Global telecoms and media company, Millicom today announced that it has signed a share purchase agreement to acquire an 85% stake in Zanzibar Telecom (Zantel) from Etisalat Group.

Zantel is an established mobile telecom operator on the islands of Zanzibar with 2014 gross revenues of $82 million and 1.7 million subscribers across Zanzibar and mainland Tanzania.

A media release states that Zantel operates 2G and 3G services over 545 network sites, with 57MHz of spectrum, 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," the statement reads.

Under the terms of the agreement Millicom will pay the total cash consideration of $1 dollar per share 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 statement continues.

The agreement allows for an adjustment to the total consideration if that target is not reached by the end of 2019.

Millicom also states that it 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 said it 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."

According to Millicom Tanzania is the company's biggest market in Africa.

"The acquisition of Zantel is a natural fit for Millicom's strategy, strengthening our overall position in Tanzania and delivering further growth prospects for the Group," the company says.

The move is expected deliver technical synergies, including procurement and national roaming, improve network service quality and coverage, as well as capitalise on the growing demand for mobile data and roll-out of 4G coverage, amongst other advantages.

In April 2015 Millicom announced the launch of a new 4G wireless network in Tanzania, first targeting the Masaki and Mlimani districts of capital Dar Es Salaam.

During the first quarter of the year the company's executive vice president for Africa, Arthur Bastings confirmed Millicom's plan to expand access to data services and strengthen offerings to help reinforce mobile as an established means of accessing the Net in Africa.

The transaction remains subject to regulatory approval by the Tanzanian Communications Regulatory Authority and the Fair Competition Commission.