Mobile Broadband Distribution
Mobile Broadband Distribution
Business Model Description
Invest in low-cost wireless broadband networks and develop mobile broadband infrastructure where assets are built and rented to users.
Expected Impact
Improve accessibility of information and income generating opportunities, and enhance access to services, such as education and healthcare.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Djibouti: Countrywide
- Djibouti: Obock
- Djibouti: Arta
- Djibouti: Ali Sabieh
Sector Classification
Technology and Communications
Development need
Access to telecommunications and internet services in Djibouti are limited, with an estimated mobile broadband penetration rate of 11.3% in 2018. Djibouti's ICT sector is one of the least developed in the region; the country ranks 158 out of 176 in the ICT Development Index (1).
Policy priority
To achieve the Vision 2035's policy objectives, Djibouti set out an ambitious National Strategy for ICT Development with the Integrated Strategic Plan (2014-2024), which aims to develop and spread access to ICT across the country. (1). The Horn of Africa Initiative also prioritizes establishing a single digital market as part of the regional infrastructure networks pillar (3).
Gender inequalities and marginalization issues
Djibouti exhibits a strong urban-rural divide in the technology and communications sector with only 0.7% of rural households declaring access to internet services. Additionally, fewer than 10% of internet users in Djibouti are women (1).
Investment opportunities introduction
Opportunities exist with regards to the ongoing partial privatization of telecommunications services, investments in hospitals and schools for further internet connectivity, and investments in the broadband network.
Key bottlenecks introduction
Challenges in the sector relate to the absence of competition in the ICT market deterring investment, limited service delivery and innovation, high prices of connection and services, underdeveloped cybersecurity, and weak privacy and data protection laws.
Internet Media and Services
Development need
55% of Djibouti's population has access to internet primarily through mobile phones; of which 71.3% are urban and 0.7% are rural households, which indicates the large urban-rural divide. Djibouti has among the highest fees for internet and some of the lowest speeds. Only the wealthiest parts of Djibouti's population have access to high-speed internet (1).
Policy priority
Djibouti's Vision 2035 seeks to strengthen the ICT sector to provide quality telecommunication services at affordable prices and to leverage the potential of digital technologies as a driver of economic growth (2). Prioritized projects of the Horn of Africa initiative include submarine cable and data infrastructure, cybersecurity, e-government and regulatory harmonization (3).
Investment opportunities introduction
Djibouti's geographic position enables productivity gains as the country houses the highest number of international gateway connections in East Africa, which also provide data provisioning to neighboring countries. Djibouti is connected to eight submarine cables (5).
Internet Media and Services
Pipeline Opportunity
Mobile Broadband Distribution
Invest in low-cost wireless broadband networks and develop mobile broadband infrastructure where assets are built and rented to users.
Business Case
Market Size and Environment
< 5%
Djibouti has 546,300 internet users
As of 2020, 546,300 internet users are active in Djibouti. This number has increased by 8,278 between 2019 and 2020, which signals a 1.5% growth. Overall internet penetration in Djibouti stands at 56% (9); mobile broadband internet penetration is lower at 11.3% (11).
Djibouti has access to eight major international fiber optic systems and is home to the first and only carrier neutral data center facility in East Africa (13).
Across the larger East Africa region, 186 million mobile broadband connections (covering 3G, 4G or 5G) are forecast by 2022 (12).
Indicative Return
ROE of 5% - 10%
The estimated return rate for investors in mobile broadband distribution is 7.1-9.1%. This rate is a benchmark calculated as a cost of equity, reflecting an average return required by investors active in the subsector (10).
Investment Timeframe
Short Term (0–5 years)
Based on studied benchmark projects, investments in mobile broadband services can see cashflow within a year once fiber cables have been installed (10).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Market - High Level of Competition
Business - Supply Chain Constraints
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Despite Djibouti's expansive optical fiber network, broadband services are expensive, and subscriber and line connection fees are high given the country's poverty rate (14).
The mobile broadband internet penetration in Djibouti was estimated to be just 11.3% in 2018. Accessibility, quality and cost are major constraints to the digital development in the country. Djibouti ranked the 161st most expensive country in broadband pricing and 133rd in terms of speed (11).
