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Millicom to buy Zantel for $1

Staff writer ▼ | June 5, 2015
Millicom has signed an agreement to acquire an 85% stake in Zanzibar Telecom (Zantel) from Etisalat Group. Zantel is mobile telecom operator with 2014 gross revenues of $82 million and 1.7 million subscribers in Zanzibar and mainland Tanzania.
Zanzibar Telecom   Millicom will assume total debt obligations of $74 million
It operates 2G and 3G services over 545 network sites, with 57MHz of spectrum1 and has ownership rights to undersea fibre optic cable capacity. Zantel has an approximate 5% share of the Tanzania mobile market.

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 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. Millicom has arranged with a leading international bank, the provision of a $100 million 5-year credit facility for Zantel. The Government of Zanzibar will continue to own the remaining 15% of the shares in Zantel.

Millicom is looking forward to working with the Government of Zanzibar as a partner and as a shareholder to continue to develop the exciting opportunities for Zantel and its customers.