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The Djibouti government has announced it will sell a “significant minority” stake in its state-run telecoms monopoly, Djibouti Telecom
In an effort to modernise its economy and increase digitalisation, the Djibouti government have announced that they will be selling a minority stake in Djibouti Telecom, the state-owned incumbent operator.
According to the announcement, investors in the company would also have the opportunity to expand into mobile money and data centres within the country.
The country hopes the move will help to “accelerate the pace of reforms of its public sector companies, to better cope with international and regional competition and to ensure that these companies participate fully in the national effort of emergence and development financing,” explained President Ismaïl Omar Guelleh in the statement.
Rumours that the government would like to privatise up to 49% of the operator have circulated for a number years, but internal restructuring within the telco itself has always prevented any potential share sale.
Now, while no specific timeline has been allocated to the stake sale, the government announcement represents the first official step towards the privatisation process.
Situated on one of the world’s busiest shipping routes around the Gulf of Aden, Djibouti is already a significant connectivity hub for East Africa when it comes to submarine cables, hosting 12 submarine cables. The country has a population of around one million people and represents a new market with a high potential for growth.
This announcement comes at a time when Djibouti’s neighbour, Ethiopia is going through a process of liberalising its telecoms sector, including its own 40% stake sale in state-owned Ethio Telecom. The process will also see two new players enter the market for the first time, the first being a Safaricom-led consortium, while the second will be decided by an ongoing tender process.
Ethiopia and Djibouti are two of the last African nations to liberalise their telecommunications markets, with both mobile and fixed markets primed for large growth in the coming years. The Horn of Africa is becoming and increasingly exciting region for telecoms investment and modernising Djibouti Telecom could be a lucrative proposition.
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