1, 2006


13,577


4,910


39,109


(76,121
)

3,308


(15,217
)Fair value adjustment














(3,308
)

(3,308
)Net shares issued via the exercise of share options





(1,549
)










(1,549
)Share based compensation





10,487











10,487Currency translation movement











12,553





12,553As at December 31, 2006


13,577


13,848


39,109


(63,568
)




2,966Transfer from retained profit


1,526














1,526Net shares issued via the exercise of share options





(3,838
)










(3,838
)Share based compensation





18,473











18,473Issuance of shares2006 LTIP





(4,523
)










(4,523
)Conversion of part of the 4% Convertible Notes








(196
)







(196
)Currency translation movement











31,149





31,149As at December 31, 2007


15,103


23,960


38,913


(32,419
)




45,557Transfer from retained profit


262














262Net shares issued via the exercise of share options





(937
)










(937
)Share based compensation





11,666











11,666Issuance of shares2006 LTIP





(3,963
)










(3,963
)Conversion of part of the 4% Convertible Notes








(38,913
)







(38,913
)Currency translation movement











(60,846
)




(60,846
)As at December 31, 2008


15,365


30,726





(93,265
)




(47,174
)


Legal reserve

On an annual basis, if the Company reports a net profit for the year on a non-consolidated basis, Luxembourg law requires
appropriation of an amount equal to at least 5% of the annual net profit to a legal reserve until such reserve equals 10% of the issued share capital. This reserve is not available for dividend
distribution.

At
the Company's Annual General Meeting in May 2008, the shareholders voted to transfer $0.3 million from retained profits to the legal reserve.

F-59

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

23. OTHER RESERVES (Continued)

Equity-settled transaction reserve

The cost of share options is recognised as an increase in the Equity-settled transaction reserve over the period in which the
performance and/or service conditions are fulfilled. If the options are subsequently exercised then the cost attributed to these options is transferred from the Equity-settled transaction reserve to
the share premium. The reserve will be transferred to the share premium account when the shares vest.

Equity component convertible notes

The portion of the convertible bond representing the fair value of the conversion option at the time of issue is included in equity
reserve.

In
October 2007, $1 million of the 4% Convertible Notes were converted into 28,686 SDRs. The equity component of the 4% Convertible Notes was then reduced by $0.2 million
and reclassified to share premium.

On
January 22, 2008, Millicom converted a further $196 million of the outstanding bonds into 5,420,235 Ordinary Shares and 202,236 SDRs. On the same day Millicom repaid in
cash the remaining $3 million of bonds that were not converted, including accrued interest. The conversion resulted in an increase of equity amounting to $175 million in January 2008.
The equity component of the 4% Convertible Notes was then fully reversed and, for that part referred to the converted bonds, reclassified to share premium.

Currency translation reserve

For the purposes of consolidating joint ventures, associates and subsidiaries with functional currencies other than U.S. dollars, their
balance sheets are translated to U.S. dollars using the closing exchange rate. Profit and loss accounts are translated to U.S. dollars at the average exchange rates during the year. The currency
translation reserve includes foreign exchange gains and losses arising from the translation of financial statements.

24. BORROWINGS

Borrowings are comprised of the following:

2008

2007US$ '000

US$ '000Corporate debt:10% Senior Notes


453,471


479,8264% Convertible Notesdebt component(i)





178,940Other Debt and Financing


1,704,555


1,175,525Total borrowings


2,158,026


1,834,291






F-60

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

24. BORROWINGS (Continued)



Borrowings due after more than one year:

2008

2007US$ '000

US$ '000Corporate debt:10% Senior Notes


453,471


Other debt and financing:Bank financing


1,111,989


831,749Minority shareholders


229,624


229,561Vendor financing


28,667


17,947Finance leases


6,479


7,061Total non-current other debt and financing


1,830,230


1,086,318Less: portion payable within one year


(168,748
)

(141,112
)Total other debt and financing due after more than one year


1,661,482


945,206


Borrowings due within one year:

2008

2007US$ '000

US$ '000Corporate debt:10% Senior Notes





479,8264% Convertible Notesdebt component





178,940


658,766Other debt and financing:Bank financing


306,243


83,698Vendor financing


21,484


5,509Finance leases


69


Total current other debt and financing


327,796


89,207Portion of non-current debt payable within one year


168,748


141,112Total other debt and financing due within one year


496,544


230,319


F-61

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

24. BORROWINGS (Continued)



2008

2007

2006US$ '000

US$ '000

US$ '000Net debt at the beginning of the year


659,694


836,964


636,056Cash itemsProceeds from issuance of debt and other financing


1,206,607


545,351


308,785Repayment of debt and other financing


(664,294
)

(315,955
)

(191,430
)Net decrease (increase) in cash and cash equivalents


500,402


(517,905
)

(60,125
)Non-cash itemsVendor financing (see note 27)


