Subsidiaries and their Market Presence

        The following table shows certain information for each of Millicom's mobile operations as at December 31, 2011.

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CENTRAL AMERICA

        Millicom's mobile and cable operations in Central America are located in El Salvador, Guatemala, and Honduras Costa Rica and Nicaragua. Our Central American mobile licenses covered approximately 28 million people as at December 31, 2011. Our cable operation has a large network in Central America with approximately 1.4 million homes passed, which together with Millicom's existing mobile network gives Millicom opportunities for future growth with cost efficiencies. Our cable operation has approximately 721 thousand Revenue Generating Units ("RGUs") across Central America with cable and broadband customers in Guatemala, El Salvador, Honduras and Costa Rica as well as corporate data customers in Guatemala, Nicaragua, El Salvador and Honduras.

        Although explored by the Spanish early in the 16th century, initial attempts at colonizing Costa Rica proved unsuccessful due to a combination of factors, including: disease from mosquito-infested swamps, brutal heat, resistance by natives, and pirate raids. It was not until 1563 that a permanent settlement of Cartago was established in the cooler, fertile central highlands. The area remained a colony for some two and a half centuries. In 1821, Costa Rica became one of several Central American provinces that jointly declared their independence from Spain. Two years later it joined the United

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Provinces of Central America, but this federation disintegrated in 1838, at which time Costa Rica proclaimed its sovereignty and independence. Since the late 19th century, only two brief periods of violence have marred the country's democratic development. Although it still maintains a large agricultural sector, Costa Rica has expanded its economy to include strong technology and tourism industries. The standard of living is relatively high. Land ownership is widespread.

Economy

        Prior to the global economic crisis, Costa Rica enjoyed stable economic growth. The economy contracted 0.7% in 2009, but resumed growth at about 4% in 2010 and 2011. While the traditional agricultural exports of bananas, coffee, sugar, and beef are still the backbone of commodity export trade, a variety of industrial and specialized agricultural products have broadened export trade in recent years. High value added goods and services, including microchips, have further bolstered exports. 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; and Costa Rica has attracted one of the highest levels of foreign direct investment per capita in Latin America. However, many business impediments, such as high levels of bureaucracy, difficulty of enforcing contracts, and weak investor protection, remain. Poverty has remained around 15-20% for nearly 20 years, and the strong social safety net that had been put into place by the government has eroded due to increased financial constraints on government expenditures. Unlike the rest of Central America, Costa Rica is not highly dependent on remittances as they only represent about 2% of GDP. Immigration from Nicaragua has increasingly become a concern for the government. The estimated 300,000-500,000 Nicaraguans in Costa Rica legally and illegally are an important source of—mostly unskilled—labor, but also place heavy demands on the social welfare system. The US-Central American-Dominican Republic Free Trade Agreement (CAFTA-DR) entered into force on 1 January 2009, after significant delays within the Costa Rican legislature. CAFTA-DR will likely lead to increased foreign direct investment in key sectors of the economy, including the insurance and telecommunications sectors recently opened to private investors.

Cable

        We are the leading Cable operator in Costa Rica and recently launched fixed telephony with very good reception from the market, allowing us to now offer Triple Play. We have the best High Definition TV offer in the market and broadband speeds of up to 10 Mbs, which is the highest speed offered in the market by any provider. These have allowed us to position ourselves in the top of mind of consumers as a pioneer in technology

Telecommunications

        The government of Costa Rica moved to a total liberalized telecom market in the country from 2008. A new Telecommunications Law was enacted in June 2008 and the new regulatory body SUTEL is in operation. Amnet has obtained licenses to provide fixed telephony, internet, and data and value added services. The company started offering fixed line telephony services at the end of the first quarter of 2011, and will be able to offer customers triple play bundles (cable TV, internet and fixed telephony).

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        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 Cartegena, of the left-wing FMLN political party was elected as president.

Economy

        Despite being the smallest country geographically in Central America, El Salvador has the third largest economy in the region. The economy took a hit from the global recession and GDP contracted by 3.5% in 2009. The economy began a slow recovery in 2010 on the back of improved export and remittances figures. El Salvador's service-oriented economy depends largely on remittances and low-cost textile and agricultural exports. As of November 2010, remittances increased 2.3% compared to the same period in 2009, driven primarily by economic recovery in the U.S. Low-cost textile manufacturing, better known as 'maquilas', increased 1.3% as of September 2010 compared to the same period in 2009, while 'maquilas' exports increased 14.9% for the same period. Importantly, employment in the private and public sector, as of September 2010, increased 2.8% and 2.6% respectively, driven primarily by economic recovery in the manufacturing sector. For the same period, agricultural production increased 5.0%, stimulated by favorable international prices and credit alternatives. Remittances accounted for 17% of GDP in 2011, and about a third of all households receive these transfers. El Salvador has promoted an open trade and investment environment, and has embarked on a wave of privatizations extending to telecom, electricity distribution, banking, and pension funds. With the adoption of the US dollar as its currency in 2001, El Salvador lost control over monetary policy. Any counter-cyclical policy response to the downturn must be through fiscal policy, which is constrained by legislative requirements for a two-thirds majority to approve any international financing.

Telecommunications

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

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

        Telemóvil launched its operations in 1993 and was the only mobile services provider until 1999. Since its entry into the market, Telemóvil has expanded its coverage of the main cities rapidly and remains the market leader. The GSM network was launched in August 2004. Services offered also include broadband internet, fixed wireless telephony and public telephony. Telemóvil's 3G/HSDPA network was launched in September 2008 offering services such as video calls, mobile internet (datacards) and all current 3G network telecommunication services. Telemóvil was awarded a 15-year mobile license in September 1991 which was subsequently extended until 2018. Telemóvil acquired WiMAX spectrum in 1998. As at December 31, 2011, Millicom's network in El Salvador comprised of 1,048 cell sites and covered 94% of the total population.

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        In 2011 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 subsequently acquired by the Caribbean operator with the same name and in 2011 a merger was announce with Claro (América Móvil) of Mexico which 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.

Cable

        We are the leading Cable operator in El Salvador where we also offer broadband and fixed telephony. We have consolidated certain regions during the last year focusing in the quality of our product by improving our High Definition TV product and offering the highest Broadband speeds in the market. We have worked on the integration of the Cable business with our Mobile business and focused on improving Customer Service as a key aspect of our future growth.

        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 September 2011, Mr. Otto Perez Molina of the Patriotic Party was elected as president in a run-off election with 53.7% of the vote and took office in January 2012. The campaign of Mr. Perez advocated a hard-line approach to rising criminality in the country.

