Millicom, the Latin America and Africa telco and media company, has signed a Share Purchase Agreement to acquire an 85 per cent stake in Zanzibar Telecom (Zantel) from Etisalat Group.
Zantel is the leading mobile telecom operator on the islands of Zanzibar with 2014 gross revenues of $82 million (€73m) and 1.7 million subscribers across Zanzibar and mainland Tanzania. It operates 2G and 3G services over 545 network sites, with 57MHz of spectrum(1) and has ownership rights to undersea fibre optic cable capacity. Zantel has an approximate 5 per cent share of the Tanzania mobile market(2). Millicom intends to retain and continue to operate the Zantel brand, while delivering cash flow growth by leveraging technical and operational efficiencies.
Under the terms of the agreement 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. The agreement allows for an adjustment to the total consideration if that target is not reached by the end of 2019.