Millicom this we ek moved to boost its operations in Tanzania with the acquisition of Zanzibar’s Zantel for a nominal fee.
The telco on Friday announced it will acquire an 85% stake in Zantel from Etisalat for $1, plus the assumption of $74 million worth of debt obligations. In addition, Zantel will have up to $32 million in net current liabilities at the close of the deal, Millicom said.
The Tanzanian government will retain a 15% stake in Zantel.
Zantel is a small player in Tanzania’s overall telecom space, but has a strong presence in its home market, the semi-autonomous region of Zanzibar.
According to the Tanzanian Communications Regulatory Authority, Zantel had a 5% share of the 32 million fixed and mobile connections in Tanzania at the end of 2014; 31.86 million of those overall connections are mobile, with just over 151,000 fixed lines.
Zantel is one of two fixed-line operators in Tanzania, the other being market incumbent Tanzania Telecommunications Company Ltd (TTCL), which had over 140,000 fixed lines at the end of last year to Zantel’s 11,000.
In addition to giving it a fixed-line presence, the acquisition of Zantel will make Millicom the second largest mobile operator in Tanzania with over 10 million customers.
As of the end of last year, Vodacom led the market with 11.8 million subscribers and a 37% share, followed by Airtel with 30% and Millicom’s Tigo with 27%. Zantel was a distant fourth at 5.4%.
"Tanzania is Millicom’s biggest market in Africa and the acquisition of Zantel is a natural fit for Millicom’s strategy, strengthening our overall position in Tanzania and delivering further growth prospects for the group," Millicom said, on Friday.
It plans to develop the Zantel brand in Tanzania, and use it to launch new products and services. Millicom said it expects Zantel to generate US$25 million in EBITDA by 2019. If the unit does not reach that target, it has the right to negotiate the terms of the purchase.
The transaction remains subject to regulatory approval by the Tanzanian Communications
Regulatory Authority and the Fair Competition Commission.
