Etisalat, a United Arab Emirates telecom operator has agreed to sell its 85 per cent stake in Zanzibar Telecom Limited Zantel to Sweden’s Millicom for 1 dollar. Zantel is the leading mobile telecom operator on the islands of Zanzibar with 1.7 million customers spanning Zanzibar and mainland Tanzania.
The deal which is pending approval by the Tanzanian Communication Regulatory Authority will see Millicom assume Zantel’s debt obligations which currently stand at $74 million. In addition Zantel will have up to $32 million in net current liabilities at closing of the deal. Zantel has revenues of $82 million in 2014 and faces stiff competition from Vodacom, a subsidiary of South Africa’s Vodacom, Airtel which is a subsidiary of India’s Bharti Airtel and Tigo, also a subsidiary of Millicom.
Millicom plans to continue operating the Zantel brand even as it continues to work towards cash flow growth. The operator has negotiated a $100 million 5-year credit facility for Zantel. Millicom’s other operation Tigo has 8.7 million subscribers making it the third largest player. The acquisition of Zantel will offer the company a larger market share than Bharti Airtel, which ranks second and thus more clout to enable it compete with Vodacom.
Millicom expects the EBITDA (earnings before interest, tax, depreciation and amortization, which is a measure of the total earnings of a companies engaged in infrastructure such as Telcos) to reach $25 million, through bringing in new products to existing subscribers as well as instituting efficiencies in the business operations. The Zanzibar government owns the remaining 15% stake in Zantel.
Source: Cellular News