Millicom buys C.America operator, Q2 in line

STOCKHOLM (Reuters) - Sweden's Millicom MICC.O (MICsdb.ST) said on Tuesday it was buying central American telecoms operator Amnet for an enterprise value of $510 million, as it posted core second-quarter profit in line with forecasts.

Millicom's shares fell 12.9 percent at 514 Swedish crowns ($86.43) by 1206 GMT, underperforming an 8 percent drop in the

European telecoms index. Shares in telecoms operators were lower on Tuesday after Vodafone (VOD.L), the world's biggest mobile group, cut its revenue outlook, knocking confidence in the sector.

Millicom said it had agreed to buy privately held Amnet Telecommunications, which operates in Honduras, Costa Rica and El Salvador and other countries in the area, to secure in excess of 350,000 high-revenue customers.

The Amnet acquisition will dramatically extend Millicom's IP network, "thereby enabling us to provide enhanced broadband and cable television in conjunction with our new 3G mobile service", the group said.

Earnings before interest, tax, depreciation and amortization (EBITDA) for Millicom -- controlled by Swedish investment group Kinnevik (KINVb.ST) -- totaled $352 million, up from $263 million a year earlier.

The market expected EBITDA of $355 million, according to the average forecast in a Reuters poll of 10 analysts.

The emerging market telecom operator said total subscribers were 28.5 million at the end of June, up 58 percent from a year earlier.

Millicom also raised its 2008 capital expenditure outlook to up to $1.5 billion from earlier in excess of $1 billion on the basis of the opportunity it sees in its markets.

Amnet had revenue of $143 million and core earnings of $56 million in 2007.

Millicom said it expected to complete the acquisition within three months, subject to customary approvals.

(Editing by Erica Billingham)