Economy

        Guatemala is the most populous of the Central American countries with a GDP per capita roughly one-half that of the average for Latin America and the Caribbean. The agricultural sector accounts for nearly 15% of GDP and half of the labor force; key agricultural exports include coffee, sugar, and bananas. Remittances increased by 6% over 2009 and GDP growth was almost 3%. Economic growth fell in 2009 as export demand from US and other Central American markets fell and foreign investment slowed amid the global recession, but the economy recovered gradually in 2010 - 2011 and is forecast to return to more normal growth rates by 2012.

        The 1996 peace accords, which ended 36 years of civil war, removed a major obstacle to foreign investment, and since then Guatemala has pursued important reforms and macroeconomic stabilization. The Central American Free Trade Agreement (CAFTA) entered into force in July 2006 spurring increased investment and diversification of exports, with the largest increases in ethanol and non-traditional agricultural exports. While CAFTA has helped improve the investment climate, concerns over security, the lack of skilled workers and poor infrastructure continue to hamper foreign direct investment. The distribution of income remains highly unequal with the richest decile comprising over 40% of Guatemala's overall consumption. More than half of the population is below the national poverty line and 15% lives in extreme poverty. Poverty among indigenous groups, which make up 38% of the population, averages 76% and extreme poverty rises to 28%. 43% of children under five are chronically malnourished, one of the highest malnutrition rates in the world. 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.

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Telecommunications

        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. Regulations to require registration by users of mobile services come into force in 2012.

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

        Comcel operates GSM/GPRS/EDGE and 3G/HSDPA networks. The GSM/GPRS/EDGE network was launched in August 2004 and the 3G/HSDPA network was launched in August 2008. Comcel also provides international long-distance services, roaming service, internet services and local telephony services. In January 1990, Comcel was awarded its initial 20-year license to operate a nationwide 800MHz network. In March 2003, Comcel was awarded a revised license to operate 10MHz of frequency for a period of 15 years until 2018. In August 1998, as validated in October 2001, the license to operate another 4MHz spectrum was awarded for the period until 2013. This license can then be extended for a further 15 years. Comcel acquired 25 MHz in the 2.5 GHz spectrum to operate WiMAX in July 2006. As at December 31, 2011, Millicom's network in Guatemala comprised of 2,981 cell sites and covered 99% of the total population.

        Comcel was the first mobile operator in Guatemala when it launched commercial operations in 1990. The operation enjoyed a sole provider position until 1999 when Telefónica and Telgua (owned by América Móvil) entered the market. In 2001, BellSouth of the U.S. entered the market as the fourth operator and Telefónica of Spain acquired BellSouth's operations in 2004. 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 in 2009 was purchased by Comcel, after Digicel failed to obtain an interconnection agreement with any other operators.

Cable

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

        Honduras's government system is a Democratic Constitutional Republic. Since the regional peace process in the late 1980s, democracy in Honduras has been strengthened. Presidential elections took place in November 2005, with the opposition candidate Manuel Zelaya Rosales of the Partido Liberal party being elected and taking office in January 2006. Mr. Zelaya left power in June 2009 and an intermediary government took his place to run the country until the new elections, held in November

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2009 with the same political parties leading the polls, and won by Porfirio Lobo Sosa with 56.3% of the vote, the candidate running for the National Party.

Economy

        Honduras, the second poorest country in Central America, suffers from extraordinarily unequal distribution of income, as well as high underemployment. While historically dependent on the export of bananas and coffee, Honduras has diversified its export base to include apparel and automobile wire harnessing. Nearly half of Honduras's economic activity is directly tied to the US, with exports to the US equivalent to 30% of GDP and remittances for another 20%. The US-Central America Free Trade Agreement (CAFTA) came into force in 2006 and has helped foster foreign direct investment (FDI), but physical and political insecurity may deter potential investors; about 70% of FDI is from US firms. The economy registered marginally positive economic growth in 2010, insufficient to improve living standards for nearly 60% of the population in poverty. The Lobo administration inherited a difficult fiscal position with off-budget debts accrued in previous administrations and government salaries nearly equivalent to tax collections. His government has displayed a commitment to improving tax collection and cutting expenditures. This enabled Tegucigalpa to secure an IMF Precautionary Stand-By agreement in October 2010. The IMF agreement has helped renew multilateral and bilateral donor confidence in Honduras following the Zelaya administration's economic mismanagement and the political coup.

Telecommunications

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

        Millicom has a 66.67% equity interest in Telefonica Celular S.A. (Celtel). The remaining 33.33% of Celtel is owned by Proempres Panama S.A. (Proempres), a privately-held company controlled by our local partners. On July 1, 2010 Millicom reached agreement with Proempres whereby Proempres granted Millicom an unconditional call option for the next five years for its 33% stake in Celtel and Millicom granted to Proempres a conditional put option for the same duration in the event of a change of control of Millicom. As a result of the above agreement as from July 1, 2010 Millicom accounts for this operation as subsidiary using the full consolidation accounting method.

        Celtel operates a GSM/GPRS/EDGE network and a 3G/HSDPA network. The 3G/HSDPA network was launched in August 2008. Celtel also provides international long-distance services and local telephony services. In June 1996, Celtel was awarded a 10-year license to operate a nationwide mobile network for a price of US$5.1 million. The license was transformed into a 25-year license in March 2005 with an expiry date of June 2021 at a cost of US$4.8 million. Celtel has already acquired a WiMAX license but have not yet performed a commercial launch. As at December 31, 2011, Millicom's network in Honduras comprised of 1,536 cell sites and covered 95% of the total population.

        Celtel launched commercial operations in 1996 as the first mobile operator in Honduras and today operates a GSM and a 3G network. Until late 2003, Celtel enjoyed sole provider status in the mobile market, when Megatel entered the market with a GSM network as the second operator. In the first quarter of 2008, América Móvil (previously Megatel) launched its 3G network. The third mobile license was issued to Hondutel (the State owned fixed line incumbent) but its operations have only limited

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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, and in December 2011 has been acquired by América Móvil (Claro).

Cable

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

        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. Britain occupied the Caribbean Coast in the first half of the 19th century, but gradually ceded control of the region in subsequent decades. 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, but voting in 2006 announced the return of former Sandinista President Daniel Ortega Saavedra. The 2008 municipal elections were characterized by widespread irregularities. Nicaragua's infrastructure and economy—hard hit by the earlier civil war and by Hurricane Mitch in 1998—are slowly being rebuilt, but democratic institutions face new challenges under the Ortega administration.

