Telecommunications Services
Telecommunications Services
Business Model Description
Invest in national telecommunications services to improve national as well as intercontinental connectivity and telecommunication infrastructure.
Expected Impact
Improve accessibility of information and reduce the income and urban-rural gap in telecommunication services.
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
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 (2).
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.
Telecommunications
Development need
Despite growing demand for mobile phones, Djibouti's mobile penetration rate remains low in with 36.6 subscriptions per 100 people in 2016. Due to poor mobile coverage and relatively high costs of mobile services, demand for landlines is high, with 24,929 subscriptions to landlines in 2016, yet high prices contribute to the underutilization of the copper network (3, 4).
Policy priority
The Accelerated Growth and Employment Promotion Strategy (SCAPE) aims to upgrade the Djibouti's economy with modernized infrastructure, including telecommunications (1). The Vision 2035 covers strengthening the subsector to provide quality telecommunication services at affordable prices and opening up the subsector to the private sector (5).
Gender inequalities and marginalization issues
Telecommunication infostructure is concentrated around Djibouti City and remote regions of the country experience lower levels of connectivity (3), which hinders access to information for remote communities.
Investment opportunities introduction
Djibouti hosts 12 high-capacity undersea cables, is rolling out a 4G network, and opportunities exist to expand into mobile money and data centers (6). The Government took the first step in privatizing the telecommunication sector by announcing its intention to sell a significant minority stake of Djibouti Telecom (26).
Telecommunication Services
Pipeline Opportunity
Telecommunications Services
Invest in national telecommunications services to improve national as well as intercontinental connectivity and telecommunication infrastructure.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
Djibouti has 410,000 mobile phone subscribers
The number of mobile phone subscribers in Djibouti reached 410,000 in 2019 (8).
Djibouti Telecom recorded revenues of more than DJF 25 billion (USD 140 million) in 2020 and enjoys generally high margins on their services and products (24).
Indicative Return
15% - 20% revenue increase
Djibouti Telecom reported a 15% increase in revenue between 2018 and 2020 (24). Ethio Telecom in Ethiopia reported a 18.4% rise in full-year revenue to USD 1.29 billion and a 22% jump in subscribers to 56.2 million (9).
Investment Timeframe
Medium Term (5–10 years)
Globally, telecommunication company shares have exhibited characteristics of both income and growth stocks. For growth investors, the small companies offering wireless services provide the best opportunities for share price appreciation (27).
In contrast, larger companies dealing with equipment and services tend to be havens for conservative, income-focused investors (27).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Highly Regulated
Market - High Level of Competition
Impact Case
Sustainable Development Need
The penetration rate of the mobile phone network in Djibouti is one of the lowest in the world, despite the growth in the market (13).
Djibouti's telecommunications market is burdened by high communications and connectivity costs, limited availability of service plans, and poor quality of the network (13), which negatively impacts on people's access to information and opportunities to connect with each other.
Studies on Djibouti and Ethiopia show that greater competition in digital infrastructure, such as a higher number of mobile operators and a reduction in the market power of broadband monopolies and oligopolies, can reduce prices and allow new entrants to adopt mobile services (14).
Gender & Marginalisation
High subscription costs to telecommunications services exclude rural populations and low-income households. Women for example represent less than 10% of internet users in Djibouti (12).
Expected Development Outcome
Telecommunications services improve access to mobile network services, and create more affordable and competitive fees for mobile subscriptions. Telecommunications services advance the development of Djibouti's digital ecosystem with significant potential for job creation (24).
Through the telecommunications services, Djibouti's population benefits from the adoption of digital technologies. This includes improved financial inclusion through mobile money applications, enhanced access to job opportunities, effective delivery of basic services through e-government applications, and expanding access to markets through e-commerce (14).
Gender & Marginalisation
Surveys indicate that mobile phones help women in middle and low income countries stay connected to friends and family, save their time, make them feel safer, give them independence and help save money (15).
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).
5.b.1 Proportion of individuals who own a mobile telephone, by sex
56.34% in total; 51.57% for women and 61.32% for men (2017) (17).
N/A
17.8.1 Proportion of individuals using the Internet
55.68 per 100 people (2017) (17).
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Indirectly impacted stakeholders
People
Public sector
Outcome Risks
Telecommunication infrastructure may result in disruptions in natural habitats and increase greenhouse gas emissions, which can cause environmental degradation.
Impact Risks
Poor infrastructure and limited technical know-how for telecommunications services 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 telecommunication services 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 telecommunication services, which would limit the scale and inclusiveness of the impact (19).
Impact Classification
What
Telecommunication services enable greater mobile phone connectivity and accessibility.
Who
Remote communities and unserved population who are excluded from telecommunication services and do not have access to mobile network services.
Risk
While the model of telecommunication services is proven, infrastructure investments, affordability for those left behind, and users 'limited digital skills require consideration.
Impact Thesis
Improve accessibility of information and reduce the income and urban-rural gap in telecommunication services.
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 (18).
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 (19).
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 (12, 20).
