Millicom International Cellular (MIC) has announced that it has signed a share purchase agreement to acquire an 85% stake in Zanzibar Telecom (Zantel) from Etisalat Group. Under the terms of the agreement, the European telco will pay a cash consideration of just USD1 but assume total debt obligations of USD74 million. Zantel will have up to USD32 million in net current liabilities when the transaction closes.
Millicom expects Zantel’s EBITDA to reach USD25 million through a combination of bringing new products and services to the existing customer base and delivering greater efficiencies. The deal allows for an adjustment to the total consideration if that target is not reached by the end of 2019. The remaining 15% stake in Zantel will continue to be state-owned. The transaction remains subject to regulatory approval by the Tanzanian Communications Regulatory Authority (TCRA) and the Fair Competition Commission (FCC).
The acquisition will see Millicom strengthen its position in Tanzania – its biggest African market – with the operator saying it will have the opportunity to: further leverage the brand power of Zantel; deliver technical synergies including procurement and national roaming; improve network service quality and coverage; capitalise on the growing demand for mobile data and roll out of 4G coverage; access further bandwidth capacity via the undersea fibre optic cable EASSy; and expand its mobile financial services in Zanzibar to support financial inclusion.
Zantel currently holds 850MHz, 900MHz, 1800MHz and 2100MHz spectrum for Zanzibar and mainland Tanzania.