Djibouti to Sell 40% of State Phone Company to Private Investors

Djibouti plans to sell 40% of its state-owned phone company to raise cash for its sovereign wealth fund and help the economy recover from the coronavirus pandemic.

The sale of Djibouti Telecom SA will be a first step toward opening up the nation’s telecommunications industry and may include an offering of shares to the public, Finance Minister Ilyas Dawaleh said in an interview. The privatization is expected to take place in the second half of 2022, he said.

“The capital raise is about strengthening the financial capacity of the Sovereign Wealth Fund of Djibouti, and thus making strategic investments in sustainable infrastructure with a strong focus on job creation,” Dawaleh said. “We also need to finance the national plan for the post-Covid economic recovery.”

Djibouti would be one of the last in Africa to liberalize its telecommunications industry. The country created a sovereign wealth fund last year, targeting contributions of $1.5 billion across a range of industries within a decade.

With the world’s most youthful and fastest-growing population, Africa is an attractive market for major telecommunications companies. Djibouti’s neighbor, Ethiopia, is also in the process of selling a stake in its state-owned phone company, and recently awarded licenses to a consortium that includes the U.K.’s Vodafone Group Plc, and this week reopened a process for operators to bid for a second license.

Djibouti hosts landing infrastructure for a dozen high- capacity undersea cables. Still, it has work to do on broadband connections — its internet penetration rate is about 56%, compared with 64% in South Africa, the continent’s most industrialized economy, and 90% in the U.S., according to DataReportal’s latest statistics.

The Horn of Africa nation is implementing the roll-out of a 4G network and investors in Djibouti Telecom would also have the opportunity to expand into mobile money and data centers, the government said last month.

Investment bank SouthBridgeOn and legal advisers Willkie Farr & Gallagher LLP, who were also involved in the creation of the Sovereign Wealth Fund, have been appointed to run the sale, Dawaleh said.

Source: Bloomberg