Millicom International Cellular (MIC) has announced that, having received the necessary regulatory approval, it has concluded the acquisition of an 85% stake in mobile operator Zanzibar Telecom (Zantel), in the process becoming the second largest mobile operator in Tanzania by subscribers. Prior to the takeover, Zantel was the leading mobile telecom operator on the island of Zanzibar, with gross revenues of USD82 million in 2014 and an approximate 5% share of the overall Tanzanian market. It operates 2G and 3G services over a network of 545 base transceiver stations (BTS) – it holds 850MHz, 900MHz, 1800MHz and 2100MHz spectrum for Zanzibar and mainland Tanzania – and has ownership rights to undersea fibre-optic capacity on the EASSy cable.
The government of Zanzibar has retained its 15% stake in the company. ‘Millicom will work alongside the Government of Zanzibar to create a strong and revitalised Zantel, bringing new benefits to the people of Zanzibar such as improved customer experience on voice, data and mobile financial services,’ Cynthia Gordon, Chief Executive Officer of Millicom Africa Division, said in a statement.
In June this year, Millicom signed a share purchase agreement to acquire an 85% stake in Zantel from Etisalat Group. Under the terms of the agreement, the European telco agreed to pay a cash consideration of just USD1 but assume total debt obligations of USD74 million. At the time, Millicom said it expected 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 also allows for an adjustment to the total consideration if that target is not reached by the end of 2019.