48,632


23,041


65,870Interest accretion


30,532


8,419


16,24810% Senior Notes adjustment


(28,545
)

31,035


Conversion of the 4% Convertible Notes


(176,247
)




Exchange of the 5% Exchangeable Notes (see note 27)








(357,512
)Debt acquired in acquisition of subsidiaries (see note 4)


3,387





403,690Other


(15,442
)

1,861


4,219Exchange movement on debt and other financing


(80,895
)

46,883


11,163Net debt at the end of the year


1,483,831


659,694


836,964


10% Senior Notes

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

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

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

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

F-62

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

24. BORROWINGS (Continued)

In
October 2007, Millicom decided that it would redeem the balance of the Notes in December 2008 and pay the contractual redemption premium of 5%. As a result, Millicom reclassified the
10% Senior Notes from non current to current and recorded an additional interest expense of $31 million for the year ended December 31, 2007, which represented the increase in financial
liabilities due to the recognition of the 5% pre-payment expense and an increase in the amortised cost of the Notes due to the earlier settlement date. Millicom reviewed its position to
early repay the Notes in September 2008 and the Board of Directors decided not to early redeem the Notes but to keep them until the contractual maturity date (December 1, 2013). This decision
impacted the future expected cash flows and, as a result, the 5% premium accrued in 2007 was completely reversed and an interest income amounting to $29 million was recorded in 2008. In
addition the 10% Notes were reclassified as non-current.

4% convertible Notes

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

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

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

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

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

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

F-63

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

24. BORROWINGS (Continued)

Other Debt and Financing

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

2008

2007US$ '000

US$ '000Amnet(i)


231,523


Bolivia(ii)


103,111


41,874Colombia(iii)


456,356


436,670Democratic Republic of Congo(iv)


63,256


60,877El Salvador(v)


192,045


199,715Ghana(vi)


138,999


108,244Honduras(vii)


90,817


56,961Paraguay(viii)


64,147


26,019Senegal(ix)


58,309


62,557Tanzania(x)


168,793


51,471Other


137,199


131,137Total other debt and financing


1,704,555


1,175,525Of which:due after more than 1 year


1,208,011


945,206due within 1 year


496,544


230,319


Significant individual financing facilities are described below:

i)    Amnet

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

In
addition as at December 31, 2008, Amnet had other debt and financing of $2 million.

ii)    Bolivia

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

F-64

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

24. BORROWINGS (Continued)

In
March 2008, Telecel Bolivia signed a 4 year and 9 months financing agreement for $30 million with the International Finance Corporation. The loan bears interest
at $LIBOR plus 2% and is fully guaranteed by the Company. This loan was fully drawn as at December 31,2008.

In
addition to the above, Telecel Bolivia also had vendor financings with Huawei (at interest rates of $LIBOR plus 2%) and FPLT totalling $32 million and $1 million of
other debt and financing outstanding as at December 31, 2008 (2007: $2 million).

iii)    Colombia

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

In
October 2006, the Company acquired a majority ownership 50% plus 1 share in Colombia Movil. At the time of the acquisition the Company had a COP 168,539 million
($83 million) Hermes guaranteed export credit facility with Citigroup maturing in January 2012. This facility bears interest at IPC plus 6.30% and is 100% guaranteed by the minority
shareholders. As at December 31, 2008 $37 million (2007: $54 million) was outstanding under this facility. In addition at the time of acquisition Colombia Movil also had a COP
309,800 million (total of $154 million, of which $94 million outstanding as at December 31, 2007) loan facility arranged by BBVA which was settled in 2008. This facility
was bearing interest at DTF plus 4.15% and was 100% guaranteed by the minority shareholders.

Colombia
Movil S.A. E.S.P. also had local currency loans from the minority shareholders outstanding as at December 31, 2008 of $230 million (2007:
$230 million). These loans bear interest at DTF plus 4.15% and mature between 2011 and 2013.

In
addition, as at December 31, 2008 Colombia Movil S.A. E.S.P. had no outstanding amount in respect of local currency 60 day treasury credits from various banks
(2007: $57 million) and $16 million (2007: $2 million) of other debt and financing, in US$ and local currency.

iv)    Democratic Republic of Congo

In September 2006, Oasis S.P.R.L. ("Oasis"), Millicom's operation in the Democratic Republic of Congo, entered into a
$106 million, 7 year loan from the China Development Bank to finance equipment purchases from Huawei, an equipment supplier. The loan bears interest at $ LIBOR plus 2% and is repayable
over 17 equal quarterly installments commencing in 2009. This financing is 100% guaranteed by the Company. As of December 31, 2008, $59 million was outstanding under this facility (2007:
$56 million) and in addition Oasis had other debt and financing of $4 million (2007: $5 million).

v)    El Salvador

In September 2006, Telemovil El Salvador S.A., Millicom's operation in El Salvador, entered into a $200 million
5 year loan. The loan was syndicated amongst a group of local and international banks and was arranged by ABN AMRO, Citigroup and Standard Bank. The loan bears interest at $ LIBOR plus 1.75%.
As of December 31, 2008, $180 million of this facility was outstanding (2007: $200 million).

