Helios Towers Tanzania, a full subsidiary of private equity-backed Helios Towers Africa, is buying up all the mainland tower sites belonging to Zanzibar Telecom, (Zantel). As part of the deal, the company is working with Zantel to decommission duplicate towers in a separate services agreement. The transaction involves buying 185 of Zantel’s towers whilst consolidating another 385, giving Helios Towers Tanzania’s a portfolio of towers which now numbers around 3,700 sites.
Zantel is majority-owned by one of Helios Towers Africa’s major backers, Millicom International Cellular. The South African mobile telecoms firm acquired a 75% interest in Zantel from Etisalat Group in 2015 for a dollar plus the assumption of $74 million of debt. At the time it was reported that Zantel’s 2014 revenues stood at $82 million from serving 1.7 million subscribers across Zanzibar and Tanzania, representing some 5% of the country’s mobile market. By investing in new products and services for the existing customer base and delivering greater efficiencies, Millicom expected the firm to achieve an EBITDA of $25 million by 2019.
The transaction gives Helios Towers Africa a leading market position in Tanzania, which, as one of the fastest growing telecoms markets on the continent, is expected to expand by some 37% within the next three years. As well as helping their customers boost network coverage and service quality for their subscribers, it’s anticipated that among the deal’s outcomes will be lower costs for Tanzania’s consumers and a reduction in capital, maintenance and operating costs for mobiles services providers. The decommissioning of duplicate towers will also help to reduce the environmental impact of delivering telecoms services in the East Africa country.
Helios Investment Partners was part of a group of investors who originally committed $350 million to Helios Towers Africa in November 2009, which gave the Africa-focused private equity firm an initial 28.6% stake. Helios Towers Africa counts Quantum Strategic Partners, Albright Capital Management, RIT Capital Partners, the International Finance Corporation as well as Millicom International Cellular among its other investors.