Although it only has a population of 850,000, Djibouti has nonetheless seen a steady expansion in opportunities for telecommunications investment. This is mostly due to increasing consumption and regional demand for high-bandwidth international connectivity. While the sector remains largely under the purview of a single publicly-owned operator, Djibouti Telecom, it has seen sustained investment in network maintenance, infrastructure upgrades and fixed and mobile connections.
Over the past two years, more than $100m has been invested in gateway connections, with the country now linked to six submarine data cables. These capital expenditures are in line with government efforts to strengthen the role of telecommunications and IT in national development, and to increase the role the sector plays regionally. All of these developments are taking place under the aegis of the strategic Djibouti Vision 2035.
History
The modern telecommunications sector in Djibouti began in 1999 with the merger between the Post and Telecoms Office and the International Telecom Company, to create Djibouti Telecom. Although telephone boxes and internet cafes are liberalised and open to investment, Djibouti Telecom remains the sole telecom and IT operating body and is wholly-owned by the state. Djibouti Telecom is one of the largest companies in the country, contributing up to 14.5% of GDP and employing approximately 1260 people. The operator currently offers four types of service: fixed telephony, mobile telephony (both GSM and, for rural areas, CDMA) internet access and data for both regional and international connectivity.
Government Strategy
The Ministry of Communication and Culture, charged with overseeing telecommunication activities, implemented Law No. 80/AN/04/5th in 2004 which outlined a national policy for the use of new technologies.
Under this legal framework the government has defined the following central priorities: increasing access to IT services for the whole population; reducing telecommunication costs in order to strengthen external competitiveness and attractiveness as an investment location; and expanding telecommunications as a factor that is conducive to regional integration and action against poverty and illiteracy. Responsibility for sector oversight has been assigned to the Djiboutian Agency for ICT Regulation, which has the sole judicial capacity for regulating the domestic ICT sector and managing the distribution of licenses for data connections, both domestically and externally.
Mobile
In the fourth quarter of 2015, 314,350 people made use of mobile services, up from 285,904 one year earlier. This represented a mobile penetration rate of 33.5% of the population, which remains well below the regional average.
The introduction of the 3G+ network in 2011, in cooperation with Ericksson, replaced the 2G GSM and 2.5G EDGE mobile networks. The rollout of faster connectivity and higher bandwidth appears to have spurred a significant increase in the consumption of data usage, which should bode well for Djibouti Telecom’s revenues over the medium-term. The country’s mobile download speed currently stands at 7 Mbps.
Tests for the implementation of a new and updated 4G mobile network are in the process of being provisioned. “We are currently in a testing phase for the 4G network. We have identified 10 testing sites for the LTE Advanced standard, which will allow for 1 Gbps data transfer, in addition to the LTE Basic, which will facilitate 150 Mbps. This pilot project will allow us to see where most demand lies and what packages our clients would prefer,” Mohamed Assoweh Bouh, director-general of Djibouti Telecom, told OBG.
By making better use of its data capacity, Djibouti Telecom is planning to significantly cut tariffs or even attempt to provide a nearly free internet connection in the near future. Demand for data is expected to reach over 3 Tbps by 2020.
Subscriber Options
As is the case with most emerging markets, the pre-paid segment tends to account for a significantly larger volume of activity. With the average telecom consumer being relatively young – fully a third of the population is below the age of 30 – and with two-thirds of Djibouti still lacking regular mobile access, the country has the potential to increase both overall usage and average revenue per user.
However, one challenge has been ensuring that the provision of data coverage through the 3G+ and the soon-to-be-rolled-out 4G services are affordable for the population as a whole, in a country where the per capita income is approximately $1618, according to the World Bank.
Currently those services are available at a high tariff, with 500 MBs valid for 24 hours costing DJF250 ($1.40) and 800 MBs, valid for 30 days, DJF5000 ($28). By comparison, 1 GB of mobile internet in Ethiopia costs DJF1670 ($9.35) and 6 GBs costs DJF5000 ($28). While prices for telecom services remain relatively high within the regional context, network reliability in Djibouti – an aspect of its relatively high rate of urbanisation, small size and numerous gateways – tends to be higher than in neighbouring countries, with comparatively low figures for the number of dropped calls.
Djibouti Telecom has also worked to help encourage demand through subsidised access to handsets and post-paid plans, in a bid to help expand the subscriber base for more high-usage packages. The recent offering of the “Hadya” package, where a smartphone with 100 MBs mobile internet, 60 minutes of local calls and a 50-SMS packet, is offered under a 24-month contract, costing DJF2000 ($11.20) per month, is a good example of this expansion of mobile data usage.
