Millicom CEO Sees Big Growth Potential In Colombia

STOCKHOLM -(Dow Jones)- Millicom International Cellular, Friday said it had high expectations for growth in the Colombian market after buying a controlling stake in the country's third largest operator mobile phone operator, Ola, late Thursday.

"I believe Colombia has excellent growth potential since it has a high GDP per capita," Chief Executive Marc Beuls told Dow Jones Newsires. He added the country only has three major operators, which is less than most other Latin American markets.

Beuls said the higher gross domestic product per capita means that mobile penetration in Colombia, which he estimates to be in the low fifties, is also greater than in Millicom's other Latin American markets where he said penetration is about ten percentage points lower.

Millicom late Thursday acquired 50% plus one share in Colombia Movil S.A., whose Ola-branded mobile phone business has a 9% market share, for $125 million excluding debt and $478.5 million including debt.

Beuls said the company opted for debt financing so that its cash reserves could instead be used to buy out minority shareholders in other businesses. But he refrained from commenting on which operators were on top of his list. Tax considerations also lay behind the decision, he said.

Millicom acquired its stake in Ola from founders Empresa de Telecomunicaciones de Bogota and EPM Telecomunicaciones, which will stay in the business as minority shareholders.

Millicom will appoint four out of seven board members and have day-to-day management control of the business.

According to Beuls, the company planned to invest around $75 million in the business over the next two to three years mainly in marketing and to increase the number of points of sales where customers can buy their services.

The strategy is in line with Millicom's 'triple A' business strategy, which focuses on affordability, accessibility and availability.

"It's not an underinvested business," Beuls said, adding that Ola's network coverage was sound, but that much needed to be done to make services cheaper and easier to come by.

Beuls said he has no plans to re-brand Ola as Tigo to replicate the strategy in other Latin American markets.

He refrained however from commenting further on when Ola would become profitable on an earnings before interest, tax, depreciation and amortization, or EBITDA, level, sticking to an earlier forecast that this will happen in 2007.

Company Web site: http://www.millicom.se

-By Johan Carlstrom, Dow Jones Newswires; +46 8 545 130 99; johan.carlstrom@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 1st September 2006