Economy

        Nicaragua, the poorest country in Central America and the second poorest in the Hemisphere, has widespread underemployment and poverty. The US-Central America Free Trade Agreement (CAFTA) has been in effect since April 2006 and has expanded export opportunities for many agricultural and manufactured goods. Textiles and apparel account for nearly 60% of Nicaragua's exports, but increases in the minimum wage during the Ortega administration will likely erode its comparative advantage in this industry. Ortega's promotion of mixed business initiatives, owned by the Nicaraguan and Venezuelan state oil firms, together with the weak rule of law, could undermine the investment climate for domestic and international private firms in the near-term. Nicaragua relies on international economic assistance to meet internal- and external-debt financing obligations. Foreign donors have curtailed this funding, however, in response to November 2008 electoral fraud. In early 2004, Nicaragua secured some $4.5 billion in foreign debt reduction under the Heavily Indebted Poor Countries (HIPC) initiative. Managua still struggles with a high public debt burden although it succeeded in reducing that burden substantially in 2011. The economy grew at a rate of about 4% in 2011.

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Telecommunications / Cable

        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. Since privatization, access to fixed-line and mobile-cellular services has improved but teledensity still lags behind other Central American countries.

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, 2011.

        Bolivia's system of government is a Social Unitarian State. The government has pursued an economic and social reform agenda since the early 1990s. Democratic civilian rule was established in 1982, but leaders have faced difficult problems of deep-seated poverty, social unrest and illegal drug production. In December 2005 Bolivians elected Movement Toward Socialism leader Evo Morales as president by the widest margin of any leader since the restoration of civilian rule in 1982, after he ran on a promise to change the country's traditional political class and empower the nation's poor majority. However, since taking office, his controversial strategies have exacerbated racial and economic tensions between the Amerindian populations of the Andean west and the non-indigenous communities of the eastern lowlands. One of these strategies was the "recuperation of the natural resources to the hands of the state": nationalization of the entire hydrocarbon sector (gas, production, transportation, refining, and storage companies), the main mining companies, and also Entel, the main telecom operator previously privatized in 1997. This nationalization process has been confirmed under the new constitution approved in January 2009. New elections were held in December 2009 and Evo Morales was confirmed as president in January 2010. The government has majorities in both the senate and parliament, resulting in increased social stability and smoother enactment of new laws.

Economy

        Bolivia is one of the poorest and least developed countries in Latin America. Following a disastrous economic crisis during the early 1980s, reforms spurred private investment, stimulated economic growth, and cut poverty rates in the 1990s. The period 2003-2005 was characterized by political instability, racial tensions, and violent protests against plans—subsequently abandoned—to export Bolivia's newly discovered natural gas reserves to large northern hemisphere markets. In 2005, the government passed a controversial hydrocarbons law that imposed significantly higher royalties and required foreign firms then operating under risk-sharing contracts to surrender all production to the state energy company in exchange for a predetermined service fee. After higher prices for mining and hydrocarbons exports produced a fiscal surplus in 2008, the global recession in 2009 slowed growth. A decline in commodity prices that began in late 2008, a lack of foreign investment in the mining and hydrocarbon sectors, a poor infrastructure, and the suspension of trade benefits with the United States pose challenges for the Bolivian economy. During 2010-2011 an increase in world commodity prices resulted in large trade surpluses. The country is a major producer of tin and gold, and, although its exports of zinc and silver are small parts of the world market, they account for a significant portion of export earnings. Bolivia also has reserves of antimony, tungsten (wolfram), lead, copper, and lithium.

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Telecommunications

        In 2011 a new Telecommunications Law was voted whereby licenses (previously concessions) will have a 15 year duration period, universal service obligations (fund) introduced, as well as tariff and roaming service requirements, all of which have yet to be enacted.

        The new constitution guarantees the "concession previous rights". As a result, our Concession Contract rights were not affected. One of the most relevant changes resulting from the new constitution was the elimination of the Sirese system, an autonomous government agency responsible for regulating the five basic utility sectors: telecommunications, electricity, transport, oil and gas and water. These functions were taken over by a Government Ministry. Regulations to require registration by users of fixed line and mobile services entered into force in 2010. Renegotiation of concession contracts are expected in the near future with a focus on coverage and quality of service.

        Millicom has a 100% equity interest in Telefonica Celular de Bolivia S.A. (Telecel Bolivia). Millicom accounts for this operation as a subsidiary using the full consolidation accounting method.

        Telecel Bolivia 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 Bolivia 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 Bolivia started offering nationwide GSM services in December 2005 and was the first and only operator in Bolivia to offer 3G services since 2008. Telecel Bolivia 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 Bolivia's license was extended in 1997 to cover the rest of the country for a period of 20 years. In December 2002, Telecel Bolivia was also awarded a 40-year license to provide long-distance telecommunication services in Bolivia. This license is mainly used to carry Telecel Bolivia's mobile traffic. In May 2006, Telecel Bolivia was awarded a 40-year data concession to provide services in Bolivia. As at December 31, 2011, Millicom's network in Bolivia comprised 982 cell sites and covered 58% of the total population.

        From 1991 to 1996, Telecel Bolivia 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. More recently, Entel was renationalized. In 2001 NuevaTel (a joint venture, now 72% owned by Trilogy International Partners of the United States, and 28% by Cooperative of Telecommunications Cochabamba, one of Bolivia's largest telecommunication cooperatives) entered the market with a GSM network and in 2010 commenced 3G services. Since 2002 Entel heavily subsidized GSM services and since then has been the leading operator in terms of customer numbers.

        Colombia's system of government is a Constitutional Republic. The President of the Republic of Colombia (Colombia) is Mr. Juan Manuel Santos who has been in office since August 2010, succeeding former president Mr. Alvaro Uribe who held the presidential office since August 2002. A 40 year conflict between government forces, anti-government insurgent groups and illegal paramilitary groups, heavily funded by the drug trade, escalated during the 1990's. The insurgents lack the military or popular support necessary to overthrow the government and violence has been decreasing since 2002 but insurgents continue attacks against civilians and large parts of the countryside are under guerrilla influence. Most paramilitary members have demobilized since 2002 in an ongoing peace process,

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although their commitment to ceasing illicit activity is unclear. During his term former president Alvaro Uribe stepped up efforts to reassert government control throughout the country. However, neighboring countries worry about the violence spilling over their borders. In January 2011, Colombia assumed a non-permanent seat on the UN Security Council for 2011-2012.

Economy

        Colombia experienced accelerating growth between 2002 and 2007, chiefly due to improvements in domestic security, rising commodity prices, and to President Uribe's pro-market economic policies. Foreign direct investment reached a record $10 billion in 2008, but dropped to $7.2 billion in 2009, before beginning to recover in 2010, notably in the oil sector. Pro-business reforms in the oil and gas sectors and export-led growth, fueled mainly by the Andean Trade Promotion and Drug Eradication Act, have enhanced Colombia's investment climate. Inequality, underemployment, and narco-trafficking remain significant challenges, and Colombia's infrastructure requires major improvements to sustain economic expansion. The Santos administration has highlighted five "locomotives" to stimulate economic growth: extractive industries; agriculture; infrastructure; housing; and innovation. Colombia is third largest exporter of oil to the United States. Due to the global financial crisis and weakening demand for Colombia's exports, Colombia's economy grew only 2.7% in 2008, and 0.8% in 2009 but rebounded to around 4.4% in 2010The economy continued to improve, buoyed by reduced public debt, the export-oriented growth strategy, improved security, and high commodity prices (oil in particular). The government continues to encourage exporters to diversify their customer base beyond the United States and Venezuela, traditionally Colombia's largest trading partners; the Santos administration continues to pursue free trade agreements with Asian and South American partners and awaits the approval of a Canadian trade accord by Canada's and EU's parliaments. The business sector remains concerned about Venezuela's trade restrictions on Colombian exports, an appreciating domestic currency, and the pending US Congressional approval of the US-Colombia Trade Promotion Agreement. . In late 2010, Colombia experienced its most severe flooding in decades, with damages estimated to exceed $6 billion.