While rates remain relatively elevated when compared against regional averages, they have nonetheless dropped in recent years. The recent signing of a cooperation agreement between Djibouti Telecom and China Telecom signals the provider’s wish to strengthen international partnerships and exchange of knowledge.
Fixed Line
Although increasing – a rare upward trend in Africa, where fixed line connections have generally been dropping – demand for fixed line connections has nonetheless developed at a much slower rate in Djibouti, partly due to the dominance of mobile devices in daily communication. At the end of 2014 there were 28,763 fixed telephone lines in use, increasing by 5.2% to reach 30,271 at the end of 2015. The moderate uptake in fixed connectivity is in part a result of two key factors: fixed line connections remain relatively expensive in contrast to the average Djiboutian salary, and secondly, infrastructure is concentrated in Djibouti City – with 95% of the urban environs connected to the network – but more remote regions still face low levels of connectivity.
The fixed network benefits from integration with neighbouring countries. In 2006, an interconnection with Somaliland was launched, and there are currently four Somaliland operators using Djibouti’s telecom access; MICCOM, Telesom, Telcom and Somtel, which have a combined bandwidth of 400 Mbps. Plans exist to upgrade the current telecom connections and install another fibre optic cable that will increase the reliability.
Gateway Ambitions
Djibouti has sought to make the most of its geographic location by investing in key infrastructure to help it serve as a gateway for the region – with some success. The country now handles the majority of neighbouring 95m-person Ethiopia’s trade volumes, for example, and is looking to strengthen links with South Sudan and Yemen. It is looking to extend its ambitions to become a regional platform for the telecommunications and IT sector, with existing links to six submarine data cables. With data usage in the Horn of Africa increasing from 100 Gbps in 2009, to 900 Gbps in 2015, the country’s overall expansion in bandwidth provision comes at a critical juncture, with over 20 regional operators currently using IP connections based in Djibouti.
Submarine Cables
Djibouti currently has the highest number of international gateway connections in East Africa, which lends to data provisioning for regional countries such as Ethiopia and Somalia, which lack greater data connectivity.
The country’s submarine cable connections include the East African Submarine Cable System (EASSy) data cable, which was constructed in 2009 and has a current operating capacity of 3.84 Tbps. EASSy – which is owned by a wide consortium of telecoms operators, including the South Africa-based West Indian Ocean Cable Company (itself a consortium of African operators, including Djibouti Telecom), South Africa’s MTN, India’s Bharti Airtel and France’s Orange – extends 16,093 km from Mtunzini in South Africa to Port Sudan, on the Sudanese coast, providing data access for 250m people in East Africa.
The second cable is the Transcontinental Europe India Gateway, which has been operational since 2010, and holds a capacity of 1.28 Tbps, connecting India with the Middle East, North Africa, Western Europe and the UK. Djibouti is currently the only East African country that has an access point to this submarine cable, which is owned by a group of operators, including US-based AT&T, the UAE’s du, Egypt’s Telecom Egypt, South Africa’s Telkom SA and Djibouti Telecom. The third cable, SEACOM, was launched in 2009, and stretches from South Africa to Mumbai, with a capacity of 1.28 Tbps. The cable is owned by a group of shareholders, including the Aga Khan Fund for Economic Development, South Africa’s Remgro and US-based Herakles Telecom. The fourth regional submarine cable – and one of Yemen’s two international connections – is the Aden-Djibouti cable, which was put in place in 1997 and has a capacity of 10 Gbps data speed.
Finally, the cable South-East-Middle-East-Europe West 3 was built and deployed by a consortium of 93 operators in 2000; the cable connects to Europe, Africa, Asia and Oceania across 33 countries, and has a capacity of 40 Gbps.
New Linkages
The connection to two additional cables in 2015, the Asia-Africa-Europe-1 and South-East Asia Middle-East Western Europe cables, will further strengthen existing capacity and Djibouti’s position as a gateway to the region.
Finally, agreement has been reached between Djibouti Telecom and China Telecom for the construction of the Djibouti Africa Regional Express (DARE) project, which proposes a 20 Tbps regional fibre-optic cable connecting the major capitals of the area and operated by a consortium of 13 telecom providers. The concept for the DARE cable envisages it running from Djibouti, from which all in-coming traffic will be relayed to international submarine cables, linking into the Somali coast, then to Kenya and Yemen. Djibouti has been looking to solicit additional investment from foreign operators; Orange, Safaricom, Teleyemen, Somali Telecom, and Turk Telekom have all shown interest for the joint execution of the project.