Studies indicate a strong correlation between broadband availability and jobs and GDP growth. Globally, the COVID-19 pandemic has enhanced the digital divide and the need for reliable, fast and affordable internet connectivity (15).
Gender & Marginalisation
Women represent less than 10% of internet users in Djibouti (11), hindering their access to education and healthcare.
High subscription costs to broadband internet services in Djibouti exclude rural populations and low-income households from accessing information and economic opportunities (14).
Expected Development Outcome
Low-cost wireless broadband networks enhance access to affordable, fast and reliable internet connectivity.
The mobile broadband infrastructure increases access to services, such as education and healthcare, improve the ease of doing business especially for small enterprises.
Gender & Marginalisation
Mobile broadband networks increase women's access to online services, including education and healthcare, and contribute towards closing the digital gap between urban-rural communities and income levels.
Primary SDGs addressed
9.c.1 Proportion of population covered by a mobile network, by technology
23.63 mobile broadband subscriptions per 100 people (16).
100 in the long term (globally) (16).
17.6.1 Fixed Internet broadband subscriptions per 100 inhabitants, by speed
17.8.1 Proportion of individuals using the Internet
10 MBPS: 598, 256KT2MBPS: 20452, 2MT10MBPS: 3366, ANYS: 24416 (2019) (17).
55.68 per 100 people (2017) (17).
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Indirectly impacted stakeholders
People
Corporates
Outcome Risks
Broadband internet infrastructure may result in disruptions in natural habitats and increase greenhouse gas emissions, which can cause environmental degradation.
Greater internet accessibility may lead to overuse, which may result in addiction, impede the user's cognitive development and negatively impact on social relationships (18).
Impact Risks
Poor infrastructure and limited technical know-how for broadband internet may disrupt the delivery of the expected impact if the infrastructure is not set up and managed well.
If accessibility is not ensured for low-income communities and rural populations, the impact of the internet solutions may be limited as they would only reach groups already enjoying connectivity.
People with limited literacy and digital skills, including women and youth, may be excluded from using internet services, which would limit the scale and inclusiveness of the expected impact (19).
Impact Classification
What
Mobile broadband distribution enables greater internet accessibility to obtain information, income generating opportunities and access to services, such as education and healthcare.
Risk
While the model of mobile broadband distribution is proven, infrastructure investments, affordability for those left behind, and users' limited digital skills require consideration.
Impact Thesis
Improve accessibility of information and income generating opportunities, and enhance access to services, such as education and healthcare.
Enabling Environment
Policy Environment
Strategy for Accelerated Growth and Employment Promotion (SCAPE) 2015-2019, 2014: Identifies the upgrade of the profile of the economy with modernized infrastructure and reformed sectors, including advances in telecommunications and ICT, as the main goal under the first phase of the strategy (20).
Vision Djibouti 2035, 2014: Aims to develop a diversified and competitive private sector driven economy, including an inclusive digital economy. It highlights Djibouti's submarine cable infrastructure potential (21).
National Strategy for ICT Development, 2014: Sets an ambitious strategy for ICT development and adopts a ten-year ICT roadmap, which aims to develop and generalize access to ICT across the country (11, 22).
Financial Environment
Financial incentives: The Horn of Africa Initiative implements projects in digital infrastructure with, which include the Festoon Cable and Terrestrial Links; Regional Data Market Infrastructure and Cybersecurity; and Data Services Market: E-Government and Cross-Border Digital Payments (32).
Other incentives: Djibouti has access to eight submarine cables: DARE 1, SeaMeWe3, Aden-Djibouti, EASSy/WIOC, SEACOM, EIG, Djibouti-Ethiopia, and Djibouti-Somalia, which provide an opportunity for the country's ICT sector at large (25) .
Regulatory Environment
Law No. 80, 2014: Outlines the adoption of the Integrated Strategic Plan, the Government's ten-year ICT development roadmap covering 2014-2024 (19).
Law No. 80, 2004: Aims to reform the ICT sector and calls for the establishment of the regulatory authority Djiboutian Agency for the Regulation of Telecommunications (ADRT) (23).