Telecommunications

        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. Colombia is a "calling party pays" country. Interconnection is mandatory and it cannot be interrupted without previous permission from the regulator. Millicom's operation, Colombia Móvil S.A. (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 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.

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

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        In 2011, Millicom acquired 40% of the subsidiary of American Towers in which Colombia Móvil is selling and leasing back a portion of its cell sites. At the same time we have provided our local partners with a put option that expires in July 2013 to acquire up to half of our shareholding in this entity.

        Colombia Móvil was awarded three licenses in February 2003 to offer Personal Communications System (PCS) services in the three zones, covering all of Colombia. The PCS licenses each have a term of 10 years and allow Colombia Móvil to offer voice, data and video services without additional license requirement for value added services. Additionally, Colombia Móvil has one license for offering carrier services, with a term of ten years, extendable for an additional ten years. Colombia Móvil S.A. ESP is operating in Colombia with GSM/GPRS/EDGE/HSPA/HSPA+ technology, on the 1900 MHz band, with 55 MHz of spectrum in the 1900MHz band composed of 50MHz of spectrum which is expiring in 2013 and 5MHz which is due to expire in 2021. Colombia Móvil has another license that permits it to offer several telecommunication services, named "Título Habilitante Convergente" which was awarded in April 2008 and it has a term of 10 years renewable. Through this license, Colombia Móvil is offering value added services, has offered international gateway services since July 2003 and is able to offer bearer services. As at December 31, 2011, Millicom's network in Colombia comprised 3,095 cell sites (of which 1,346 owned and operated by the subsidiary of American Towers in Colombia) and covered 74% of the total population.

        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 three mobile companies, with a fourth virtual player Uff, entering in 2010 providing services on Colombia Móvil's network: Movistar, a subsidiary of the Telefónica group, Comcel, a subsidiary of América Móvil, Avantel, a digital trunking operator (privately owned) and Colombia Móvil, majority owned by Millicom.

        Paraguay's governmental system is a Constitutional Republic. The 35-year military dictatorship of Alfredo Stroessner was overthrown in 1989 and, despite a marked increase in political infighting in recent years, relatively free and regular presidential elections have been held since then. President Nicanor Duarte Frutos of the Partido Colorado political party oversaw a period of economic recovery and greater stability of public finances after taking office in 2003. Presidential elections which took place in 2008 resulted in the election of Fernando Lugo (a former Roman Catholic bishop allied with the main opposition party, the Liberal party). Next elections will be held in April 2013.

Economy

        Landlocked Paraguay has a market economy distinguished by a large informal sector, featuring re-export of imported consumer goods to neighboring countries, as well as the activities of thousands of microenterprises and urban street vendors. A large percentage of the population, especially in rural areas, derives its living from agricultural activity, often on a subsistence basis. Because of the importance of the informal sector, accurate economic measures are difficult to obtain. The economy grew rapidly 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. Paraguay is the sixth largest soy producer in the world. Drought hit in 2008, reducing agricultural exports and slowing the economy even before the onset of the global recession. The economy fell 3.8% in 2009, as lower

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world demand and commodity prices caused exports to contract. The government reacted by introducing fiscal and monetary stimulus packages. Growth resumed at a 14.5% level in 2010 the highest in South America but slowed to about 6% in 2011 as the stimulus subsided. Political uncertainty, corruption, limited progress on structural reform, and deficient infrastructure are the main obstacles to growth.

Telecommunications

        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 the Copaco Workers Union.

        Telefonica Celular del Paraguay S.A (Telecel) is 100% owned by Millicom. Millicom accounts for this operation as a subsidiary, using the full consolidation accounting method.

        Telecel 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, broadband mobile and fiber optic in Paraguay and was the market leader in the Paraguayan broadband market in 2011.

        In 2008, Telecel launched 3G/HSDPA services. Telecel was awarded a 10-year license for an 800MHz network in 1991, which was renewed in October 2001, October 2006, and in 2011 renewed until 2016. The 1900MHz PCS license that was due to expire in November 2012 was also renewed for an additional 5-year period. The ISP services license was renewed in 2009 until 2014 and in 2010 Conatel announced that both ISP and data licenses were to become a single license. In August 2008 Telecel launched Fiber to the Home (FTTH) services, 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. As at December 31, 2011, Telecel's network in Paraguay comprised 983 cell sites and covered 94% of the total population.

        Until 1998, Telecel enjoyed a sole provider 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. In 2010 Vox was acquired by Copaco, the state owned fixed line operator. Hutchison Whampoa-owned Porthable entered the market as the fourth mobile operator in 2001, followed in 2005 by América Móvil, which acquired Porthable, re-named CTI, from Hutchison Whampoa, currently operating under the brand name Claro.

Cable

        During 2012 Telecel plans to commence roll-out of a greenfield cable operation in the greater Asunción area.

AFRICA

        Millicom's Africa cluster consists of its mobile operations in Chad, the Democratic Republic of Congo, Ghana, Mauritius, Rwanda, Senegal and Tanzania. Our African licenses covered approximately 176 million people as at December 31, 2011.