Data Centres
To capitalise on the high levels of international connectivity in the country, and increase the volume of regional traffic that passes through its gateways, the country has launched the Djibouti Data Centre (DDC). The DDC, which is owned predominantly by Djibouti Telecom, was founded in 2013 in order to provide direct fibre access, interconnection and co-location at a common cable landing station, thereby bundling all data in one place, from which the connection can be re-connected or backhaul services provided. The DDC was constructed with the aim of centralising incoming data connections in one location for re-transmission to Africa, Asia and Europe. Currently 25 African telecoms providers are connected to the DCC, ranging from countries like Burundi to Madagascar. Current connection speeds stand at 30 Gbps.
By keeping local traffic in the Horn of Africa, the use of peering points outside of the region has become redundant, leading to faster connectivity and lower costs. The Djibouti Internet Exchange platform provides open peering for IP addresses from the DDC, lowering the costs of transit time, with data speeds ranging from 100 Mbps to 10 Gbps. Through the installation of a special cable head backhaul tariff in 2014, prices have been put in line with European pricing schemes.
Currently, around 500 GB leaves the region daily, of which 10-20% is captured by the DDC. By having invested over $100m since 2014, Djibouti Telecom aims to increase this amount, potentially reaching up to 70% at one point in time.
Djibouti also hosts the Djibouti Teleport, a joint-venture between Djibouti Telecom and US-based BringCom, with fibre connections to four gateways, that provides IP connections and international backhaul services mostly geared at aeronautical and maritime satellite services.
Internet Usage
According to the Djibouti Statistics and Demographic Studies Department (Direction des Statistiques et Etudes Dé mographiques, DISED) in terms of internet usage, around 10% of the population has regular access to internet services – including through internet cafes and shared subscriptions – up from 7% in 2011, putting the country ahead of neighbours such as Ethiopia and Somalia, who are at less than 3% according to World Bank figures. The DISED figures still show space for market growth.
In order to boost usage rates, the government has supported the expansion of a number of internet cafes around the country and is offering new mobile internet packages at lower tariffs. Special pricing schemes have been introduced, where one-year subscriptions for students and low-income groups now cost DJF35,700 ($200), down from almost double this amount in previous years. The government has also begun to roll out the one-laptop-per-child programme, with the aim of providing universal access to ICT services. This has seen the delivery of 10,000 iPads and notebooks to primary and secondary schools pupils.
While internet access often relies heavily on mobile devices in most emerging markets – in Egypt, for example, it accounts for roughly 40% of total internet access, while in Kenya, mobile data and internet subscriptions account for more than 90% of all internet subscriptions – Djibouti trends in the opposite direction.
By the end of the fourth quarter of 2015, there were just under 33,000 internet subscribers, with the vast majority – around 24,000 – accessing it through fixed ADSL connections, with the remaining via 3G fobs and mobile devices. Growth has been relatively steady, rising by almost 4,000 year-on-year, with nearly all of that growth found within the ADSL segment.
ADSL
With 24,165 Djiboutians using ADSL connections by the end 2015, up from 19,426 at the end of 2014, ADSL services have become increasingly widespread, yet still reach only a limited share of the population. The main reason behind low ADSL connectivity rates is the high price tag that comes with the fast-speed data connection.
Monthly access to ADSL services costs an average of $36 per month, compared to an average of $31 for a similar package in Ethiopia, according to Ethio Telecom. Such a monthly package represents nearly 24% of the average annual salary in Djibouti, versus 5% or 3.5%, in countries such as Morocco and Tunisia, according to the World Bank .
Fibre-Optic
In order to improve the bandwidth and reliability of the network backbone, and boost speeds for retail users, Djibouti Telecom launched the fibre-to-home initiative in 2008. The first connection was between the Balbala suburbs of Djibouti City and the Doraleh port, covering a total length of 5 km, serving as a testing ground for further exploitation of the network. With the expansion of investment and the need for international and local enterprises to have access to secure, stable and fast data, an additional 2 data port access points, with 500 additional data lines, have been created, specifically for the Djibouti Free Zone and major facilities such as the Kempinski Hotel.
Fibre-optic connections have also been expanded to neighbours such as Ethiopia, where a terrestrial fibre optic cable was established in 2007, reaching a capacity of 1.5 Gbps, with a back-up mechanism being put in place on the border crossing at Galafi. This connection is expected to be upgraded to 100 Gbps in the near future.
