1

TanzaniaCapital Markets Event8th and 9th Sept 2010

2

Beautiful Tanzania

the largest wildebeest migration on earth

The exotic

Island of

Zanzibar

The finest game parks in

the world (Serengeti)

Kilimanjaro, the highest

mountain in Africa

Home of the legendary

Maasai Warriors

Tanzania is one of the

oldest known

continuously inhabited

areas on Earth!

Tanzania is one of the

oldest known

continuously inhabited

areas on Earth!

3

Tanzania – Key data

Population

(million)42.60

Population growth 2.86%

Average of the past 3

years over the stats of

WB

Total Area 945,087 sq km

GDP (US$ Billions) 24.5 (estimated for 2010)

Population below

poverty line:35.70%

Poverty headcount ratio

at national poverty line

Life expectancy 56Life expectancy at birth,

total (years)

Mobile Penetration 33%

4

Country overview

• Among the most stable countries

in Sub-Saharan Africa, expecting

growth of 5.8% for 2011

• Economy based on agriculture and

75% of the GDP concentrated in 5

sectors of the economy

YearGDP

Growth

GDP per

Capita

US$*Inflation

Budget

balance

% GDP

Current

account

% GDP

Exchange

Rate Var.

2008 7.5% $519 10.3% 0.0% -12.4% 3.5%

2009 5.5% $551 12.1% -2.7% -10.2% 4.6%

2010 5.7% $592 8.5% -3.8% -13.6% 20.0%

2011 5.8% $628 6.2% -5.8% -15.5% NA

• Strong growth potential in the services sub-sectors of finance, real

estate, business services, communication (in particular mobile

telephony) and tourism

5

The mobile landscape

5

6

COMPANY NAME OWNERSHIPMARKET

SHARE*MARKET

Vodacom Vodacom Group (65%), Mirambo (35%) 34.8 % Mobile voice and data (3G)

Tigo Millicom (100%) 32 % Mobile voice and data

Zain TanzaniaBharti (60%), Government of Tanzania

(40%)26.3 % Mobile voice and data (3G)

Zantel (Zanzibar

Telecom)

Etisalat (65%), Government of Zanzibar

(18%), Meeco International of

Tanzania (17%)

5.8 %

Fixed-line telephony

(local, long distance,

international), data, internet

TTCL (Tanzania

Telecommunications

Company)

Government (65%), MSI/Detecon

Consortium (35%)0.8 %

Fixed-line telephony (local,

long distance, international),

data, internet connection to

the SEACOM cable

Others 0.1 %

Key players

*Market share based on interconnection data

7

Tigo and competitors

Revenue Growth

Continuous revenue

growth in a tough

competitive

environment

8

Key cities and penetration

Tanga

Penetration 39%

Tanga

Penetration 39%

Morogoro

Penetration 44%

Morogoro

Penetration 44%

Arusha

Penetration 40%

Arusha

Penetration 40%

Dar Es Salaam

Penetration 120%

Dar Es Salaam

Penetration 120%

Mbeya

Penetration 22%

Mbeya

Penetration 22%

Mwanza

Penetration 16%

Mwanza

Penetration 16%

*Penetration based on interconnection data

9

Regulatory frameworkTigo Regulatory Framework

Licensing

Converged Licensing Framework with 4 categories; technology and service

neutral

Network Facility

25 yrs May ‘07

Network Services

25 yrs May ‘07

Application Services

5 yrs from May ’07

Renew up to 25 yrs

Content Services

(Application Pending)

Inte

rco

nn

ect

Re

gim

e

Co

mp

uls

ory

Re

gis

tra

tio

n

Tig

oC

ash

/ B

an

k R

eg

ula

tio

ns

• Currently 7 active mobile operators (15 licenses)

• International Gateway License recently acquired

• Domestic Interconnect Rate defined by the regulator in USD,

settlements in Local Currency

• 2010 Compulsory registration process for all the customers

10

Our company – Tigo TanzaniaREVENUES (TZS Bn) 168.6 ($122m)