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        Chad's government system is a Unitary Republic based on the amended constitution of June 2005. The country endured three decades of civil war as well as an invasion by Libya before peace was restored in 1990. The government drafted a democratic constitution and held flawed presidential elections in 1996 and 2001. In 1998, a rebellion broke out in northern Chad, which continues to sporadically flare up despite several peace agreements between the government and the rebels. In 2005, new rebel groups emerged in Western Sudan (Darfur) and have made probing attacks into eastern Chad. Power remains in the hands of an ethnic minority. In June 2005, President Idriss Déby held a referendum successfully removing constitutional term limits. In April 2006, an attempted coup against Mr. Déby's government was defeated. In May 2006, Mr. Déby was re-elected president for a five-year term. At the time of the election, the country was facing a growing conflict with Sudan, high unemployment and a growing insurgency fueled by deserting members of the Chadian military and the United Front for Democratic Change rebel group. During the first two weeks of February 2008, rebel groups opposing the Government of Mr. Deby made attacks on cities along the Sudanese border and into N'Djamena. By order of the Government, during this period all networks were shut down in N'Djamena and along the Sudanese border. In 2008-2009, after the Chadian Army had defeated three major rebel attacks and the Sudanese Army repulsed a rebel attack that reached the suburbs of Khartoum, international pressure for the normalization of Chad-Sudan relations intensified. Several Chad-Sudan agreements brokered by third parties had failed from 2006 to 2008, following which N'Djamena and Khartoum moved to resolve their differences bilaterally. This resulted in January 2010 in a Chad-Sudan peace accord, according to which the sides agreed to end the proxy war by breaking with rebel clients, normalize relations, and secure their border through joint military cooperation. President Deby publicly renounced past support for Sudanese rebels, a key Sudanese and international demand, and committed Chad to assist international efforts to resolve the Darfur crisis through peaceful negotiation. In April 2011 Mr. Déby was re-elected with 84% of the vote for a further five-year term

Economy

        Chad's primarily agricultural economy will continue to be boosted by major foreign direct investment projects in the oil sector that began in 2000. At least 80% of Chad's population relies on subsistence farming and raising of 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 US companies has been investing $3.7 billion to develop oil reserves—estimated at 1 billion barrels—in southern Chad. Chinese companies are also expanding exploration efforts and are currently building a 311-km pipeline and the country's first refinery. The nation's total oil reserves are estimated at 1.5 billion barrels. Oil production came on stream in late 2003. Chad began to export oil in 2004. Cotton, cattle, and gum arabic provide the bulk of Chad's non-oil export earnings.

Telecommunications

        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

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has sold 60% of Sotel Tchad to Libyan state-owned firm LAP Green Network for $90 million. Due to breach of contract 2011, the Chadian government annulled the contract and restored the national operator as a national asset.

        Millicom Tchad S.A. (Millicom Tchad) is 100% owned by Millicom. Millicom accounts for this operation as a subsidiary, using the full consolidation accounting method.

        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, 2011, Millicom's network in Chad comprised 377 cell sites and covered 78% of the total population.

        Airtel Tchad, in which Indian based Bharti is the 100% majority shareholder, is the only other major mobile operator in Chad. Airtel Tchad was acquired in 2010 from Zain which started operations as the first mobile operator in Chad in 2000.

        The DRC's government system is a Unitary Republic. Following the withdrawal of Rwandan forces from eastern DRC in 2002, the Pretoria Accord was signed by all relevant parties to end four years of regional war involving Angola, Chad, Namibia, Sudan and Zimbabwe supporting the Congolese regime being challenged by Rwanda and Uganda. A transitional government was set up in July 2003 with Joseph Kabila. He was joined by four vice-presidents representing the former government, former rebel groups and the political opposition. New elections had been due by June 2005 after a transition period of two years. The transitional government held a successful constitutional referendum in December 2005 and elections considered generally free and fair for the presidency, National Assembly, and provincial legislatures in 2006. These were the first democratic elections in approximately 40 years, since the election of Patrice Lumumba, Congo's first ever elected head of state. President Kabila was inaugurated president in December 2006. Provincial assemblies were constituted in early 2007, and elected governors and national senators in January 2007. In 2008, the war in the East started again, with one million refugees displaced, and the international community and the United Nations fully involved in the humanitarian crisis. On March 23, 2009, the Government of the D.R.C. signed separate peace agreements with (1) the CNDP, (2) the North Kivu armed groups, and (3) the South Kivu armed groups. The rebel groups agreed to transform their movements from military to political in nature, while the government promised to work toward integrating rebel soldiers and officials into the FARDC, national police, and national and local political and administrative units. In November 2011 President Kabila was re-elected for a further five-year term although allegations of corruption and incompetence in electoral proceedings led to sporadic social unrest and the declaration of the leader of the opposition as being the rightful president.

Economy

        The economy of the Democratic Republic of the Congo—a nation endowed with vast potential wealth—is slowly recovering from decades of decline. Systemic corruption since independence in 1960 and conflict that began in May 1997 dramatically reduced national output and government revenue, increased external debt, and resulted in the deaths of more than 5 million people from violence,

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famine, and disease. Foreign businesses curtailed operations due to uncertainty about the outcome of the conflict, lack of infrastructure, and the difficult operating environment. Conditions began to improve in late 2002 with the withdrawal of a large portion of the invading foreign troops. The transitional government reopened relations with international financial institutions and international donors, and President Kabila began implementing reforms. Progress has been slow and the International Monetary Fund curtailed their program for the DRC at the end of March 2006 because of fiscal overruns. Much economic activity still occurs in the informal sector, and is not reflected in GDP data. Renewed activity in the mining sector, the source of most export income, boosted Kinshasa's fiscal position and GDP growth from 2006-2008, however, the government's review of mining contracts that began in 2006, combined with a fall in world market prices for the DRC's key mineral exports temporarily weakened output in 2009, leading to a balance of payments crisis. The recovery in mineral prices beginning in mid 2009 boosted mineral exports, and emergency funds from the IMF boosted foreign reserves. An uncertain legal framework, corruption, and lack of transparency in government policy are long-term problems for the mining sector and the economy as a whole. The global recession cut economic growth in 2009 to less than half its 2008 level, but growth returned to 6-7% in 2010-2011. The DRC signed a Poverty Reduction and Growth Facility with the IMF in 2009 and received $12 billion in multilateral and bilateral debt relief in 2010.

Telecommunications

        DRC's incumbent fixed line operator is the "Office Congolais des Postes et des Télécommunications" (OCPT). It operates an outdated, poorly managed analogue fixed-line network of approximately 10,000 lines mainly concentrated in the capital city of Kinshasa. The Autorité de Régulation de la Poste et des Télécommunications du Congo (ARPTC) is in charge of regulating the telecommunications sector. Legislation has been prepared but not yet implemented which will formally end the OCPT's monopoly and allow for market liberalization. To date, the government has not developed a telecommunications policy. As the DRC lacks the funds to invest in a modern fixed-line infrastructure, the country's mobile sector has been facing high demand in recent years. According to the Ministry of Telecommunications, which is charged with the management of spectrum and licenses, 3G licenses are expected to be auctioned in 2012. Recently, the government has introduced a temporary minimum tariff to protect consumers and national interests, which has led to Millicom's operation, Oasis S.P.R.L. (Oasis), significantly increasing its on-net tariff.

        Oasis is 100% owned by Millicom. Millicom accounts for this operation as a subsidiary, using the full consolidation accounting method.

        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. Oasis also has an international gateway. As at December 31, 2011, Millicom's network in DRC comprised 774 cell sites (of which 204 are off), and covered 76% of the Kinshasa Bas-Congo Region population. In December 2010 an agreement was reached with Helios Towers DRC, in which 729 towers will be sold to Helios DRC, as part of an outsourcing deal in which Helios DRC will manage the towers and provide related services to Oasis. By December 31, 2011 approximately 50% of the towers had been transferred, and Millicom had acquired a 40% interest in Helios Towers DRC.