Financial Environment
Financial incentives: The government approved a draft law defining the terms for the total or partial transfers of shares in state-owned capital in public enterprises, including the share capital opening of Djibouti Telecom to private investors (23).
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 (21).
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) (25).
Law No. 74, 2019: Establishes the Djiboutian Multisector Regulatory Authority (ARMD) to cover the telecommunications, post and energy sectors (12, 22).
Law No. 13, 1998 and Decree No. 19, 1999: Defines the status of Djibouti Telecom as the full owner of Djibouti’s telecommunication networks (21).
Marketplace Participants
Private Sector
Djibouti Telecom, Ethio Telecom (Ethiopia), Vodafone Group, MTN (South Africa), Orange, Etisalat (UAE).
Government
Ministry of Communications, Ministry of Economy and Finance, National Agency for State Information Systems (ANSIE), Djibouti Multisectoral Regulatory Authority (ARMD).
Multilaterals
International Telecommunication Union (ITU), Broadband Commission for Development, African Union (AU), World Bank, 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
Opening up of Djibouti telecom's Capital to a strategic private minority partner (24).
Target Locations
Djibouti: Countrywide
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) Horn of Africa Initiative. February 2021. Description of Priority Projects and Readiness. https://hoainitiative.org/wp-content/uploads/2021/03/HoAI-Project-Profiles.pdf.
- (3) 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.
- (4) Lixi, Marc, Arthur Foch and Mariana Dahan. 2015. Telecommunications Sector in Djibouti: Finding the Path to Growth. https://ppiaf.org/documents/3712/download.
- (5) Republic of Djibouti. 2014. Vision Djibouti 2035. http://ccd.dj/w2017/wp-content/uploads/2016/01/Vision-Nationale.pdf.
- (6) Prinsloo, Loni. July 2021. Djibouti to Sell Minority Stake in State-Run Telecoms Company. https://www.bloomberg.com/news/articles/2021-07-11/djibouti-to-sell-minority-stake-in-state-run-telecoms-company.
- (7) Prinsloo, Loni. July 2021. Djibouti to Sell Minority Stake in State-Run Telecoms Company.
- (8) The Global Economy. 2019. Djibouti: Mobile phone subscribers. https://www.theglobaleconomy.com/Djibouti/Mobile_phone_subscribers.
- (9) Developing Telecoms. July 2021. Ethio Telecom reports a 22% jump in subscribers to 56.2m. https://developingtelecoms.com/telecom-technology/consumer-ecosystems/11518-ethio-telecom-reports-a-22-jump-in-subscribers-to-56-2m.html
- (10) Reuters. May 2021. Consortium led by Safaricom wins Ethiopian operating licence. https://www.reuters.com/world/africa/ethiopias-ethio-telecom-launch-mobile-money-service-2021-05-07.
- (11) World Bank. 2021. Telecommunications/Information & Communication Technology PPPs. https://ppp.worldbank.org/public-private-partnership/sector/telecom.
- (12) World Bank. October 2020. Djibouti Digital Foundations Project Information Document.
- (13) Lixi, Marc, Arthur Foch and Mariana Dahan. 2015. Telecommunications Sector in Djibouti: Finding the Path to Growth.
- (14) Iza Institute of Labor Economics. February 2021. Mobile Internet Adoption in West Africa. http://ftp.iza.org/dp14151.pdf.
- (15) GSM Alliance (GSMA). 2015. Bridging the gender gap: Mobile access and usage in low and middle income countries. https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2016/02/Connected-Women-Gender-Gap.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) Government of Djibouti. 2015. Strategie de Croissance Accélérée et de Promotion de l'Emploi. https://economie.gouv.dj/wp-content/uploads/de95d383afef8bcbe0a3bc609a7f5c76.pdf.
- (19) Republic of Djibouti. 2014. Vision Djibouti 2035. http://ccd.dj/w2017/wp-content/uploads/2016/01/Vision-Nationale.pdf.
- (20) Government of Djibouti, Ministry of Communications. 2021. Djibouti Numérique. https://communication.gouv.dj/pages/DetailPages/76.
- (21) Government of Djibouti, Ministry of Communications. 2021. Présentation du secteur des Postes et des Télécommunications. https://communication.gouv.dj/pages/DetailPages/48.
- (22) Presidency of the Republic of Djibouti. 2020. 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.
- (23) Presidency of the Republic of Djibouti. July 2021. Press Release The Government of the Republic of Djibouti announces The opening of the capital of Djibouti Telecom. https://twitter.com/Ilyasdawaleh/status/1414168736299421698/photo/2.
- (24) Djibouti Digital Future. 2021. What are the expected positive impacts for Djibouti Telecom and its customers?. https://www.djiboutidigitalfuture.com/questions-and-answers.
- (25) 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.
- (26) CommsUpdate. July 2021. Govt to sell ‘significant’ stake in state-run Djibouti Telecom. https://www.commsupdate.com/articles/2021/07/12/govt-to-sell-significant-stake-in-state-run-djibouti-telecom.
- (27) Investopedia. April 2021. What Is the Telecommunications Sector?. https://www.investopedia.com/ask/answers/070815/what-telecommunications-sector.asp.