Credit research 2011

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Credit Opinion: Millicom International Cellular S.A.
Global Credit Research - 21 Oct 2011

Luxembourg
Ratings
Category
Outlook
Corporate Family Rating
Telemovil Finance Co. Ltd.
Outlook
Corporate Family Rating
Bkd Senior Unsecured

Moody's Rating
Positive
Ba1
Stable
B1
B1

Contacts
Analyst
Alexis Foret/London
Gunjan Dixit/London
Chetan Modi/London

Phone
44.20.7772.5454Key Indicators
[1]Millicom International Cellular S.A.
RCF/Adjusted Debt
FCF/Adjusted Debt
Total Debt/EBITDA
(FFO+Interest Exp)/Interest Expense
(EBITDA-Capex)/Interest Expense

2009
43%
17%
1.7x
6.9x
3.8x

2010
22%
-1%
1.5x
6.8x
4.7x

LTM Sept-11
46%
23%
1.3x
7.8x
5.5x

[1] LTM metrics, adjusted by Moody's based on unaudited accounts Sep 2011

Note: Fordefinitions of Moody's most common ratio terms please see the accompanying User's Guide.
Opinion
Corporate Profile
Millicom International Cellular S.A., ("Millicom") is a global telecommunications investor with cellular operations and
licenses in 13 countries in Latin America and Africa. Millicom operates in El Salvador, Guatemala and Honduras in
Central America; in Bolivia, Colombia and Paraguay inSouth America; in Chad, DRC, Ghana, Mauritius, Rwanda,
Senegal and Tanzania in Africa. Millicom also operates cable businesses in five countries in Central America.
In the first nine months of 2011, Millicom generated USD 3.4 billion in revenues, USD 1.6 billion in EBITDA and
reported a total mobile subscriber base of over 42 million. In Q3 2011, 40% of group revenues and 44% of EBITDA
weregenerated from Central America, while South America contributed 38.5% of revenues and 36% of EBITDA, the

fastest growing African region contributing 21% of revenues and 20% of EBITDA.
Millicom is incorporated in Luxembourg and publicly listed in the Stockholm stock exchange. As of 20 October,
Millicom had a Market capitalization of around USD11 billion.
Recent Events
In the nine months toSeptember 2011, Millicom grew revenue by around 11% (in local currency) notably thanks to
strong growth in South America and Africa. Central America grew revenue by 5% in the period. Millicom added
around 3.6 million net new mobile customers, with a gradually growing share of data and 3G users. ARPU declined
between 1% and 3% driven by a 6% to 10% ARPU decline in Africa that was partly mitigatedby a stabilization in
ARPU in Latin America. EBITDA margin remained above 45% in the period, although accelerated investment in 3G,
promotional spending and subsidy costs weigh on profitability, notably in Latin America.
Millicom expects to return approximately USD1 billion to its shareholder, with the combination of (i) around USD190
million ordinary dividend, (ii) an exceptional dividend ofUSD310 million and the remainder in the form of share
buybacks, of which USD370 million were already executed.
Rating Rationale
The Ba1 CFR reflects: (i) Millicom's leading market positions across its region of operations, (ii) its continued strong
operating performance translated in growing revenue and EBITDA for the group, (iii) its improving cash flow profile,
with a positive contributionfrom Africa and (vi) Moody's expectation that the group will maintain conservative
financial metrics going forward.
At the same time, the Ba1 CFR reflects: (i) the risks inherent to the countries in which Millicom operates; (ii) the
increasing competition in Millicom's markets; and (iii) the company's active shareholder remuneration policy, in the
form of dividends and share buybacks.
WhilstMillicom's rating is impacted by its geography of operations, the spread of operations provides the company
with some diversification to mitigate country risk.
DETAILED RATING CONSIDERATIONS
Millicom focuses mainly on wireless telecommunications across Latin America and Africa, providing low cost - mostly
pre-paid - services under its cross-regional brand "Tigo". Millicom operates in...
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