        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 2010, Zain was acquired by Airtel. 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

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coverage to a large number of cities. The fourth operator, CCT, jointly owned by Chinese telecom equipment provider ZTE (51%) and France Telecom which acquired a 49% stake from the government in 2011, launched its GSM network in January 2002. Other GSM licenses were granted in 2008 to the following operators: Niletel (present in Sierra Leone), Hits Telecom (present in Tanzania and Equatorial Guinea) and MTN.

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

Economy

        Ghana is well endowed with natural resources and agriculture accounts for roughly one-quarter of GDP and employs more than half of the workforce, mainly small landholders. The services sector accounts for 50% of GDP. Gold and cocoa production and individual remittances are major sources of foreign exchange. Oil production at Ghana's offshore Jubilee field began in December 2010 and is expected to boost economic growth. Estimated oil reserves have jumped to almost 700 million barrels. Ghana signed a Millennium Challenge Corporation (MCC) Compact in 2006, which aims to assist in transforming Ghana's agricultural sector. Ghana opted for debt relief under the Heavily Indebted Poor Country (HIPC) program in 2002, and is also benefiting from the Multilateral Debt Relief Initiative that took effect in 2006. In 2009 Ghana signed a three-year Poverty Reduction and Growth Facility with the IMF to improve macroeconomic stability, private sector competitiveness, human resource development, and good governance and civic responsibility. Sound macro-economic management along with high prices for gold and cocoa helped sustain GDP growth in 2008-11.

Telecommunications

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

        Millicom Ghana Company Limited (Millicom Ghana) is 100% owned by Millicom. Millicom accounts for this operation as a subsidiary, using the full consolidation accounting method.

        Millicom Ghana was the first mobile operator in Ghana, having commenced operations in 1992. Millicom Ghana introduced the concept of prepaid services in Ghana in 1998. Millicom Ghana's GSM license authorizes it to provide mobile and local fixed wireless services. Although Millicom Ghana applied for a GSM license in 2000, it was not allowed to launch GSM services for approximately two years until July 2002 when it launched its GSM operation, which led to an important growth in its

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customer base. In December 2004, the NCA issued Millicom Ghana a formal GSM operating license that is valid for 15 years. Under this license, Millicom Ghana has 8 MHz of spectrum in the 900 band and has been granted an additional 10 MHz in the 1800 band. Millicom Ghana also acquired an International Gateway license in June 2005. This license is valid for 10 years. In March 2006, Millicom Ghana introduced the tigo® brand 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 acquired a 3G license in the last quarter of 2008, and rolled-out 3G services in 2011. In January 2010, Millicom's operation in Ghana signed a sale and lease-back agreement with Helios Towers Ghana, a direct subsidiary of Helios Towers Africa, for most of its sites, almost all of which have been transferred to Helios Towers Ghana during 2010 and 2011. As at December 31, 2011, Millicom's network in Ghana comprised 812 cell sites and covered 80% of the total population.

        In addition to Millicom Ghana, four other companies offer mobile services in the country: Expresso, MTN, Vodafone and Airtel. MTN, a South African mobile operator previously known as Areeba, began operations in 1996 as the third operator and operates a nation-wide GSM 900/1800 MHz network. MTN currently has the largest network coverage in Ghana. Vodafone operates a GSM 900/1800 MHz network it acquired from OneTouch, which entered the market in 2000 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 and now operates CDMA service with limited coverage. Kasapa, formerly known as Celltel, was acquired in 2010 by Expresso, and is the smallest Mobile operator in Ghana. Westel, the national fixed line operator was bought by Zain during 2007 and in 2010 Zain was acquired by Airtel. Westel has both fixed and mobile license and started providing services in 2008. Glo, a Nigerian operator, which was due to launch in 2009 has not yet launched.

        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 and was re-elected in May 2010 within a coalition of the Labor Party, the Militant Socialist Movement and the Social Democrat Party. Stated priorities of the government are improvement of road infrastructures, the security of the people, education, and health and youth development.

Economy

        Since independence in 1968, Mauritius has developed from a low-income, agriculturally based economy to a middle-income diversified economy with growing industrial, financial, and tourist sectors. For most of the period, annual growth has been in the order of 5% to 6%. This remarkable achievement has been reflected in more equitable income distribution, increased life expectancy, lowered infant mortality, and a much-improved infrastructure. The economy rests on sugar, tourism, textiles and apparel, and financial services, and is expanding into fish processing, information and communications technology, and hospitality and property development. Sugarcane is grown on about 90% of the cultivated land area and accounts for 15% of export earnings. The government's development strategy centers on creating vertical and horizontal clusters of development in these

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sectors. Mauritius has attracted more than 32,000 offshore entities, many aimed at commerce in India, South Africa, and China. Investment in the banking sector alone has reached over $1 billion. Mauritius, with its strong textile sector, has been well poised to take advantage of the Africa Growth and Opportunity Act (AGOA). Mauritius' sound economic policies and prudent banking practices helped to mitigate negative effects from the global financial crisis in 2008-09. GDP grew more than 4% per year in 2010-2011 and the country continues to expand its trade and investment outreach around the globe.

Telecommunications

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

        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). Emtel acquired WiMAX spectrum in 2007 and has a WiMAX network with 11 base stations. Implementation of the Telecommunications Directive (1 of 2008) to reduce interconnect tariffs to the state owned fixed-line infrastructure was implemented in May 2008. Emtel operates a GSM network which is GPRS/EDGE enabled and a UMTS/3G/HSPA network. As at December 31, 2011, Millicom's network in Mauritius comprised 290 cell sites and covered 92% of the total population.

        Emtel entered the market in 1989 as the first mobile operator in the country. Until 1996, Emtel enjoyed a sole provider 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. MTML, the fourth operator has launched its services in the latter part of 2011.

        In 1959, three years before independence from Belgium, the majority ethnic group, the Hutus, overthrew the ruling Tutsi king. Over the next several years, thousands of Tutsis were killed, and some 150,000 driven into exile in neighboring countries. The children of these exiles later formed a rebel group, the Rwandan Patriotic Front (RPF), and began a civil war in 1990. The war, along with several political and economic upheavals, exacerbated ethnic tensions, culminating in April 1994 in the genocide of roughly 800,000 Tutsis and moderate Hutus. The Tutsi rebels defeated the Hutu regime and ended the killing in July 1994, but approximately 2 million Hutu refugees, many fearing Tutsi retaliation, fled to neighboring Burundi, Tanzania, Uganda, and Democratic Republic of Congo (at that time Zaire). Since then, most of the refugees have returned to Rwanda, but several thousand remained in the neighboring Democratic Republic of the Congo and formed an extremist insurgency bent on

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retaking Rwanda, much as the RPF tried in 1990. Rwanda held its first local elections in 1999 and its first post-genocide presidential and legislative elections in 2003. In 2009, Rwanda staged a joint military operation with the Congolese Army in DRC to root out the Hutu extremist insurgency there and Kigali and Kinshasa restored diplomatic relations. Rwanda also joined the Commonwealth in late 2009. During 2010 a second presidential election was completed and the incumbent Mr. Paul Kagame, was re-elected until 2017.