F-65

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

24. BORROWINGS (Continued)

In
December 2008, Telemovil El Salvador S.A., entered into a $12 million 2 year loan with Banco Agrícola Comercial S.A. The loan bears interest
at $ LIBOR plus 6%. As of December 31, 2008, the loan was fully drawn.

vi)    Ghana

In December 2007 Millicom (Ghana) Limited, Millicom's operation in Ghana, entered into a $60 million local 5 year
club-deal Facility. The loan bears interest at Libor plus 2%. In parallel a $80 million offshore 7 year DFI (Development Finance Institution) financing which bears interest
at Libor plus 2.25% was arranged. As at December 31, 2008, $139 million (2007: $90 million) was outstanding under these facilities.

In
July 2005, Millicom (Ghana) Limited entered into a $20 million loan agreement with Citibank N.A., 75% guaranteed by the Overseas Private Investment Corporation and 100%
guaranteed by the Company. This loan was bearing interest at $ LIBOR plus 2.5% and was repaid in 2008. As at December 31, 2007, $15 million was outstanding under this facility.

In
addition as at December 31, 2008, Ghana had no other debt and financing (2007: $3 million).

vii)    Honduras

Telefonica Celular S.A., Millicom's operation in Honduras, has facilities with several local banks maturing between 2009 and
2015. These facilities are in dollars and in Lempiras and are unsecured. Interest rates are either fixed or variable, ranging as of December 31, 2008 between 7.4% and 16% (2007: between 7.28%
and 10.25%). As at December 31, 2008, the outstanding debt under these facilities was $91 million (2007: $57 million).

viii)    Paraguay

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

In
addition as at December 31, 2008, Telefonica Cellular Del Paraguay had $14 million (2007: $26 million) of other debt and financing outstanding.

ix)    Senegal

In December 2005, Sentel GSM, Millicom's operation in Senegal entered into a XAF12,500 million loan agreement with
Crédit Lyonnais Sénégal ("CLS"). This loan bears a fixed interest rate of 8% and is fully repayable at maturity, in December 2010. The outstanding amount
in US$ as at December 31, 2008 was $26 million (2007: $28 million). Sentel GSM also entered into a 5 year additional Tranche of XAF7,500 million with CLS in July
2007. This tranche bears an 8.5% fixed interest rate and was fully drawn at the end of 2007. The outstanding amount under this additional Tranche in US$ as at December 31, 2008 was
$14 million (2007: $17 million). As at December 31, 2008 Sentel GSM was in breach of its debt covenants under the above facilities and as such these loans were reclassified as
current. Negotiations are in progress with the bank to maintain the facilities and to waive the covenants.

F-66

---



Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

24. BORROWINGS (Continued)

In
September 2006, Sentel GSM additionally entered into a XAF2,500 million bridge loan with the Compagnie Bancaire de l'Afrique Orientale (CBAO). This loan was bearing interest at
7% and was repaid in March 2008 (outstanding amount as at December 31, 2007 amounted to $1 million). Additionally in 2007, Sentel GSM entered into a new short term facility with CBAO
amounting in to XAF7,500 million maturing on October 31, 2008 and bearing fixed interest of 6.5%. The facility has been rolled over and the amount outstanding as at December 31,
2008 was $18 million (2007: $17 million).

x)    Tanzania

In December 2008, Millicom Tanzania Limited, Millicom's operation in Tanzania entered into facilities totaling $228 million
comprising of a five year local currency syndicated tranche for TZS95 billion at the 180 days treasury Bill rate plus 3%, a seven year $116 million EKN guaranteed financing with
45% of the facility fixed at 4.1% and 55% of the facility at $LIBOR plus 0.665% and a seven year $40 million tranche with Proparco at $LIBOR plus 2.5%. All tranches are 100% guaranteed by the
Company. As at December 31, 2008, the amount outstanding under these facilities was $152 million.

In
March 2007 Millicom Tanzania Limited entered into a new 5 year Citi-Opic facilities, bearing interest rate of LIBOR plus 2.5%, composed of a $17.4 million $
Tranche and a Tranche in local currency up to the equivalent of $5 million. The outstanding US$ amount under these facilities as at December 31, 2008 amounted to $17 million
(2007: $23 million).

At
the same time Millicom Tanzania Limited entered into a 5 year $10 million Term Loan with Barclays bearing interest of LIBOR plus 3% and a 5 year
$16.5 million vendor financing with Ericsson credit AB, priced at LIBOR plus 2.5%. The amount outstanding as at December 31, 2008 was nil (2007: $8 million) under the Barclays
loan and nil (2007: $14 million) under the Ericsson loan.