Law No. 74, 2019: Establishes the Djiboutian Multisector Regulatory Authority (ARMD) to cover the telecommunications, post and energy sectors (11, 24).
Press Release of the Parliamentary Session, 2021: Presents the draft law relating to the terms and conditions for the sale of state holdings in the capital of public enterprises; amends 1997 law relating to the conditions and modalities of privatization (33).
Marketplace Participants
Private Sector
Djibouti Telecom (Evatis, Adjib), Telecom Italia Sparkle, Saudi Telecom Company (STC), Algerie Telecom, Djibouti Data Centre (DDC), AfriMax, Ericsson.
Government
Ministry of Communications, Ministry of Economy and Finance, Djiboutian Multisector Regulatory Authority (ARMD), Central Bank of Djibouti, National Agency for State Information Systems (ANSIE).
Multilaterals
International Telecommunications Union (ITU (WiMAX), Broadband Commission for Development, African Union (AU), World Bank, International Monetary Fund (IMF), GSM Association (GSMA), Horn of Africa Initiative (HoAI).
Non-Profit
Djibouti Chamber of Commerce, Center for Leadership and Entrepreneurship (CLE), Center for Technology and Innovation for Development (CTID).
Public-Private Partnership
In 2017, Djibouti Telecom signed an MOU with GoToNetworks in for the Australia West Express cable (27). In 2018, it signed an MOU and a landing party agreement with Pakistan for the PEACE Cable International Network (26).
Target Locations
Djibouti: Countrywide
Djibouti: Obock
Djibouti: Arta
Djibouti: Ali Sabieh
References
- (1) World Bank. October 2020. Djibouti Digital Foundations Project Information Document. https://documents1.worldbank.org/curated/en/854401603922890710/text/Concept-Project-Information-Document-PID-Djibouti-Digital-Foundations-Project-P174461.txt.
- (2) Republic of Djibouti. 2014. Vision Djibouti 2035. http://ccd.dj/w2017/wp-content/uploads/2016/01/Vision-Nationale.pdf.
- (3) Horn of Africa Initiative. February 2021. Description of Priority Projects and Readiness. https://hoainitiative.org/wp-content/uploads/2021/03/HoAI-Project-Profiles.pdf.
- (4) Horn of Africa Initiative. 2020. Key Priority Projects to Deepen Regional Integration. https://hoainitiative.org/wp-content/uploads/2020/11/HoA-Initiative-KEY-PRIORITY-PILLARS-Brochure_FINAL.pdf.
- (5) Oxford Business Group. 2018. Global and local stakeholders to leverage Djibouti's unique position to develop ICT, https://oxfordbusinessgroup.com/overview/key-advantage-both-global-and-local-levels-stakeholders-are-leveraging-country’s-unique-position.
- (6) ITU News. May 2019. How Djibouti’s wireless networks are connecting ‘last-mile’ communities. https://news.itu.int/how-djiboutis-wireless-networks-are-connecting-last-mile-communities.
- (7) IFC. Supporting Wireless Broadband in Africa. https://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_external_corporate_site/news+and+events/news/wireless-broadband-africa.
- (8) IFC. 2013. Afrimax Raises $56 million of Equity to Deliver Sub-Saharan Africa’s Largest and Most Advanced 4G Network. https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=17853.
- (9) Simon Kemp. February 2020. Digital 2020: Djibouti. https://datareportal.com/reports/digital-2020-djibouti.
- (10) PwC / UNDP Analysis, based on Prof. A. Damodaran data, 2020. Not publicly available.
- (11) World Bank. October 2020. Djibouti Digital Foundations Project Information Document.
- (12) Connecting Africa. June 2018. East Africa to Have 186M Mobile Broadband Connections by 2022: Ovum. http://www.connectingafrica.com/document.asp?doc_id=744053.
- (13) Djibouti Data Center. 2021. About. http://www.djiboutidatacenter.com/en/page/about.
- (14) ITU. 2018. Measuring the Information Society Report 2018. https://www.itu.int/en/ITU-D/LDCs/Documents/2017/Country%20Profiles/Country%20Profile_Djibouti.pdf.