Geographic Coverage
With the majority of the population concentrated in and around Djibouti City, ensuring coverage for the bulk of the country has been fairly straightforward, although this has meant that rural connectivity lags significantly. The WiMax cable connection put in place in 2013 has facilitated internet access for remote regions and locally based institutions such as schools and hospitals. Currently, government ministries are using the WiMax line in order to ensure basic connectivity is maintained with reliability.
Djibouti Telecom has also expanded the roll out of the CDMA wireless network to expand coverage to low-income regions, through the sale of CDMA dongles. In Djibouti city the CDMA keys are currently operational at a speed of 512 Kbs, which plan to be upgraded in 2016 to 1 Mbps.
Djibouti Smart City
As part of the Djibouti Digital 2024 campaign, Djibouti Telecom has launched the plan for the development of the Iroley Smart City, located 40 km from the capital, which aims to attract ICT-related activities such as data centres, cloud computing storage and call centres, all of which plan to be powered by dedicated renewable generating facilities. The Iroley Smart City is envisioned to cover 3.6 sq km in three separate zones and is planned to be home to 50,000 people and 1,000 businesses, with 50,000 workers expected to commute in daily. The project also seeks to establish a training academy, geared towards providing vocational training, and eventually residential housing for workers and students. The first batch of training programmes has already been realised in cooperation with the Egyptian Information Technology Institute in January 2015, which has provided training to around 100 Djiboutians.
E-Services
Apart from promoting internet access to the domestic population, the national communication strategy has also envisaged the expansion of digitalisation, including internet usage in public institutions, with the aim of improving efficiency and transferring services online. Specific initiatives, such as the new payment plan that has been introduced in the banking sector and e-learning in the National University are only possible by improved data capacity.
To help streamline payment collection and improve accessibility, a number of initiatives are currently under way to allow for the integration of telecoms and e-services into other sectors of the economy. Djibouti Telecom is working with the country’s electricity and water companies, Electricité de Djibouti (EDD) and Office National de l’Eau et de l’Assainissement (ONEAD). This cooperation will see the use of so-called smart meters where individual SIM cards will be connected to the water and electricity network in order to transmit data from users to the utility providers. “We have already introduced e-tracking services and ONEAD is currently using SIM cards for their water measuring. The EDD has taken fifty SIM cards and we are currently in a testing phase which should see implementation later in 2016,” according to Djibouti Telecom‘s director-general Bouh.
The operator has also sought to improve integration with the banking sector through the roll-out of some of its promotional packages. The “Hadya” package, which offers subsidised access to a smartphone, is one such example: the contract, which looks to encourage users to migrate to post-paid packages, can only be paid monthly by bank transaction, unless the full amount of DJF45,000 ($252) can be paid in cash directly.
Outlook
With the rapid development of Djibouti’s IT sector, the country possesses significant potential in terms of data provision for the wider region. In order for Djibouti Telecom to carve out an international role to in facilitating data connection, important steps have been made, such as the establishing of fibre-optic cables, the creation of the DCC, and the extension of new and existing connections to submarine cables. In order to fight current high unemployment rates, the creation of the Iroley Smart City and the aim to make the country a hub for IT-based services, such as customer service by phone, would tap into the country’s solid connectivity and the linguistic abilities of the local population, who often speak two or three languages fluently. Currently, little of the new bandwidth is offered to local consumers, to the detriment of mass broadband adoption. Challenges still persist in lowering high-speed internet tariffs and providing coverage to remote regions.
The Djiboutian telecoms sector will continue to expand and will continue to increase its capacity. Djibouti Telecom’s aim to lower tariffs and communication costs are likely to begin rolling out in the near future. Recent investments in the modernisation of the telecommunications infrastructure, coupled with the attention attributed to the digitalisation of the country under the Djibouti Vision 2035, have highlighted the government’s programme to improve access.
The country will soon begin to see the potential implementation of new services such as e-banking and e-tracking that could be connected to users’ mobile phones. In possession of a multitude of submarine connections for telecoms and data services, Djibouti has plans – as well as the potential – that could well extend service provisions to the entire region. This follows the government’s strategy to invest in Djibouti Telecom’s physical infrastructure and knowledge base in order to eventually launch the company’s services as a regional provider. Challenges do remain in terms of ensuring the affordability of tariffs and in building a competitive market for the future.
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