Economy

        Rwanda is a poor rural country with about 90% of the population engaged in (mainly subsistence) agriculture and some mineral and agro-processing. Tourism, minerals, coffee and tea are Rwanda's main sources of foreign exchange. Minerals exports declined 40% in 2009-10 due to the global economic downturn. The 1994 genocide decimated Rwanda's fragile economic base, severely impoverished the population, particularly women, and temporarily stalled the country's ability to attract private and external investment. However, Rwanda has made substantial progress in stabilizing and rehabilitating its economy to pre-1994 levels. GDP has rebounded and inflation has been curbed. Nonetheless, a significant percent of the population still live below the official poverty line... Despite Rwanda's fertile ecosystem, food production often does not keep pace with demand, requiring food imports. Rwanda continues to receive substantial aid money and obtained IMF-World Bank Heavily Indebted Poor Country (HIPC) initiative debt relief in 2005-06, although these levels have been impacted in 2010 with the global economic turndown. In recognition of Rwanda's successful management of its macro economy, in 2010, the IMF graduated Rwanda to a Policy Support Instrument (PSI). Rwanda also received a Millennium Challenge Account Compact in 2008. Africa's most densely populated country is trying to overcome the limitations of its small, landlocked economy by leveraging regional trade. Rwanda joined the East African Community and is aligning its budget, trade, and immigration policies with its regional partners. The government has embraced an expansionary fiscal policy to reduce poverty by improving education, infrastructure, and foreign and domestic investment and pursuing market-oriented reforms, although energy shortages, instability in neighboring states, and lack of adequate transportation linkages to other countries continue to handicap growth. The Rwandan government is seeking to become regional leader in information and communication technologies. In 2010, Rwanda neared completion of the first modern Special Economic Zone (SEZ) in Kigali. The SEZ seeks to attract investment in all sectors, but specifically in agribusiness, information and communications technologies, trade and logistics, mining, and construction. The global downturn hurt export demand and tourism, but economic growth is recovering, driven in large part by the services sector, and inflation has been contained. On the back of this growth, government is gradually ending its fiscal stimulus policy while protecting aid to the poor. In 2011 rises in global food and fuel prices increased inflation in Rwanda from 1% in January to more than 7% in October.

Telecommunications

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

        Tigo Rwanda S.A. (Tigo Rwanda) is 87.5% owned by Millicom. Millicom accounts for this operation as a subsidiary, using the full consolidation accounting method.

        In late 2008, Millicom was successful in its tender against three other bidders for the third national mobile license in Rwanda. Millicom set up Tigo Rwanda and, after roll-out of the network, services

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were launched in December 2009. As at December 31, 2011, Millicom's network in Rwanda comprised 261 cell sites and covered 98% of the population.

        A privatization strategy for Rwandatel was adopted in 2003, in which the government committed to sell all of its shares in the operator. In order to promote competition in the telecommunications sector, Rwandatel sold its 28% stake in MTN Rwandacell in 2004. As the main cellular provider, MTN Rwandacell currently has coverage in all of the provinces in Rwanda, covering more than 90% of the country. The operator mainly supplies mobile services, but is now offering internet services via its general packet radio service (GPRS) and UMTS (3G) cell phone network. The operator has also started to roll out wireless broadband data services using WiMax, and, with its new fixed-line license, has started offering fixed-line services. In 2011 Rwandatel's license was revoked by the government after failing to comply with license obligations, and recently acquired by Bharti who will enter the market shortly.

        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 and results from the next presidential election which is taking place from February 2012 are currently unknown.

Economy

        Senegal relies heavily on donor assistance. The country's key export industries are phosphate mining, fertilizer production, and commercial fishing. The country is also working on iron ore and oil exploration projects. In January 1994, Senegal undertook a bold and ambitious economic reform program with the support of the international donor community. Government price controls and subsidies have been steadily dismantled. After seeing its economy contract by 2.1% in 1993, Senegal made an important turnaround, thanks to the reform program, with real growth in GDP averaging over 5% annually during 1995-2008. Annual inflation had been pushed down to the single digits. The country was adversely affected by the global economic downturn in 2009 and GDP growth fell below 2%. As a member of the West African Economic and Monetary Union (WAEMU), Senegal is working toward greater regional integration with a unified external tariff and a more stable monetary policy. High unemployment, however, continues to prompt illegal migrants to flee Senegal in search of better job opportunities in Europe. 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 which was completed in 2010. Senegal received its first disbursement from the $540 million Millennium Challenge Account compact it signed in September 2009 for infrastructure and agriculture development. In 2010, the Senegalese people protested against frequent power cuts. The government pledged to expand capacity by 2012 and to promote renewable energy but until Senegal has more capacity, more protests are likely and economic activity will be hindered. During the year, bakers protested government price controls on bread. Foreign investment in Senegal is constrained by Senegal's business environment, which has slipped in recent years, and by perceptions of corruption.

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Telecommunications

        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.

        Sentel GSM S.A. (Sentel) is 100% owned by Millicom. Millicom accounts for this operation as a subsidiary, using the full consolidation accounting method.

        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. As at December 31, 2011, Millicom's network in Senegal comprised 619 cell sites and covered 73% of the total population.

        Sentel was awarded a 20-year concession to operate a nationwide network in July 1998. The concession is renewable every five years after the expiry of the original concession, in 2018, subject to the approval of the Senegalese authorities and provided Sentel has complied with the terms of the concession. At the time of the grant of the concession, the Senegalese government had announced certain amendments to the concession. No amendments to the concession have been implemented to date. The government that took office in 2000 repeatedly publicly questioned the status and the validity of Sentel's concession. In August 2002, Millicom and the government entered into an agreement whereby they agreed to negotiate in good faith certain mutually acceptable new conditions that would constitute an amendment of Sentel's 1998 concession. In 2008, the government again questioned the status and the validity of Sentel's concession. On November 11, 2008, Millicom International Operations B.V. (MIO B.V.), a wholly owned Millicom subsidiary, and Sentel instigated arbitration proceedings with the International Center for the Settlement of Investment Disputes (ICSID) against the Republic of Senegal under provisions of the Sentel license and international law. MIO B.V. and Sentel seek compensation for the purported expropriation of the Senegal license and monetary damages for breach of the license. During 2010 the government withdrew its case from the Senegalese courts, and a hearing at the ICSID occurred in December 2011 from which a ruling is expected mid 2012.

