Building on its unique geographical location in the Horn of Africa, Djibouti Télécom has developed an international telecom activity by investing in international fiber-optic cables that pass through the Gulf of Aden and cables that connect neighboring countries. Djibouti Télécom holds stakes in eight consortiums for submarine fiber-optic cables and has thereby built a position as a regional hub for long-distance telecommunications.
Djibouti Télécom called on AFD in 2013 and 2014 to finance part of its investment in two submarine cables. The first, Asia-Africa-Europe 1 (AAE-1), which is 25,000 km long, connects France to Hong Kong. The second, South East Asia – Middle East – Western Europe 5 (SMW5), which is 20,000 km long, connects France to Singapore.
The laying and operation of the cables are implemented by two consortiums, each with about fifteen international telecom operators, co-investors and co-owners of the cables (Orange, British Telecom, Telecom Egypt, TeleYemen, China Telecom Global, etc.).
AFD’s contribution aims to finance Djibouti Télécom’s investment in AAE1 ($25 million) and SMW5 ($14.5 million) via a non-sovereign loan. This financing also comprises a $500,000 technical assistance line, a component which has helped Djibouti Télécom:
- Improve its financial and accounting management;
- Strengthen the strategic and operational management of its international activity to make the operator a major player in the wholesale market in the subregion.
The total cost of this project for Djibouti Télécom is $61.5 million. It is cofinanced by AFD, a loan from the Banque pour le Commerce et l'Industrie Mer Rouge (BCI-MR - $5 million) and financing from the Islamic Development Bank (IsDB - $16.5 million).
Through its investments in submarine cables, Djibouti Télécom:
- Gains access to very high-speed equipment with state-of-the-art technology, in particular towards Asia and China;
- Becomes a key hub in the international telecommunications market.
Building on this competitive advantage, the government wants the national telecom operator to play a key role in the development of the digital sector in Djibouti. The objective is to make it the second growth driver for the national economy after the port sector.
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