Millicom
Tanzania Limited had no other debt and financing outstanding as at December 31, 2008 (2007: $6 million).

Fair value of financial liabilities

Borrowings are recorded at amortised cost. The fair value of borrowings as at December 31, 2008 and 2007 is as follows:

2008

2007US$ '000

US$ '00010% Senior Notes


418,223


489,4594% Convertible Notes(i)





199,000Other debt and financing


1,706,988


1,173,252Fair value of total debt


2,125,211


1,861,711






When the quoted price of the borrowings in an active market is not available, the fair value of the borrowings is calculated by discounting the expected future
cash flows at market interest rates.

F-67

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

24. BORROWINGS (Continued)

The
nominal value of the other financial liabilities is assumed to approximate their fair values.

Guarantees

In the normal course of business, Millicom has issued guarantees to secure some of the obligations of some of its operations under bank
and supplier financing agreements. The tables below describe the outstanding amount under the guarantees and the remaining terms of the guarantees as of December 31, 2008 and 2007. Amounts
covered by bank guarantees are recorded in the consolidated balance sheets under the caption "Other debt and financing" and amounts covered by supplier guarantees are recorded under the caption "Trade
payables" or "Other debt and financing" depending on the underlying terms and conditions.

As of December 31, 2008

Bank and other financing
guarantees(i)

Supplier guarantees

TotalTerms

Outstanding
exposure

Maximum
exposure

Outstanding
exposure

Maximum
exposure

Outstanding
exposure

Maximum
exposureUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '0000 - 1 year


233,077


240,000








233,077


240,0001 - 3 years


22,830


32,998








22,830


32,9983 - 5 years


353,012


415,558








353,012


415,558More than 5 years


102,902


194,022








102,902


194,022Total(iii)


711,821


882,578








711,821


882,578


As of December 31, 2007

Bank and other financing
guarantees(i)

Supplier guarantees(ii)

TotalTerms

Outstanding
exposure

Maximum
exposure

Outstanding
exposure

Maximum
exposure

Outstanding
exposure

Maximum
exposureUS$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '0000 - 1 year

















1 - 3 years


36,335


50,205


1,200


1,200


37,535


51,4053 - 5 years


80,557


102,606








80,557


102,606More than 5 years


89,598


166,000








89,598


166,000Total


206,490


318,811


1,200


1,200


207,690


320,011




F-68

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

24. BORROWINGS (Continued)

The Group's share of total debt and financing secured by either pledged assets, pledged deposits issued to cover letters of credit or guarantees issued by the
Company is $1,313 million (2007: $739 million). The assets pledged by the Group for these debts and financings amount to $610 million (2007: $449 million).

25. OTHER NON-CURRENT AND CURRENT PROVISIONS AND LIABILITIES

Provisions and other non-current liabilities are comprised as follows:

2008

2007US$ '000

US$ '000Non-current legal provisions (note 28)


6,957


7,133Long-term portion of asset retirement obligations


55,167


42,502Unpaid portion of license fees





915Other


7,884


5,051Total


70,008


55,601


Included in non-current legal provisions are litigation contingencies of $3 million (2007: $4 million) that were assumed as part of the
Colombia Móvil S.A. acquisition. The founding shareholders of Colombia Móvil S.A. committed to reimburse Millicom for any payments relating to these
litigation contingencies. As a consequence, Millicom has booked a corresponding receivable.

Provisions
and other current liabilities are comprised as follows:

2008

2007US$ '000

US$ '000Deferred revenues


79,670


82,932Revenue sharing in Cambodia


21,449


11,960Subscriber deposits


6,709


4,890Current legal provisions (note 28)


3,006


3,207Asset retirement obligations


209


413Unpaid portion of license fees


1,584


2,745Other tax payables


50,703


32,939Other(i)


43,776


15,905Total


207,106


154,991






F-69

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)



26. DIRECTORS' AND OFFICERS' REMUNERATION

Directors

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

The
remuneration charge for the Board for the years ended December 31, 2008, 2007 and 2006 was as follows:

Other members of
the boardChairmanTotalNo. of shares
and share
options

US$ '000

No. of shares
and share
optionsUS$ '000

US$ '0002008Fees





100





410


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


1,446


165


4,927


562


727Total





265





972


1,2372007Fees





82





305


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


960


82


4,074


350


432Total





164





655


8192006Fees





75





415


490Share based compensation:(i)Restricted shares(ii)


1,122


50


8,976


400


450Charge for share options





164





1,104


1,268Total





289





1,919


2,208




F-70

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

26. DIRECTORS' AND OFFICERS' REMUNERATION (Continued)

The
number of shares and share options beneficially owned by the Board as at December 31, 2008 and 2007 was as follows:

Chairman

Other members of the Board

Total2008Shares


28,528


71,619


100,147Share options


20,000


55,000


75,0002007Shares(i)