        The telecommunications sector in Senegal was reformed in 1985 with the creation of state owned Sonatel. The country made commitments under the World Trade Organization's Basic Telecommunications Agreement to introduce a regulatory structure promoting competition by the end of 1997 and new legislation was adopted in 1996, providing for the opening up of Sonatel's capital to private foreign and national partners and liberalization of some segments of the telecommunications market. Subsequently, France Télécom acquired a 33% stake in Sonatel in 1997 and later increased the holding to 42.3%. Other shareholders include the Senegalese government (27.7%) and employees (10%), with the remaining shares being traded on the local stock exchange. In 2010 Sonatel acquired a 3G license. In addition to Millicom's Sentel, the other mobile operators in Senegal include Sonatel, controlled by France Télécom, Expresso controlled by Sudatel (services launched in January 2009) and Kirene.

        Tanzania's system of government is a United Republic formed by the union in 1964 of Tanganyika and Zanzibar. President Jakaya Mrisho Kikwete came to power after winning democratic elections held on December 14, 2005. One-party rule came to an end in 1995 with the first democratic elections held

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in the country since the 1970s. Zanzibar's semi-autonomous status and popular opposition have led to two contentious elections since 1995, which the ruling party won despite international observers' claims of voting irregularities. President Kikwete is continuing to carry out economic reforms that gained momentum during the two terms in office of the previous president, Benjamin Mkapa. President Kikwete's government was re-elected in October 2010 in peaceful and uncontested results.

Economy

        Tanzania is one of the world's poorest economies in terms of per capita income, however Tanzania averaged 7% GDP growth per year between 2000 and 2008 on strong gold production and tourism. The economy depends heavily on agriculture, which accounts for more than 40% of GDP, provides 85% of exports, and employs about 80% of the work force. The World Bank, the IMF, and bilateral donors have provided funds to rehabilitate Tanzania's aging economic infrastructure, including rail and port infrastructure that are important trade links for inland countries. Recent banking reforms have helped increase private-sector growth and investment, and the government has increased spending on agriculture to 7% of its budget. Continued donor assistance and solid macroeconomic policies supported a positive growth rate, despite the world recession. In 2008, Tanzania received the world's largest Millennium Challenge Compact grant, worth $698 million. Dar es Salaam used fiscal stimulus and loosened monetary policy to ease the impact of the global recession. GDP growth in 2009-11 was a respectable 6% per year due to high gold prices and increased production.

Telecommunications

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

        Following the buy-out of the non-controlling shareholder, Ultimate Communications Limited, in January 2006, Millicom owns 100% of MIC Tanzania Limited (MIC Tanzania). Millicom accounts for this operation as a subsidiary, using the full consolidation accounting method.

        In January 1994, MIC Tanzania was awarded a 15-year license to operate a nationwide mobile network and, in 2005 a new converged licensing framework which is technological neutral was introduced in Tanzania, where by all operators were migrated to the new licensing regime. MIC Tanzania migrated to the new licensing regime in May 2007, three separate licenses for Network Facilities Services, Network Services and Application Services were issued. These licenses are valid for 25 years, 25 years and 10 years (effective May 2012), respectively. MIC Tanzania does not have a WiMAX license, as all spectrums have already been awarded. In December 2010, Millicom's operation in Tanzania signed a sale and lease-back agreement with Helios Towers Tanzania, a direct subsidiary of Helios Towers Africa, for most of its sites, of which more than 700 have been transferred to Helios Towers Tanzania during 2011 and most of the remaining sites are expected to be transferred in 2012. As at December 31, 2011, Millicom's network in Tanzania comprised 1,173 cell sites and covered 62% of the total population.

        In addition to Millicom's, there are 10 other licenses for mobile operators in Tanzania. Millicom's main competitors are Vodacom Tanzania (65% owned by Vodafone and 35% owned by its local partner, it entered the market in August 2000 and has become the leading provider of mobile services

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in Tanzania in terms of customers), Zain Celtel, purchased by Bharti Airtel in 2010, launched GSM services in the country in November 2001 and Zantel (jointly owned by the government of Zanzibar, Emirate Telecommunication Company, Kintbury Investment of the Channel Islands and a local technology firm), introduced GSM services in Zanzibar and the islands of Unguja and Pemba in August 1999, and entered the Tanzanian mainland in June 2005 through a national roaming agreement with Vodacom Tanzania). Other operators with less than 3% of market share include TTCL mobile, Bol and Dovotel.

DISCONTINUED AND DIVESTED OPERATIONS

        In July 2011, Millicom's operation in Colombia signed a sale and lease-back agreement with a subsidiary of American Towers, for most of their tower assets. Approximately 63% of the towers under this agreement have been sold in 2011 and the remaining towers are expected to be transferred in 2012. The carrying value of the portion of the remaining towers that will not be leased back and any related liabilities have been classified respectively as assets held for sale and liabilities directly associated with assets held for sale.

        On March 9, 2011 Millicom completed the sale of its Asian business segment with the sale of Laos.

        On August 20, 2010, to facilitate the integration of its various business lines and to create synergies, Millicom entered into agreements with its partners in Honduras and Guatemala to align ownership of its Amnet and Navega businesses. As a result Millicom sold 45% of its Amnet operations in Guatemala to its partner in Guatemala. From this date Amnet Guatemala has been accounted for as a joint venture and proportionately consolidated into the Millicom Group financial statements. Previously, the results of the Amnet Guatemala were fully consolidated. There was no significant impact on profit and loss from the disposal.

        In January 2010, Millicom's operation in Ghana signed a sale and lease-back agreement for most of its cell sites. The agreement marked Millicom's first outsourcing of passive infrastructure and is consistent with Millicom's strategy of improving both our capital and operating efficiency by focusing on our core activities. The Ghana agreement was followed by similar arrangements in December 2010 in Tanzania and DRC.

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

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 finance leases, towers, 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 individuals, corporations or municipal entities.

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

•

switching, transmission and receiving equipment;



•

connecting lines (cables, wires, poles and other support structures, conduits and similar items);



•

land and buildings;



•

easements and other rights of use; and



•

other miscellaneous properties (work equipment, furniture and plant under construction).

Insurance

        We maintain the types and amounts of insurance which we believe to be customary in the industry and countries in which we operate and in accordance with our risk management strategy. Annually, we review and analyze our worldwide insurance coverage needs with the assistance of an insurance broker. We have standardized our coverage along the recommendations suggested by our insurance broker and have put in place group master insurance policies under which all our operations are covered. Certain local risks not covered under the group master insurance policies or required by local regulations are covered through local insurance policies. We consider our insurance coverage to be adequate both as to risks and amounts for the business we conduct.