- (15) Deloitte. April 2021. Broadband for all: charting path to economic growth. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/process-and-operations/us-broadband-for-all-economic-growth.pdf.
- (16) Sustainable Development Report. 2021. Country Profiles: Djibouti. https://dashboards.sdgindex.org/profiles/djibouti.
- (17) UN Global SDG Database, 2021. SDG Indicators. https://unstats.un.org/sdgs/indicators/database.
- (18) Quaglio, G. and Millar, S. 2020. Potentially Negative Effects Of Internet Use. European Parliament. https://www.europarl.europa.eu/RegData/etudes/IDAN/2020/641540/EPRS_IDA(2020)641540_EN.pdf.
- (19) GSM Alliance (GSMA). 2020. The State of Mobile Internet Connectivity Report 2020. https://www.gsma.com/r/wp-content/uploads/2020/09/GSMA-State-of-Mobile-Internet-Connectivity-Report-2020.pdf.
- (20) Government of Djibouti. 2015. Strategie de Croissance Accélérée et de Promotion de l'Emploi. https://economie.gouv.dj/wp-content/uploads/de95d383afef8bcbe0a3bc609a7f5c76.pdf.
- (21) Republic of Djibouti. 2014. Vision Djibouti 2035. http://ccd.dj/w2017/wp-content/uploads/2016/01/Vision-Nationale.pdf.
- (22) Government of Djibouti, Ministry of Communications. 2021. Djibouti Numérique. https://communication.gouv.dj/pages/DetailPages/76.
- (23) Government of Djibouti, Ministry of Communications. 2021. Présentation du secteur des Postes et des Télécommunications. https://communication.gouv.dj/pages/DetailPages/48.
- (24) Presidency of the Republic of Djibouti. 2021. Loi N° 74/AN/20/8ème L portant création de l'autorité de régulation multisectorielle de Djibouti (ARMD). https://www.presidence.dj/texte.php?ID=74&ID2=2020-02-13&ID3=Loi&ID4=3&ID5=2020-02-13&ID6=n.
- (25) Resilient Digital Africa. February 2021. Djibouti-Crossroads of submarine cables. https://resilient.digital-africa.co/en/blog/2021/02/03/djibouti-crossroads-of-submarine-cables.
- (26) Submarine Cable Networks. August 2018. PEACE Cable Initiates Landing Cooperation with Pakistan and Djibouti. https://www.submarinenetworks.com/en/systems/asia-europe-africa/peace/peace-cable-initiating-landing-cooperation-with-pakistan-and-djibouti.
- (27) Capacity Media. January 2017. Djibouti Telecom to take capacity on new Australia West Express cable. https://www.capacitymedia.com/articles/3654545/djibouti-telecom-to-take-capacity-on-new-australia-west-express-cable.
- (28) Republic of Djibouti. 2017. Plan de development rural de Obock. https://www.academia.edu/37693835/PLAN_DE_DEVELPPEMENT_RURAL_OBOCK_final_08_03_2017_pdf.
- (29) Republic of Djibouti. 2017. Plan de development rural de Arta. https://www.academia.edu/37693833/PLAN_DE_DEVELPPEMENT_RURAL_ARTA_final_08_03_2017_pdf.
- (30) Developing Telecoms. September 2020. Djibouti benefits from completion of the DARE cable system. https://developingtelecoms.com/telecom-business/market-reports-with-buddecom/10027-djibouti-benefits-from-completion-of-the-dare-cable-system.html.
- (31) Jason McGee-Abe. August 2018. Pakistan, Djibouti land deals for 60Tbps Peace subsea cable. https://www.capacitymedia.com/articles/3822295/pakistan-djibouti-land-deals-for-60tbps-peace-subsea-cable.
- (32) Horn of Africa Initiative. February 2021. Description of Priority Projects and Readiness. https://hoainitiative.org/wp-content/uploads/2021/03/HoAI-Project-Profiles.pdf.
- (33) Presidency of the Republic of Djibouti. 2021. Communiqué de la 11ème Séance du Dimanche 11/07/2021. https://www.presidence.dj/conseilministresuite.php?ID=11&ID2=2021-07-11.