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Millicom has agreed to acquire 85% of Zanzibar Telecom (Zantel) which was held by Etisalat Group while the Government of Zanzibar will continue to own the remaining 15% of the shares in Zantel.
Millicom also runs Tigo Tanzania and says the country is its biggest market in Africa and the acquisition of Zantel is a natural fit for Millicom’s strategy, strengthening its overall position in Tanzania and delivering further growth prospects for the Group. Zantel has an approximate 5% share of the Tanzania mobile market and the Zantel brand will not be killed.
The transaction remains subject to regulatory approval by the Tanzanian Communications Regulatory Authority and the Fair Competition Commission.
In 2014, Zantel had gross revenues of $82 million and 1.7 million subscribers across Zanzibar and mainland Tanzania. It operates 2G and 3G services over 545 network sites, with 57MHz of spectrum and has ownership rights to undersea fibre optic cable capacity.
Millicom will pay the total cash consideration of $1 dollar and assume total debt obligations of $74 million. In addition Zantel will have up to $32 million in net current liabilities at closing. Millicom expects the EBITDA of Zantel to reach $25 million through a combination of bringing new products and services to the existing customer base and delivering greater efficiencies.
Millicom has arranged with a leading international bank, the provision of a $100 million 5-year credit facility for Zantel.
