Djibouti Telecom, at a crossroads

Africa’s digital present and future passes through a host of cables submerged in the depths of the Red Sea. Djibouti is now home to ten submarine cables as well as terrestrial cables, consolidating its role as an essential gateway for regional and international digital communication.

Since its creation in 1999, Djibouti Telecom has built on the country’s unique geographical position and the presence of these cables to turn its telecoms sector into a major economic asset. Djibouti Telecom has posted solid performances; for example, in 2023, nearly 40% of its revenues – a significant share of its total turnover of $205m – came from international business. The operator connects more than 60 internet service providers in 90 countries. It provides connectivity to Eastern and Southern Africa, the Middle East and Europe.

Mohamed Assoweh Bouh, CEO of Djibouti Telecom, says: “Our strategy was initially focused on regional and international connectivity; over the past 10 years, we have invested more than $200m in undersea cables, which has enabled us to offer our services to operators in Ethiopia, Somalia and Kenya. It’s a strategy that has paid off: we have reinvested this income in the development of national connectivity.” 

The responsibilities go beyond the simple transmission of data. Djibouti Telecom maintains constant security surveillance of its infrastructure. The submarine cables that transit through Djibouti follow a protected corridor monitored by satellite. 

Once they surface on land, these cables are connected to four energy self-sufficient stations, monitored 24/7. This is essential for guaranteeing the security of the network against breakdowns and geopolitical tensions in the Red Sea. Yann Jaffré, associate director at Tactis, a firm specialising in digital deployment and development, says: “Djibouti is perceived as a stable point for telecoms despite tensions in the Red Sea, where underwater infrastructure faces increased security risks. Thanks to its recent and diversified cable network, the operator can guarantee robust connectivity and ensure continuity of service in all circumstances.” 

Impact of liberalisation 

But while Djibouti Telecom remains unrivalled on international connectivity, its dominance in the national market is now being challenged. In recent years, the gradual opening up of the sector has allowed new players to establish themselves. 

AfriFiber, a subsidiary of the IIB group, has already deployed a fibre optic network covering 3,600 households, with the aim of serving 90% of Djibouti City within five years. For its part, TO7 Network, in association with Wingu Africa, specialises in the hosting of submarine cables and data centres. 

This emerging ecosystem is already generating tangible results, including a drop in fixed internet charges, improved services and diversification of offers. Djibouti Telecom, which employs 2,500 people, can no longer rely on its former monopoly position. However, the competition “will stimulate us further,” says the CEO, Mohamed Assoweh Bouh. “It is our responsibility to take up new challenges, to innovate and to always be one step ahead of our competitors,” he adds. 

AfriFiber was the first private company to obtain an internet service provider licence in 2019. It is relying on fibre optics to modernise the local service. After a rollout delayed by the pandemic, it launched high-speed broadband in May 2023. However, it remains dependent on Djibouti Telecom for international connectivity and is seeking to diversify its options via TO7 Network.

“We are both competitors and customers of Djibouti Telecom,” says Neili Yahyaoui, CEO of AfriFiber. “Today, we have no alternative for accessing international connectivity.” The arrival of TO7 could reshuffle the cards. The company will host its first submarine cable, Blue Ramen, developed by Google. This, for the first time, represents a credible alternative to Djibouti Telecom.

At the same time AfriFiber is developing Afridata-Park, a data centre located in the PK23 free zone which is equipped with a 5 MW solar park and a training centre for artificial intelligence. “A clear regulatory framework is essential to support the development of the sector,” says Yahyaoui. 

“The Digital Code Act, tabled in Parliament, should play a key role in the organisation of the market, particularly in regulating competition and structuring infrastructure sharing,” he says. In any case, he welcomes Djibouti’s security and regulatory framework, which he says remains very favourable to foreign investment.

A transformation to remain competitive

In the face of this competition, Djibouti Telecom is adjusting its strategy at all levels – international, regional and national. The operator has reduced its financial exposure by welcoming new submarine cables without direct investment. This approach guarantees stable revenues while limiting risks. At the same time, Djibouti Telecom is experimenting with 5G through a pilot project with deployment planned for 2025. It is also working on the nationwide rollout of fibre.

Another area of modernisation is a project in partnership with Paix, a pan-African provider of cloud- and carrier-neutral data, and the Djibouti Sovereign Wealth Fund (FSD). 

The objective is to make Djibouti a data stronghold to attract giants such as Google and Facebook. “Djibouti must become a true digital platform for the region, a marketplace where customers can find all the data they need,” explains Bouh.

“The climate and the cost of electricity remain challenges for Djibouti,” notes Yann Jaffré, associate director of Tactis. “But with an electrical interconnection with Ethiopia and targeted investments, Djibouti could overcome these obstacles and become a key digital hub in East Africa.”

Future prospects

The opening up of Djibouti Telecom’s capital, in December 2021, also marks a key stage in the operator’s transformation. Today, it is wholly owned by the state, via the FSD, whose mission is to enhance the value of the country’s strategic assets and attract investors. The FSD is thus piloting the opening process, with the aim of modernising this flagship of the national economy. This is an opening that the operator’s CEO sees in a positive light: “To evolve in such a competitive environment, we must transform our model. The introduction of an investor into the Telecom capital, with the associated expertise and financing, is essential for the development of our infrastructure.”

Another major challenge concerns the emergence of Starlink, Elon Musk’s satellite internet company. “Today, there is still no clear regulatory framework for these new players,” emphasises the CEO. Some African countries have already granted them licences, while others remain cautious. 

“The arrival of a player like Starlink can be an asset for areas with poor coverage, but it also raises the question of digital sovereignty and the impact on traditional operators.”

If Djibouti Telecom intends to remain competitive in this changing landscape, it will have to adapt to these new realities. “The Djibouti Telecom of tomorrow will not remain what it is today,” concludes its CEO. “We must evolve, be more agile, more competitive. It is a necessary transformation, and we are going to carry it out.”