2,082


2,100,753


2,102,835Share options


45,000


55,000


100,000






Officers

The remuneration of the Officers of the Company ("Officers") comprises of an annual base salary, an annual bonus, share-based
compensation, social security contributions, pension contributions and other benefits. The bonus and share-based compensation plans are based on actual performance (including individual and Group
performance). Up until May 2006, the Officers were issued share options. Subsequent to May 2006, the Officers were issued restricted shares. Share-based compensation is granted once a
year by the Compensation Committee of the Board. For 2006, the annual base salary and other benefits of the Chief Executive Officer ("CEO") was proposed by the Compensation Committee and approved the
Board and the annual base salary and other benefits of the Chief Operating Officer ("COO") and Chief Financial Officer ("CFO") were set by the CEO and approved by the Board.

F-71

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

26. DIRECTORS' AND OFFICERS' REMUNERATION (Continued)

The
remuneration charge for the Officers for the year ended December 31, 2008, 2007 and 2006 was as follows:

Chief Executive
Officer

Chief Operating
Officer

Chief Financial
Officer(vi)US$ '000

US$ '000

US$ '0002008Base salary


2,406


750


920Bonus


1,309


882


125Pension








85Other benefits





231


7Total


3,715


1,863


1,137Share based compensation:(i)Shares issued/charge under long term incentive plans(ii)


3,737


1,410


958Charge for share options


59


29


2402007Base salary


2,351


629


690Bonus


2,008


547


500Pension








83Other benefits





138


Total


4,359


1,314


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


2,076


850


539Charge for share options


104


54


1712006Base salary


1,982


624


568Bonus(iii)


1,669


712


468Pension








73Other benefits





138


Total


3,651


1,474


1,109Share based compensation:(i)Restricted shares(iv)


104


62


48Charge for long term incentive plans(v)


1,031


397


265Share options granted/charge for share options


240


113


228




F-72

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

26. DIRECTORS' AND OFFICERS' REMUNERATION (Continued)

The number of shares, share options and unvested share awards beneficially owned by the senior management as at December 31, 2008 and 2007 was as follows:

Chief
Executive
Officer

Chief
Operating
Officer

Chief
Financial
Officer

Total2008Shares


1,695,175


592,308





2,287,483Share options


30,000


15,040





45,040Share awards not vested


146,678


63,342


4,500


214,5202007Shares


1,664,770


578,897


9,700


2,253,367Share options


45,000


22,560


100,000


167,560Share awards not vested


96,488


38,561


24,951


160,000


Severance payments

If employment of the CEO and the COO is terminated by Millicom, severance payment of up to 12 months salary is payable.

F-73

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

27. NON-CASH INVESTING AND FINANCING ACTIVITIES

The following table gives details of non-cash investing and financing activities for continuing operations for the years ended December 31, 2008, 2007 and 2006.

2008

2007

2006US$ '000

US$ '000

US$ '000Investing activitiesSale of Tele2 AB "B" shares








252,140Acquisition of property, plant and equipment (see note 16)


(48,632
)

(23,041
)

(65,870
)Derecognition of the embedded derivative on the 5% Mandatory Exchangeable Notes








105,372Asset retirement obligations (see note 16)


(12,505
)

(15,305
)

(16,378
)Financing activitiesVendor financing (see note 16)


48,632


23,041


65,870Settlement of the 5% Mandatory Exchangeable Notes








(357,512
)Shares issued as payment of bonuses





1,000


Share based compensation (see note 22)


13,619


19,228


12,850


28. COMMITMENTS AND CONTINGENCIES

Operational environment

Millicom 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, Millicom is involved in discussions regarding taxation, interconnect, license renewals and tariffing arrangements,
which can have a significant impact on the long-term economic viability of its operations.

Litigation

The Company and its operations are contingently liable with respect to lawsuits and other matters that arise in the normal course of
business. As of December 31, 2008, the total amount of claims against Millicom's operations was $70 million (December 31, 2007: $50 million) of which $3 million
(2007: $1 million) relate to joint ventures. As at December 31, 2008, $10 million (December 31, 2007: $10 million) has been provided for these contingent liabilities
in the consolidated balance sheet. Management is of the opinion that while it is impossible to ascertain the ultimate legal and financial liability with respect to these contingencies, the ultimate
outcome of these contingencies is not anticipated to have a material effect on the Group's financial position and operations.

Sentel GSM S.A. ("Sentel") license

The Sentel license to provide mobile telephony services in Senegal is in dispute. As of today, Sentel continues to provide telephony
services to its subscribers and effectively remains in control of the business. However, the government of the Republic of Senegal published on November 12, 2008 a decree dated as of 2001 that
purports to revoke Sentel's license.

