Millicom International Cellular S.A. says it is considering strategic options for Paktel Limited, its business in Pakistan, where significant doubts affect confidence in the ability of Paktel to generate returns on investment at the levels required by Millicom. Millicom had been considering significant investments to build market share in Pakistan but the return on those investments had been overshadowed by, among other things, the challenging business conditions in the Pakistan mobile telephony market and frequency interference issues. Paktel has been granted additional 1,800MHz spectrum to resolve these issues but the grant of such spectrum was not permanent and, as part of an overall discussion with the Pakistan Telecommunications Authority to resolve interference issues permanently, Paktel has requested a deferral of the latest installment of its licence fee (US$29.10mn) which the PTA has not granted.

As a result, Millicom is considering a sale of its interest in Paktel, but there can be no assurance that the sale will be consummated and another option that may be considered is the closure of Paktel. Either sale or closure may impact profit and loss and cash outflow in a way that Millicom cannot quantify at this time but which, in any case, Millicom believes would be lower than the loss it expects to incur in 2007 and 2008 if it were to continue to fund Paktel as a going concern. Millicom has appointed Lazard as its financial advisor.

Millicom has been operating in Pakistan since 1990 and currently owns 88.9% in Paktel Limited. As at 30 September, 2006 Paktel had 1,529,682 total subscribers, up 62% from the 944,718 as at 30 September, 2005. Paktel is currently the fifth largest operator in Pakistan, by number of active subscribers.
Ian Channing