Millicom International Cellular S.A.: Revision Of Accounting Treatment Of The Mandatorily Exchangeable Notes


NEW YORK, LONDON and BERTRANGE, Luxembourg, Nov. 4, 2003 (PRIMEZONE) -- Millicom International Cellular S.A. ("Millicom") (Nasdaq:MICC) announced its results for the quarter and nine months ended September 30, 2003 on October 22, 2003. Prior to that release, the accounting treatment of its approximately $310 million 5% Mandatorily Exchangeable Notes (the "Notes") and the Tele2 AB shares into which the Notes are exchangeable was reviewed by PricewaterhouseCoopers, Millicom's auditors.

Subsequently, PricewaterhouseCoopers has advised Millicom that there should be a change of accounting treatment relating to the Notes and the Tele2 AB shares. Based upon this revised professional advice, and to ensure compliance with IFRS, Millicom has decided to adopt this change. As a result, Millicom will mark-to-market on a quarterly basis the value of its holding of Tele2 AB shares, with any resulting changes in fair value being recorded in Millicom's profit and loss statement for such period under the heading "valuation movement on securities". Millicom will also account for the embedded derivative relating to the corresponding Note revaluation and to the potential 30% premium if the price of the Tele2 AB shares is above the reference price of SEK 285 in accordance with the terms of the Notes, at fair value with any subsequent change in its fair value being recorded in the profit and loss statement. The net impact on Millicom's results reflects an economic hedge against a decrease in the price of Tele2 AB shares and the premium that Millicom would realize at maturity if the price of the Tele2 AB shares is above the reference price in accordance with the terms of the Notes.

Accordingly, Millicom is reissuing its results for the quarter and nine months ended September 30, 2003 to reflect the change in accounting treatment relating to the Notes, which results in an increase of $10.7 million in its profit and net shareholders' equity for the nine months ended September 30, 2003. Although changes in the market value of the Tele2 AB shares will impact Millicom's net income on a quarterly basis until the Notes mature in August 2006, the aggregate net impact over this period cannot result in a loss to Millicom.

Millicom International Cellular S.A. is a global telecommunications investor with cellular operations in Asia, Latin America and Africa. It currently has a total of 16 cellular operations and licenses in 15 countries. The Group's cellular operations have a combined population under license of approximately 382 million people. In addition, MIC provides high-speed wireless data services in five countries.

This press release may contain certain "forward-looking statements" with respect to Millicom's expectations and plans, strategy, management's objectives, future performance, costs, revenues, earnings and other trend information. It is important to note that Millicom's actual results in the future could differ materially from those anticipated in forward-looking statements depending on various important factors. Please refer to the documents that Millicom has filed with the U.S. Securities and Exchange Commission under the U.S. Securities Exchange Act of 1934, as amended, including Millicom's most recent annual report on Form 20-F, for a discussion of certain of these factors.

All forward-looking statements in this press release are based on information available to Millicom on the date hereof. All written or oral forward-looking statements attributable to Millicom International Cellular S.A., any Millicom International Cellular S.A. members or persons acting on Millicom's behalf are expressly qualified in their entirety by the factors referred to above. Millicom does not intend to update these forward-looking statements.


Millicom International Cellular S.A. Consolidated statements of profit and loss for the three months ended September 30, 2003 and 2002



                                          Quarter ended     Quarter ended
                                          Sept 30, 2003     Sept 30, 2002

                                            (Unaudited)       (Unaudited)
                                               US$ '000          US$ '000

 Revenues                                       156,668           155,826

 Operating expenses

   Cost of sales (excluding                    (36,900)          (40,410)
 depreciation and
   amortization)

   Sales and marketing                         (20,558)          (20,093)

   General and administrative expenses         (16,348)          (24,234)

    Corporate and license acquisition           (5,829)           (3,559)
 costs

    Write-down of assets, net                         -           (7,841)