F-74

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

28. COMMITMENTS AND CONTINGENCIES (Continued)

Sentel's
twenty year license was granted in 1998 by a prior administration, before the enactment in 2002 of Senegal Telecommunications Act. Although the current Senegalese government
has, since 2002, acknowledged the validity of Sentel license, it has also requested that Sentel renegotiate the terms of the license. Sentel has indicated its willingness to negotiate only certain
enhancements to the license and data services and the extension of the duration of the license.

On
November 11, 2008 Millicom International Operations B.V. (MIO B.V.), a wholly-owned Millicom subsidiary and Sentel instituted arbitration proceedings with the
International Center for the Settlement of Investment Disputes (ICSID) against the Republic of Senegal under provisions of Sentel license and international law. MIO B.V. and Sentel seek
compensation for the purported expropriation of the Senegal license and monetary damages for breach of the license.

On
the same day, the Republic of Senegal instituted court proceedings in Senegal against Millicom and Sentel and has sought court approval for the revocation of Sentel's license and
sought damages against Sentel and Millicom. Millicom believes that the action filed by the Republic of Senegal is baseless and also ignores the agreement between Sentel and the Republic of Senegal to
submit any dispute concerning the license to an international arbitration forum.

Lease commitments



The Group has the following annual operating lease commitments as of December 31, 2008 and 2007.

2008

2007US$ '000

US$ '000Operating lease commitmentsWithin: one year


43,113


25,732Between: one-five years


140,581


101,191After: five years


143,644


110,918Total


327,338


237,841


The operating leases comprised mainly of lease agreements relating to land and buildings. The operating lease terms and conditions reflect normal market
conditions. Operating lease expense from continuing operations was $54 million in 2008 (2007: $48 million, 2006: $24 million).



The Group's future minimum payments on the finance leases were not material. These financial leases are comprised mainly of lease
agreements relating to vehicles used by the Group.

Capital commitments

The Company and its subsidiaries and joint ventures have fixed commitments to purchase network equipment, land and buildings and other
fixed assets for a value of $539 million (2007: $400 million), of which $57 (2007: $88 million) relate to joint ventures, from a number of suppliers.

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

28. COMMITMENTS AND CONTINGENCIES (Continued)

In
addition, Millicom is committed to supporting Colombia Móvil S.A., its operation in Colombia, through loans and warranties. The maximum commitment is
$230 million and remains until the time the total support from Millicom equals the support from the founding shareholders of Colombia Móvil S.A.

Contingent assets

Due to the late delivery by suppliers of network equipment in various operations, Millicom is entiltled to compensation. This
compensation is in the form of discount vouchers on future purchases of network equipment. The amount of vouchers received but not recognised as they had not yet been used as at December 31,
2008 was $26 million (2007: $30 million).

Dividends

The ability of the Company to make dividend payments is subject to, among other things, the terms of indebtedness, legal restrictions
and the ability to repatriate funds from Millicom's various operations.

29. RELATED PARTY TRANSACTIONS

Kinnevik

The Company's principal shareholder is Investment AB Kinnevik ("Kinnevik") and subsidiaries. Kinnevik is a Swedish holding company with
interests in the telecommunications, media, publishing, paper industries and financial services. As of December 31, 2008, Kinnevik owned approximately 35% of Millicom (2007: 37%).

During
2008 and 2007, Kinnevik did not purchase any Millicom shares.

Services purchased and sold to related companies

For the year ended December 31, 2008 the Group made purchases for an amount of $3 million (2007: $4 million; 2006:
$5 million) and had outstanding balances as at December 31, 2008 of $1 million (as at December 31, 2007: $1 million) with related parties. These related parties are
companies where Kinnevik is the principal shareholder. The services purchased and supplied covered fraud detection, network and IT support, acquisition of assets and customer care systems. These
purchases were made on an arm's length basis.

There
were no sales to related companies. As of December 31, 2008 and 2007, Millicom had no receivables from related parties.

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

30. FINANCIAL RISK MANAGEMENT

Interest rate risk

The interest rate risk generally arises from borrowings. Borrowings issued at floating rates expose the Group to cash flow interest
rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group's exposure to the risk for changes in market interest rates relates to both of the above. To
manage the risk, the Group's policy is to maintain a combination of fixed and floating rate debt in which neither category of debt falls below 25% of the total debt. The Group actively monitors its
borrowings to ensure the compliance with this policy. At December 31, 2008, approximately 26% of the Group's borrowings are at a fixed rate of interest (2007: 43%).