EMPLOYEES 290

CUSTOMERS 4.4m

MARKET SHARE 32%

* H1 2010

DIRECT SALES FORCE 3,600

SERVICE CENTERS 20

SITES 1,030

11

2007 to present – major achievements

Revenue growth

of 301%

Subscriber base

growth 369%

Market share

from 18% to 32%

13 new service

centers

countrywide

Insourced Call

Centre. Reaching

91% service level

12

Customer satisfaction study

Jun 2010

TIGO ranked 1st in most of the measured

variables

Overall

ImportanceTigo Operator A Operator B

Overall Satisfaction 84 89 85 72

Card/ e-pin availability 91 95 88 88

Customer Service 91 88 86 82

Call Quality 91 87 85 93

Net Coverage 88 86 86 93

SMS Comm. / Promos 72 81 77 69

Overall Pricing 70 74 64 60

Price - voice calls 69 80 66 71

Price - SMS 64 77 58 57

Price - VAS 56 67 52 53

13

2007-2008 - Phase 1

Team

Control our costs

Sales/Customer care focus in DES

Processes

Improve our network

performance

Product offering

“Fixing the

basics”

“Fixing the

basics”

14

2009-2010 - Phase 2

Build critical mass of customers and gain MK share from competitors

Smart and aggressive on-net pricing “build our

island” effect

Improve our margins Comprehensive direct

distribution system

Build brand equity

“Consolidating

our position in

the market”

“Consolidating

our position in

the market”

15

What's next?

2011-2012 – Phase 3

Build a customer oriented

organization

Focus on customer understanding and

segmentation

Reach leadership in customer care and

contact centre

Keep our leadership in network capacity and

accelerate the implementation of a efficient capex/low opex

Focus in innovation (ie data, mobile money, home

services)

Strengthening our focus on CSR

“Protect and

enhance our

leadership

position”

“Protect and

enhance our

leadership

position”

16

Financial Performance

17

Financial performance H1 '10

EBITDA margin

higher than the

African average

EBITDA margin

higher than the

African average

Targeted

CAPEX

investment

Targeted

CAPEX

investment

ROIC superior

to the country

WACC

ROIC superior

to the country

WACC

Revenue at

42.0% growth

in LC YoY

Revenue at

42.0% growth

in LC YoY

Highest growth

rate company

in Africa

(Millicom

Group)

Highest growth

rate company

in Africa

(Millicom

Group)VAS at 15.4%

of recurring

revenue

VAS at 15.4%

of recurring

revenue

63% of

Revenues

On Net

63% of

Revenues

On Net

18

Customers and ARPU (LC)

• Fastest growing customer base in the market

• On Oct 2008 the Tanzanian government introduced a new

Excise Duty TAX which impacted ARPU by 10%.

• Stable ARPU since 2009

New Excise duty tax

10%

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

Jan

-07

Ap

r-0

7

Jul-

07

Oct

-07

Jan

-08

Ap

r-0

8

Jul-

08

Oct

-08

Jan

-09

Ap

r-0

9

Jul-

09

Oct

-09

Jan

-10

Ap

r-1

0

Customers evolution

19

Financial performance

Gross margin improvement due

to ‘island effect’

Revenue Composition (%)

GM growth

On-net revenue increased

eight-fold over the last 4

years!

20

Cost control & efficiency

Note: EBITDA is excluding rev enue share / licensing fees. All MTN, Zain and Vodacom data are f rom 2009; all data for other operators are f or 2008Source: Companies annual reports; Merrill Ly nch; A.T. Kearney analysis

EB

ITD

A (

%)

Market Share (%)

EBITDA vs. Market Share – 2009

Zain Zambia

Zain Tanzania

Zain Sudan

Zain Nigeria

AIS

AMX BR

Celcom

Djezzy

Eplus

Etisalat Saudi Arabia

Globe Telecom

Maroc Tel.

Maxis

Zain Niger

Zain KW

Zain Jordan

Zain Gabon

Zain Congo B

Zain Barhain

Wind

Vodacom SA

VF UK

VF IT

VF ES

VF DE

VD EGT

TurkcellT-mobile DE

TM UK Tim BR

TIM

TF BR

Zain Uganda

Telenor SW

TAC

SingtelSFR FR

Satelindo

Proximus

PLDT

Orascom Mobinil

Orascom Algeria

Orange UK

Orange FR

Orange ES

O2 UK

MTC NG

Movistar MX

Movistar

Mobistar

Mobinil

Mobile OneMeditel

Telkomsel

MTN Iran

MTN Nigeria

MTN SA

Zain Lebanon

Zain Kenya

Zain DRC

Zain Chad

Zain Kuwait

Zain Madagascar

Zain Sierra Leone

Vodacom Tanzania

Vodacom DRC

Vodacom Mozambique

Vodacom Lesotho

Tigo Tanzania

20% 30% 40% 50% 60% 70% 80%

Tigo’s EBITDA margin is high, considering its market share

21

Profitability

21

EBITDA Growth

Revenue Growth

Strong revenue growth complimented

by improving cost efficiencies

compounding the operation’s cash

generation and investment capacity

Cost Efficiency

(Ebitda % growth - Revenue % growth)