    Depreciation and amortization              (32,266)          (37,380)

 Operating profit                                44,767            22,309

   Loss on exchange and disposal of                   -          (59,737)
 investments

   Valuation movement on securities              17,532          (17,462)

    Fair value result on financial             (26,440)                 -
 instruments

   Profit/ (loss) from associated                    91             (860)
 companies

 Profit (loss) before financing and              35,950          (55,750)
 taxes

    Interest expense                           (36,044)          (49,709)

    Interest income                               3,396             3,188

    Income for financial instruments                  -            22,911

    Exchange loss, net                          (1,796)           (2,199)

 Profit (Loss) before taxes                       1,506          (81,559)

    Taxes                                      (10,749)           (5,844)

 Loss after taxes                               (9,243)          (87,403)

    Minority interest                           (3,962)           (2,417)

 Loss for the quarter                          (13,205)          (89,820)

 Basic and diluted loss per common               (0.81)            (5.51)
 share (US$)

 Weighted average number of shares and
 diluted potential shares in the period          16,325            16,287
 (in thousands)

Millicom International Cellular S.A. Consolidated statements of profit and loss for the nine months ended September 30, 2003 and 2002



                                        9 months ended     9 months ended
                                         Sept 30, 2003      Sept 30, 2002

                                           (Unaudited)        (Unaudited)
                                              US$ '000           US$ '000

 Revenues                                      445,249            449,907

 Operating expenses

   Cost of sales (excluding                  (107,571)          (123,898)
 depreciation and
   amortization)

   Sales and marketing                        (57,286)           (59,995)

   General and administrative                 (52,557)           (66,918)
 expenses

    Corporate and license acquisition         (17,100)           (16,822)
 costs

    Write-down of assets, net                    (310)            (9,449)

    Depreciation and amortization             (90,654)          (105,915)

 Operating profit                              119,771             66,910

   Gain (loss) on exchange and                   2,965           (33,039)
 disposal of investments

   Valuation movement on securities            117,405          (305,471)

    Fair value result on financial            (26,440)                  -
 instruments

   Profit/ (loss) from associated                  217            (2,540)
 companies

 Profit before financing and taxes             213,918          (274,140)

    Interest expense                          (91,764)          (143,849)

    Interest income                              4,976              9,126

    Gain realized on debt exchange              97,052                  -

    Other income                                     -             13,571

    Income for financial instruments                 -             20,562

    Exchange gain/ (loss), net                   6,313           (18,408)

 Profit (loss) before taxes                    230,495          (393,138)

    Taxes                                     (29,101)           (19,549)

 Profit (loss) after taxes                     201,394          (412,687)

    Minority interest                         (12,338)            (5,520)

 Profit (loss) for the period                  189,056          (418,207)

 Profit (loss) on a diluted basis              191,188          (418,207)

 Basic earnings (loss) per common                11.60            (25.62)
 share (US$)

 Diluted earnings (loss) per common               9.80            (25.62)
 shares (US$)

 Weighted average number of shares in
 the period (in thousands)                      16,298             16,326

 Weighted average number of shared
 and diluted potential shares in the            19,510             16,326
 period (in thousands)

Millicom International Cellular S.A. Consolidated balance sheets as at September 30, 2003 and December 31, 2002



                                               Sept 30,           Dec 31,
                                                   2003              2002
                                            (Unaudited)         (Audited)
                                               US$ '000          US$ '000

 Assets

 Non-current assets

 Intangible assets

 Goodwill, net                                   54,813            10,172

 Licenses, net                                   34,139            84,471

 Deferred costs and other                         5,624             4,919
 non-current assets, net