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

Amounts due within1 year

1 - 2 years

2 - 3 years

3 - 4 years

4 - 5 years

>5 years

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


108,815


5,209


754


774


454,246


1,398


571,196Average nominal interest rate


8.0
%

7.8
%

9.7
%

9.1
%

10.0
%

6.3
%

9.6
%Floating rate


387,729


200,841


334,352


313,519


263,749


86,640


1,586,830Average nominal interest rate


6.0
%

8.6
%

9.1
%

8.7
%

8.4
%

7.8
%

8.0
%Total


496,544


206,050


335,106


314,293


717,995


88,038


2,158,026Average nominal interest rate


6.4
%

8.6
%

9.1
%

8.7
%

9.4
%

7.8
%

8.4
%


The table below summarizes, as at December 31, 2007, our fixed rate debt and floating rate debt:

Amounts due within1 year

1 - 2 years

2 - 3 years

3 - 4 years

4 - 5 years

>5 years

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


716,916


13,260


43,328


11,400


8,262


2,289


795,455Average nominal interest rate


8.5
%

8.5
%

8.6
%

8.6
%

8.6
%

6.3
%

8.5
%Floating rate


172,169


172,657


152,222


270,746


135,061


135,981


1,038,836Average nominal interest rate


10.8
%

9.9
%

8.4
%

9.5
%

9.9
%

9.5
%

9.7
%Total


889,085


185,917


195,550


282,146


143,323


138,270


1,834,291Average nominal interest rate


8.9
%

9.8
%

8.4
%

9.5
%

9.8
%

9.4
%

9.1
%


A one hundred basis point fall or rise in market interest rates for all currencies in which the group had borrowings at December 31, 2008, would increase
or reduce profit before tax for the year by approximately $16 million (2007: $10 million).

F-77

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

30. FINANCIAL RISK MANAGEMENT (Continued)

Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures where the Group
operates. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.

Millicom
seeks to reduce its foreign currency exposure through a policy of matching, as far as possible, assets and liabilities denominated in foreign currencies. In some cases, Millicom
may borrow in US dollars because it is either advantageous for joint ventures and subsidiaries to incur debt obligations in US dollars or because US dollar denominated borrowing is the only funding
source available to a joint venture or subsidiary. In these circumstances, Millicom has currently decided to accept the remaining currency risk associated with the financing of its joint ventures and
subsidiaries, principally because of the relatively high cost of forward cover, when available, in the currencies in which the Group operates.

The
following table summarizes our debt detailing the balances at December 31, 2008 and 2007, that were denominated in US$ and in other local currencies.

2008

2007US$ '000

US$ '000US$


1,466,494


1,226,332Colombia


456,356


435,615Honduras


48,199


41,352Senegal


58,309


62,557Sri Lanka


37,007


48,016Tanzania


74,536


5,516Others


17,125


14,903Total local currency


691,532


607,959Total


2,158,026


1,834,291


At December 31, 2008, if the US$ had weakened/strengthened by 10% against the other functional currencies of our operations and all other variables held
constant, then profit before tax would have increased/decreased by $41 and $45 million respectively (2007: $13 and $10 million respectively). This increase/decrease in profit before tax
would have mainly been as a result of the conversion of the results of our operations with foreign functional currencies. The increase in the effect of a change in the rate of the US$ between 2008 and
2007 is mainly as a result of the increase in the size of the Group and the increase in debt denominated in other than local currencies.

The
change of the US$ against the functional currencies of the operations located in Central America has not been considered as these currencies have been closely linked to US$ in the
recent years.

F-78

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

30. FINANCIAL RISK MANAGEMENT (Continued)

Credit risk

Financial instruments that potentially subject the Group to credit risk are primarily cash and cash equivalents, pledged deposits,
letters of credit, trade receivables, amount due from joint venture partners, supplier advances and other current assets. The counter parties to the agreements relating to the Group's cash and cash
equivalents, pledged deposits and letters of credit are significant financial institutions with investment grade ratings. Management does not believe there is a significant risk of
non-performance by these counter parties.

A
large portion of the turnover is made of prepaid airtime. For customers for which telecom services are not prepaid, the Group follows risk control procedures to assess the credit
quality of the customer, taking into account its financial position, past experience and other factors.

Accounts
receivables are mainly derived from the balances towards other telecom operators. The credit risk towards the other telecom operators is limited due to the regulatory nature of
the telecom industry, in which licenses are normally only issued to credit worthy companies. The Group maintains a provision for impairment of trade receivables based upon the expected collectibility
of all trade receivables.

There
is no significant concentration of credit risk with respect to trade receivables, as the Group has a large number of customers, internationally dispersed.

Liquidity risk

Liquidity risk is defined as the risk that an entity will encounter difficulty in meeting obligations associated with financial
liabilities. The Group has incurred significant indebtedness but also has significant cash balances. Millicom evaluates its ability to meet its obligations on an ongoing basis using a recurring
liquidity planning tool. This tool considers the operating net cash flows generated from its operations and the future cash needs for borrowing and interest payments and the capital expenditures
required to maintain and develop local businesses.