22

Capex evolution

22

Capexby Category

Share of Investment

Investment surge of 2008

normalizing in 09/10 at levels of

indicative traffic growth potential

2008 focus on backlog coverage

2009 /10 focus on capacity to sustain

commercial success…

23

Ongoing projects• Transfer the passive infrastructure to a strategic

partner

• Capex optimization

• Specialization

• Bidding process ongoing

Asset Sharing

• Tanzania is among the most efficient operators in Africa

• Some areas of improvement have been identified that the operation is currently exploring

AT Kearney GCB

• New Tools under implementation and assessment Process Automation

24

Technical Overview

25

License obligationCommercial

viability

Sub growth QoS (Congestion)

3GHSDPA

Site sharing priorityLow cost solution

BTS expansionCo-location

New site

Focus on main cityLow cost solution

(co-location)

Low OPEX solution ( DCB, Solar power system, e.g. VNL...)Telemetric system ( Low maintenance cost for field alarm

monitoring)

Coverage Capacity New technologyC

rite

ria

/

Dri

ve

rs

CA

PE

XO

PE

X

Build reliable network with fast ROI, Low operating cost and new competitive servicesG

oa

l

MIC Tanzania broad network strategy

26

MIC Tanzania evolution strategy Number one in Dar Es Salam

Target number one all over Tanzania

Evolution for triple play

Number one in Dar Es Salam

Target number one all over Tanzania

Evolution for triple play

Efficient CAPEX deployment

Optimized OPEX

Customer focus

Data service penetration

Capacity (growth areas)

Performance (End user

perception)

3G ( data services)

Fiber optic and submarine

connectivity

Build and expand network

where the money is.Reduce congestion and increase

call success rate

Data service in Dar and main

urban area

Reliable and high capacity

backbone network

27

Traffic increase trend

5

10

15

20

25

30

35

40

45

50

55

04

/03

/20

08

04

/04

/20

08

04

/05

/20

08

04

/06

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08

04

/07

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04

/08

/20

08

04

/09

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04

/10

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08

04

/11

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04

/12

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04

/01

/20

09

04

/02

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/03

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04

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04

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09

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04

/01

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04

/02

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04

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10

04

/05

/20

10

04

/06

/20

10

04

/07

/20

10

Mil

lio

ns

130 %: Average daily MOU increase from

Jan 09 till Jul 10

15

20

25

30

35

40

45

Jan

-09

Ma

r-0

9

Ma

y-0

9

Jul-

09

Se

p-0

9

No

v-0

9

Jan

-10

Ma

r-1

0

Ma

y-1

0

Jul-

10

Mill

ion

s

Daily Traffic ( MOU) : 300 % increase from April 08 till July

10

28

Network performance

(Q3 2010)

1.3%

(Q3 2007)

1.96%

(Q3 2010)

1.3%

(Q3 2007)

1.96%

(Q3 2010)

89% - 90%

(Q3 2007)

60.75%

(Q3 2010)

89% - 90%

(Q3 2007)

60.75%

(Q3 2010)

99.8%(Q3 2007)

96%

(Q3 2010)

99.8%(Q3 2007)

96%

• Call Success Rate: Measure successful call rate at Cell ( for making a call till ending

the call by end user)

• All KPIs are determined at Cell Busiest Hour. Daily average performance is always

better than cell busiest hour

Network Availability

48 % improvement

50% improvement

Call Success Rate

Drop Rate

29

• Split network between Tower Company and Operating Company based on the network element definition (passive-active)

• MIC as Operating Company gains opportunity to concentrate resources on marketing and network active elements synergy

• Tower Company becomes strategic partner of MIC on the way to countrywide sharing of passive infrastructure elements and network expansion

Asset Sharing

• Reduce CAPEX for network expansion

• Minimize lead time for new site and minimize cost for rural areas where coverage is needed but with low payback

• Benefit from low utilized areas by hosting competitor and share site operating cost

