According to a media statement issued by Millicom, it has agreed to buy an 85 percent stake in Tanzanian operator Zanzibar Telecom (Zantel) from the Etisalat Group.
According to the statement, under the terms of the agreement, Millicom will pay a total cash consideration of USD 1 dollar and assume total debt obligations of USD 74 million. In addition, Zantel will have up to USD 32 million in net current liabilities at closing.
Millicom expects the EBITDA of Zantel to reach USD 25 million through a combination of bringing new products and services to the existing customer base and delivering greater efficiencies. The acquisition agreement allows for an adjustment to the total consideration if that target is not reached by the end of 2019.
Millicom intends to retain and continue to operate the Zantel brand, while delivering cash flow growth by leveraging technical and operational efficiencies. The company plans to roll out 4G coverage and access more bandwidth capacity via the undersea fibre optic cable EASSy.
Millicom has arranged with an international bank, the provision of a USD 100 million 5-year credit facility for Zantel. The Government of Zanzibar will continue to own the remaining 15 percent of the shares in Zantel. The transaction remains subject to regulatory approval by the Tanzanian Communications Regulatory Authority and the Fair Competition Commission.
Zantel has an approximate 5 percent share of the Tanzania mobile market.