Annual report and accounts 2008

Millicom is an operator of mobile telephone services in 16 emerging markets in three continents; Latin America, Africa and Asia. We also operate cable and broadband businesses in five countries in Central America. Our shares are traded under the symbol MICC on the NASDAQ Global Select Market, a segment of the NASDAQ Global Market with the highest initial listing standards of any exchange in the world, as well as 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 number B 40 630.

We have mobile operations 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 and Tanzania in Africa; and in Cambodia, Laos and Sri Lanka in Asia. We have cable and broadband businesses in El Salvador, Guatemala, Honduras, Costa Rica and Nicaragua. In 2008 we acquired a license in Rwanda in Africa and we deconsolidated our business in Sierra Leone, classifying it as an asset held for sale.

The Group continued to experience good growth in 2008 with the worldwide total subscriber base increasing by 38% to 32.0 million compared to 23.3 million in 2007. Particularly significant percentage increases by operating company were recorded in Tanzania (93%) the Democratic Republic of Congo (92%), Laos (79%), Sri Lanka (69%), Chad (67%) and Senegal (66%). This subscriber growth was driven by capital expenditure of $1.4 billion in 2008 which resulted in improvements in the quality of the networks and increased capacity and coverage. Expansion of the distribution network also helped drive subscriber growth by increasing the points of sale and improving the visibility and accessibility of the products.

Our revenues from continuing operations for the year were up 30% to $3,412 million compared to $2,624 million in 2007. Revenues in Central America increased by 20% for the year ended December 31, 2008 and in South America by 26%. For Africa and Asia, the increases in revenues for the year ended December 31, 2008 were 51% and 34% respectively. Foreign exchange had a positive impact on revenue growth by 4% over the full year 2008, as most currencies appreciated against the US$ in the first half of the year. In Q4 however, revenue growth was negatively impacted by a 3% erosion due to net depreciations of currencies in the countries in which Millicom operates. Currency devaluations have particularly affected the Colombian peso (11% devaluation vs. the dollar over a year), the Ghanaian cedi (30% devaluation), African currencies linked to the Euro (11% devaluation) and the Tanzanian Shilling (9% devaluation). Amnet, the cable and broadband business acquired on October 1, 2008 contributed 5% of revenue growth in Q4 2008 vs. Q4 2007.

Total operating profit for the year ended December 31, 2008 increased by 29% to $867 million from $672 million for the year ended December 31, 2007 due to the higher revenues. Profit from continuing operations increased to $704 million for the year ended December 31, 2008 from $552 million for the year ended December 31, 2007, an increase of 28%. The net profit attributable to equity holders of the company for 2008 was $518 million versus $697 million in 2007.

In 2008, we had capital expenditures of $1,431 million, a significant increase over the $1,050 million from continuing operations in 2007. This capital expenditure was mainly funded from cash flows provided by operating activities, which totalled $1,147 million from continuing operations in 2008 compared to $855 million in 2007.

In 2009 Millicom expects to be free cash flow positive for the full year and to see free cash flow growing in subsequent years. This is the result of an improving operating margin and a declining capex to sales ratio going forward.

Property, plant and equipment increased to $2.8 billion as at December 31, 2008 from $2.1 billion as at December 31, 2007 due to the increased capital expenditure across the Group. Cash and cash equivalents decreased to $0.7 billion compared to $1.2 billion at the end of 2007 as the Group paid a shareholders’ dividend of $0.3 billion and the acquisition of Amnet was partially paid cash. Borrowings increased to $2.2 billion as at December 31, 2008 from $1.8 billion as at December 31, 2007, mainly as a result of additional operating company debt to finance the growth of the Group through capital expenditures. As at December 31, 2008, the Group had total equity of $1.7 billion compared to equity of $1.4 billion as at December 31, 2007.

The Company’s directors are as follows:

Name	Position	Independent	Year Appointed	Expiration of Term
Kent Atkinson	Member	Yes	2007	May 2009
Mia Brunell Livfors	Member	No	2007	May 2009
Donna Cordner	Member	No	2004	May 2009
Daniel Johannesson	Chairman	Yes	2003	May 2009
Michel Massart	Member	Yes	2003	May 2009
Marten Pieters	Member	Yes	2008	May 2009*
Allen Sangines-Krause	Member	Yes	2008	May 2009

*Mr. Marten Pieters resigned from the Board of Millicom on February 6, 2009.

At the 2008 Annual General Meeting of Shareholders (the “AGM”), Ms. Cristina Stenbeck did not stand for re-election after 5 years of service and ceased to be a member of the Board.

The Board met 6 times in person and held an additional 5 meetings by teleconference during 2008.

The Board has developed and continuously evaluates its work procedures in line with the corporate governance rules of NASDAQ in the USA regarding reporting, disclosure and other requirements applicable to listed companies. The Board has received confirmation from the Stockholm Stock Exchange that it is exempt from the Swedish Code of Corporate Governance because 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 divide the work between the Board and the President and Chief Executive Officer (the “CEO”). The Chairman has discussions with each member of the Board regarding the work procedures and the evaluation of the Board work. The other members of the Board evaluate the work of each other, each year. The Board also evaluates yearly the performance of the CEO. The main task of the Board committees is to work on behalf of the Board within their respective areas of responsibility. From time to time, the Board delegates authority to an ad hoc committee so that it may resolve a specific matter on its own without having to go before the full Board for approval.

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

• the Audit Committee
• the Compensation Committee
• the CSR Committee
• the Nominations Committee

Audit Committee. The Audit Committee convenes at least four times a year, and is currently comprised of three directors: Mr. Michel Massart (Chairman and financial expert), Mr. Kent Atkinson and Mr. Daniel Johannesson (who replaced Mr. Pieters following his resignation from the Audit Committee on February 6, 2009). This committee has responsibility for planning and reviewing the financial reporting process together with the preparation of the annual and quarterly financial reports and accounts and the involvement of external auditors in that process. The Audit Committee focuses particularly on compliance with legal requirements and accounting standards, the independence of external auditors, the audit fees, the internal audit function, the fraud risk assessment and ensuring that an effective system of internal financial controls is maintained. The ultimate responsibility for reviewing and approving the Group'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. The Compensation Committee is comprised of Mr. Daniel Johannesson (Chairman from January 2007), Ms. Mia Brunell Livfors, and Mr. Kent Atkinson. This committee reviews and makes recommendations to the Board regarding the compensation of the CEO and the other senior executives as well as the management succession planning. The Compensation Committee met 7 times during 2008.

CSR Committee. The CSR Committee was established in 2008 and is currently comprised of Ms. Mia Brunell Livfors (Chair) and Ms. Donna Cordner. The CSR committee has responsibility for overseeing the management of Corporate and Social Responsibility and making recommendations to the Board. The CSR committee met once in 2008.

Nominations Committee. The Nominations Committee is currently comprised of Mr. Daniel Johannesson (Chairman), Mr. Michel Massart and Mr. Allen Sangines-Krause (who replaced Mr. Pieters following his resignation from the Nominations Committee on February 6, 2009). This committee 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 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. The Nominations Committee met 3 times in 2008.

Corporate Policy Manual. The Board has adopted a Corporate Policy Manual, which is the Group’s central reference for all matters relating to its corporate governance policy. The Code of Ethics is a part of the Corporate Policy Manual. All senior executives, as well as every member of the Board, must sign a statement acknowledging that they have read, understood and will comply with the Code of Ethics.

Directors' Service Agreements. None of the directors have entered into service agreements with the Group or any of its subsidiaries providing for benefits upon termination of employment.