Site sharing

Bidding Process

is ongoing

This will be

incorporated

with asset

sharing project

Asset sharing projects

30

Fiber Optics project• MIC Tanzania is embarking on a joint

fiber optics project in collaboration with

two other operators in Tanzania

• The Project comprises metro fiber optic

networks in Dar es Salaam, Arusha,

Dodoma, Mwanza, Morogoro and

Mbeya, as well as a regional backbone

• Total CAPEX cost will be shared equally

by the operators involved leading to

major CAPEX savings

• Project is expected to be completed by

EOY 2011

• It will ensure reliable transmission,

enhance service quality and open up

the entire country to high speed internet

communication

31

Commercial

32

Pricing - tariff roadmap

TIGO ON-NET RATES LC (per second) Cross Net

DAY EVENING NIGHT 24 Hrs

Dec 2007 3 Tsh 1 Tsh 1 Tsh 6 Tsh

Feb 20081,500 Tsh daily

unlimited on-net 1 Tsh 1 Tsh 6 Tsh

Dec 2008 1 Tsh 1 Tsh 1 Tsh 6 Tsh

Apr 2010½ Tsh after the

1st min1.25 Tsh

½ Tsh after

the 1st min6 Tsh

Mkt Share*

end 2007

Mkt Share*

end 2008

Mkt Share*

H1 2010

18%

26%

32%

*Market Share based on IX data

Tariff reduction was compensated for by MOU elasticity and customer acquisition allowing a sustainable and

healthy profitability and top line growth

33

Sales & distribution

Key to our present and future success

34

Sales and distribution structureTerritory

Manager

Territory

Manager

Regional

Manager

Regional

Manager

Direct Sales

Force

(activations)

Direct Sales

Force

(activations)

Direct

Distribution

Force (airtime)

Direct

Distribution

Force (airtime)

Indirect Channel

Dealers

/Wholesalers

Indirect Channel

Dealers

/Wholesalers

4 Territories4 Territories

New activationsSales

AirtimeDistribution

12

34

35

Direct sales force

36

Distribution Management System:

key to our present and future success

“Market Knowledge”

90,000 Point of Sales Census

“Ownership of Market”

Direct Distribution Force - Circuits Assignation

“Monitoring the Market”

DOC: Distribution Operating Centers

37

Video – sales and distribution

PlayPlay

38

Market visit

This afternoon

• Call Center

• Buguruni Distribution Operations Center (DOC)

• Customer Service Center at Millimani

Tomorrow

• Direct Sales Force in action

• Kariako Market

What was shown

in the video will

be seen live

What was shown

in the video will

be seen live

39

Marketing

40

Outdoor visibility

COVERAGECoverage

VASCoverageCoverage

AffordabilityAffordability

VASVAS

41

Below the line activities

Launch of ½ Tsh promotion (Apr10) Saba Saba (Jul10)

Street Riders

Launch of “Register

and Win” promotion

42

Below the line activities

43

Service centers

Dar Es Salaam

MorogoroTanga

44

TV commercials

1st Pricing campaign 2009 Coverage campaign 2009

2nd Pricing Campaign 2010 Tigo Pesa 2010

PlayPlay

45

VAS

464646

VAS growth

VAS growing as a percentage of revenuesA constant push to segmented groups of customers has proven successful in

ensuring awareness of new products, services and promotions

11%

13% 13%14%

15%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

16%

2006 2007 2008 2009 H12010

VAS as % of revenues

47

What is VAS in 2010?

SMS Peer to

Peer

55%

Premium

SMS

26%

Data

4%

Ring Back

Tones

15%

• Song purchases

• Daily rental fee

• Data on demand

• Data package

• WAP portal

• Mega Promotions

• SIM menu

• Weather by SMS

• Sport results

• Tigo Messenger

• Others

• SMS on-net

• SMS x-net

• SMS international

SMS packages:

• 100 SMS

• 5 SMS

Hybrid packages:

• 100 SMS + 5 Minutes

• 5 SMS + 2 minutes

484848

Growth in Ring Back Tones

What is the secret of Tanzania’s success in Ring Back Tones?

• Affordability: the only operator in Tanzania to launch small daily fees

instead of high monthly fees

• Accessibility: Multiple ways to choose songs and change songs,

updated constantly with the newest hits

0%

50%

100%

150%

200%

250%

300%

Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010

RBT subscriber growth one of out every

3 Tigo customers

use RBT!

one of out every

3 Tigo customers

use RBT!

49

New products

50

Tigo Pesa launch

Launched Aug 23, 2010

Super Dealers 12

Retail Agents 260

Retail Agents (end 2010) 2,000

Retail Agents (end 2011) >4,000

Current regional coverage 70%

51

3G preparations

Dar es Salaam Initial 3G Roll Out Dar es Salaam

Full Launch Q4 2010

Smart Capex Pay as you grow

Commercial strategy

• Phase 1: Focus on Dar es Salaam• Effective pricing to increase penetration and

usage

• Drive penetration through netbooks, modems and Internet cafes

• Promote usage from handset customers• Comprehensive direct sales force (to sell but

also educate)

5252

Asante

Sana