shabani
JF-Expert Member
- Apr 3, 2009
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Millicom has arranged with an undisclosed international bank that will provide a $100 million five-year credit facility for the deal
Dar es Salaam. Millicom International Cellular that trades as Tigo has finally acquired an 85 per cent stake in Zanzibar Telecom (Zantel) from the United Arab Emirates' Etisalat Group.
The acquisition gives the Stockholm-listed cellular firm a controlling stake in Zantel and ostensibly rekindles competition among mobile phone operators in Tanzania. Under the terms of the agreement, Millicom will pay the total cash consideration of $1 (about Sh2,100) and assume total debt obligations of $74 million (about Sh150 billion), according to a statement from the firm's corporate office in Stockholm which was availed to The Citizen in Dar es Salaam yesterday.
"In addition, Zantel will have up to $32 million (Sh64 billion) in net current liabilities at closing," the statement reads. Millicom expects that Zantel's earnings before interest, taxes, depreciation, and amortisation (EBITDA) will reach $25 million (Sh50 billion) through a combination of bringing new products to the existing customer base and delivering greater efficiencies.
However, the agreement allows for an adjustment to the total consideration if that target is not reached by the end of 2019.
Following the transaction, which will have to be approved by the Tanzania Communications Regulatory Authority (TCRA) and the Fair Competition Commission, Millicom has arranged with an undisclosed international bank that will provide a $100 million five-year credit facility for Zantel's turnaround strategy.
The Zanzibar government will continue to own the remaining 15 per cent of the shares in Zantel, the statement said. Millicom says it intends to retain and continue to operate the Zantel brand, while delivering cash flow growth by leveraging technical and operational efficiencies.
But with a close relationship with Tigo, the market dimensions are likely going to shift.
A combination of Tigo and Zantel (both being Millicom subsidiaries) is likely going to stiffen competition in Tanzania where four serious contenders battle for a market of 32 million Subscribers Identification Module (Sim) cards.
The acquisition now puts Millicom on the second slot in terms of subscribers' market share in Tanzania after Vodacom.
According to TCRA figures, Vodacom controlled a 37 per cent subscription market share as of December 2014.
The company had some 11.8 million subscribers. Airtel Tanzania came second, controlling a 30 per cent subscription market share with some 9.552 million subscribers while Tigo and Zantel held 27 per cent and 5 per cent market shares respectively – with some 8.625 million and 1.7 million subscribers in that order.
Thus, a combination of Tigo and Zantel brings the total number of
Source: The Citizen