Sweden-based Millicom has agreed to buy 85% of Zanzibar Telecom (Zantel) from UAE incumbent Etisalat. The remaining 15% will continue to be owned by the Zanzibar government.
Millicom will pay US$1 and assume debt obligations of US$74m, the company said…
Sweden-based Millicom has agreed to buy 85% of Zanzibar Telecom (Zantel) from UAE incumbent Etisalat. The remaining 15% will continue to be owned by the Zanzibar government.
Millicom will pay US$1 and assume debt obligations of US$74m, the company said in a statement. At closing, Zantel will have up to US$32m in net current liabilities.
Millicom said it has arranged a US$100m, 5-year credit facility for Zantel.
Etisalat was advised by Deutsche Bank, while Millicom carried out the deal internally, it is understood. Additional bidders Vodacom and Viettel had respectively been advised by UBS and Standard Chartered. Bharti Airtel had previously been involved in the process.
The negotiations involved Standard Chartered, which itself has a loan outstanding to Zantel, and the Zanzibar government, which waived its right of first refusal.
The sale, successful after three attempts in four years, is now awaiting approvals from the Tanzanian Communications Regulatory Authority (TCRA) and the Fair Competition Commission.
Zantel reported gross revenues of US$82m for 2014 and claimed to have 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 the EASSy undersea cable.
If Zantel fails to reach its targeted EBITDA of US$25m by the end of 2019, the total consideration may be adjusted.
Zantel has around 5% of the Tanzanian mobile market, according to TCRA figures from December 2014.
Millicom said it intends to retain the Zantel brand, while delivering cash flow growth by leveraging technical and operational efficiencies.
