Tanzania's major operators Tigo and Zanzibar Telecom (Zantel) have confirmed the planned merger between the companies will go ahead and establish a network of 12,883,000 mobile subscribers and 7,350,000 mobile money users.

In a joint statement, both companies attributed the need for the merger to Tanzania's highly fragmented telecoms industry.

"By combining Tigo and Zantel operations in Tanzania, we aim to ensure a more balanced competitive environment that will benefit the country, support progress and innovation in the telecommunications sector, and bring together the strengths of both companies to better serve customers both in the mainland and in Zanzibar," the companies said.

The merger awaits regulatory approval but the companies said the process to transfer ownership of the shares in Zantel to Tigo is now complete.

Simon Karikari, managing director of Tigo, said, "Through combining our operations in Tanzania - Tigo and Zantel - I firmly believe we will create a more inclusive future for Tanzanian telecommunications. Both Tigo and Zantel customers will be able to enjoy enhanced services and a more consolidated market will help drive forward innovation in the sector more broadly."

Tigo said the integration process between the two companies "will start soon" and until then, customers can continue enjoying their services on Tigo and Zantel respectively.

"Customers' SIM cards and mobile numbers will not change. There will be no interruption to customers' experience on both networks during the integration process," Tigo stated.

Responding to concerns about job security for workers, Tigo added that both companies will continue to operate as separate entities in the interim and execute their business as usual.

"During integration there will be reallocation of resources within both Tigo and Zantel with the objective of rationalising operations with minimal impact on the workforce," the company stated.

The journey to the merger began on 5 June 2015 when Millicom officially announced its 85% stake in Zantel from Etisalat Group.

Millicom paid the total cash consideration of US$1 and assumed total debt obligations of US$74-million. Zantel had up to US$32-million in net liabilities at closing. Subsequently, Millicom arranged the provision of a US$100-million five-year credit facility for Zantel.

During the acquisition, Millicom held 85% stake in Zantel with the government of Tanzania owning 15% stake in the company.

In January 2019, ITWeb Africa reported Tigo approached the government of Zanzibar, via the Fair Competition Commission, to release the 15% stake it owns in the operator to Tigo.

The merger will now position the established new venture as the country's second leading operator, behind Vodacom.