The
Group manages its liquidity risk through the use of bank overdrafts, bank loans (onshore and offshore), vendor financing, Export Credit Agencies and Direct Financial Institutions
("DFI") and finance leases. We believe that there is sufficient liquidity available in our markets to meet our ongoing liquidity needs. As the Group operates in the emerging markets, we are able to
take advantage of local liquidity. Additionally, we are able to arrange offshore funding through the use of Export Credit Agency guarantees and DFI (IFC, PROPARCO, DEG and FMO), who have been
established specifically to finance development in our markets.

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

30. FINANCIAL RISK MANAGEMENT (Continued)

The
tables below summarize the maturity profile of the Group's net financial liability at December 31, 2008 and 2007.

Year ended 31 December 2008

Less than
1 year

1 to 5 years

>5 years

TotalUS$ '000

US$ '000

US$ '000

US$ '000Total borrowings (see note 24)


(496,544
)

(1,573,444
)

(88,038
)

(2,158,026
)Cash and cash equivalent


674,195








674,195Net cash (debt)


177,651


(1,573,444
)

(88,038
)

(1,483,831
)Future interest commitments(i)


(169,116
)

(408,065
)

(10,980
)

(588,161
)Trade payables (excluding accruals)


(524,557
)







(524,557
)Other financial liabilities (including accruals)


(634,563
)







(634,563
)Trade receivables


257,455








257,455Other financial assets


270,456


23,195





293,651Net financial liability


(622,674
)

(1,958,314
)

(99,018
)

(2,680,006
)




Year ended 31 December 2007

Less than
1 year

1 to 5 years

>5 years

TotalUS$ '000

US$ '000

US$ '000

US$ '000Total borrowings (see note 24)


(889,085
)

(806,936
)

(138,270
)

(1,834,291
)Cash and cash equivalent


1,174,597








1,174,597Net debt


285,512


(806,936
)

(138,270
)

(659,694
)Future interest commitments(i)


(100,180
)

(137,916
)

(8,679
)

(246,775
)Trade payables (excluding accruals)(ii)


(609,858
)







(609,858
)Other financial liabilities (including accruals)(ii)


(421,302
)







(421,302
)Trade receivables


223,579








223,579Other financial assets


190,343


19,855





210,198Net financial liability


(431,906
)

(924,997
)

(146,949
)

(1,503,852
)




Capital management

The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and healthy capital
ratios in order to support its business and maximize shareholder value.

The
Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may make dividend
payments to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended December 31, 2008 and 2007.

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Table of Contents

Millicom International Cellular S.A.

Notes to the consolidated financial statements
as of December 31, 2008, 2007 and 2006 (Continued)

30. FINANCIAL RISK MANAGEMENT (Continued)

The
Group monitors capital using primarily a net debt to adjusted operating profit ratio.

2008

2007US$ '000

US$ '000Net debt


1,483,831


659,694Adjusted operating profit (see note 9)


1,467,632


1,119,117Ratio

RatioNet debt to adjusted operating profit ratio


1.0


0.6


The Group also reviews its gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, interest bearing loans and
borrowings, less cash and cash equivalents, excluding discontinued operations. Capital represents equity attributable to the equity holders of the parent.

2008

2007US$ '000

US$ '000Net debt


1,483,831


659,694Equity


1,677,918


1,287,907Net debt and equity


3,161,749


1,947,601Gearing ratio


47
%

34
%


31. SUBSEQUENT EVENTS

Appointment of Mikael Grahne to Chief Executive Officer

On March 2, 2009, Millicom announced that the Board appointed Mikael Grahne to succeed Marc Beuls as President and Chief
Executive Officer (CEO).

Mikael
Grahne has been the Chief Operating Officer of Millicom since February, 2002 and has been responsible for the development of Millicom?s operational strategies,
including the development of the Tigo brand.

Purchase of partners' shareholding in Navega.com S.A.

On March 13, 2009, Millicom announced that its operation in Guatemala acquired the remaining 55% interest in
Navega.com S.A. (see note 17) for a consideration of $90 million, that will be financed through local borrowings.

Purchase of partners' shareholding in Millicom Tchad S.A.

On March 13, 2009, Millicom announced that it has reached an agreement on the purchase of the remaining 12.5% interest in
Millicom Tchad S.A for an initial consideration of $8 million, that will be paid cash.

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Table of Contents

Shareholder information

Corporate and registered officeMillicom International Cellular SA
15 Rue Léon Laval
L-3372 Leudelange
Grand-Duchy of Luxembourg
Tel: +352 27 759 101
Fax: +352 27 759 359
RCB 40630 Luxembourg

Investor relationsShared Value Limited
30 St. James's Square
London SW1 4JH
Tel: +44(0)20 7321 5010
Fax: +44(0)20 7321 5020
E-mailmic@sharedvalue.net

Visit MIC's homepage athttp://www.millicom.com

Financial CalendarFebruary 11, 2009
Full year results 2007

April 21,
2009
First quarter results

July 21,
2009
Second quarter results

October 20,
2009
Third quarter results

February
2010
Full year results 2009

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