 Tangible assets, net                           481,691           458,933

 Financial assets

          Investment in securities              397,708           220,386

 Investment in associated company                 1,013             1,013

 Pledged deposits                                20,507            32,921

 Deferred taxation                                6,179             8,470

 Total non-current assets                     1,001,674           821,285

 Current assets

 Investment in securities                             -           101,540

 Inventories                                     10,403             6,962

 Debtors

 Trade debtors, net                             106,932           113,221

 Amounts due from joint ventures                 12,385            14,053

 Amounts due from other related parties           4,416             6,806

 Prepaid and accrued income                      26,456            14,148

 Other current assets                            32,319            38,453

 Time deposits                                   16,034            16,200

 Cash and cash equivalents                      134,631            70,451

 Total current assets                           343,576           381,834


 Total assets                                 1,345,250         1,203,119

Millicom International Cellular S.A. Consolidated balance sheets as at September 30, 2003 and December 31, 2002



                                           Sept 30,         Dec 31,
                                               2003            2002
                                        (Unaudited)       (Audited)
                                           US$ '000        US$ '000

 Shareholders'
 equity and liabilities

 Shareholders' equity

 Share capital and premium                  239,633         281,989

 Treasury stock                             (8,705)        (54,521)

 2% PIK notes                                16,053               -

 Legal reserve                                4,256           4,256

 Retained loss brought forward            (453,563)        (57,719)

 Profit (loss) for the period               189,056       (385,143)

 Currency translation reserve              (91,312)        (84,121)


 Total shareholders' equity               (104,582)       (295,259)


 Minority interest                           23,984          23,733


 Liabilities

 Non-current liabilities
 Deferred taxation                           36,574          26,874

 Corporate 13.5% debt                       136,443         912,539

 Corporate 11% debt                         395,219               -

 2% PIK notes                                50,022               -

 5% Mandatory Exchangeable                  283,173               -
 Bond - Debt Component

 5% Mandatory Exchangeable                   45,320               -
 Bond - Embedded Derivative

 Other debt and financing                   125,932         159,370

                                          1,072,683       1,098,783


 Current liabilities
 Other debt and financing                   105,616         156,666

 Trade creditors                             93,688          90,945

 Amounts due to shareholders                      -           4,021

 Amounts due to other related parties           779           6,487

 Accrued interest and other expenses         55,241          42,745

          Other current liabilities          97,841          74,998

                                            353,165         375,862

 Total liabilities                        1,425,848       1,474,645


 Total shareholders'                      1,345,250       1,203,119
 equity and liabilities

Millicom International Cellular S.A. Consolidated statements of cash flows for the nine months ended September 30, 2003 and 2002



                                                    Sept 30,     Sept 30,
                                                        2003         2002
                                                  (Unaudited)   (Unaudited)

                                                    US$ '000     US$ '000

 Net cash provided by operating activities           128,322       54,693
 Cash flow from investing activities                (14,173)       17,206
 Cash flow from financing activities                (50,464)     (79,516)
 Cash effect of exchange rate changes                    495        (301)

 Net increase (decrease) in cash and cash             64,180      (7,918)
 equivalents

 Cash and cash equivalents, beginning                 70,451       56,276

 Cash and cash equivalents, ending                   134,631       48,358

Millicom International Cellular S.A. Consolidated statements of changes in shareholders' equity for the nine months ended September 30, 2003 and the year ended December 31, 2002



                                              Sept 30,        Dec 31,
                                                2003           2002
                                             (Unaudited)      (Audited)
                                              US$ '000       US$ '000

 Shareholders' equity at January 1           (295,259)         68,894
 New shares issued                                937              -
 Treasury shares used to offset 
  liability to                                  2,523              -
 shareholders
 Purchase of treasury stock                          -         (2,488)
 Profit (loss) for the period                 189,056        (385,143)
                                                              
 Effect of consolidation
   of El Salvador                             (10,701)             
 Prolonged decrease in market value                  -         61,325
 Movement in currency translation 
  reserve                                      (7,191)        (37,847)
 Issuance of equity instruments
   (2% PIK Notes)                              16,053              -
 Shareholders' equity                        (104,582)       (295,259)

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