Millicom Invests in Internet Services Company

Millicom International Cellular, which operates under the Tigo brand name, has signed a partnership agreement with Rocket Internet to jointly develop franchises in the online sector in Latin America and Africa.

Over a four year period, Millicom has the option to gradually acquire controlling stakes in two subsidiaries of Rocket Internet, which currently control 8 operating businesses with combined estimated revenues of circa EUR35 million in 2012. The two subsidiaries develop and offer services through franchises in online payments and e-commerce.

As Millicom has a clearly defined path to control, these businesses will be fully consolidated from closing and reported as a sixth category called Online.

Both holding companies are required to launch a number of new businesses in Latin America and Africa over the next 3 years. Accumulated start-up losses over the first three years of operation are expected to be below EUR250 million. Over time, Millicom expects to extend similar services to its existing markets, generating both additional revenues and costs synergies.

Upon closing, Millicom will acquire a 20% stake in both subsidiary companies, through two reserved capital increases. Millicom has been granted options to increase its stakes up to 50% without management rights over 24 months and a final option to acquire the remaining 50% of these two holdings with full management rights by no later than September 2016 at fair market value. The total consideration to be paid to acquire the first 50% will be EUR340 million in three instalments (EUR85 million upon closing expected in Q4 2012).

Mikael Grahne, Millicom’s President and CEO, commented: “We are pleased to partner with Rocket Internet to develop an online and e-commerce franchise in Latin America and Africa, where these promising sectors are nascent. Rocket Internet has a proven track record of rapidly developing successful operations in the online and e-commerce sectors. Millicom has a strong know-how of operating in the fast moving consumer goods industry in Latin America and Africa.”

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