Reuters
An unidentified bank has demanded Zanzibar Telecom repay $96mn owed to it after the Tanzanian mobile operator defaulted on the loan, a bond prospectus for parent firm Etisalat said.
Zanzibar Telecom, which uses the brand name Zantel, has struggled against larger rivals Vodacom and Bharti Airtel. Its subscriber base fell 41% last year despite plenty of room for growth in the sector, with mobile penetration in the East African country at 61%.
“Zantel is currently in non-payment default under a bilateral bank facility,” a bond prospectus issued by Etisalat, the UAE’s largest listed company, states.
The facility’s provider, which Etisalat does not identify, has issued an acceleration notice, the document showed.
This is a formal demand that the entire balance, interest and late fees be paid. The prospectus says the outstanding amount is $96mn, warning “unless this default is remedied, the lender may take enforcement action against Zantel”.
Etisalat repeated the prospectus’s details regarding Zantel in a statement to Reuters, but declined to provide further information. Zantel did not respond to Reuters enquiries.
Etisalat is expected to issue a bond to replace a €2.1bn ($2.86bn) bridge loan it used to help fund its purchase of a controlling stake in Maroc Telecom.
Etisalat bought a 34% stake in Zantel in 1999, in 2010, upping its holding to 65%. Zanzibar’s government owns 18% and Meeco International Company 17%.
Etisalat does not provide financial details of Zantel’s operations, but the bond prospectus omits Zantel from a list of foreign subsidiaries that last year made a “positive contribution” to the parent’s operating profit, implying the Tanzanian operator was loss-making.