Somalia Telecom Sector Resilient Despite COVID-19

Somalia's telecom market has been sustained despite tremendous difficulties. The country's economy has made it difficult to sustain investment in infrastructure, and the Al Shabaab Islamic militant group has on occasion forced the closure of internet services in many areas of the country. Furthermore, there has been a lack of guidance from a central government or sector regulatory entity since 1991, when a dictatorial regime was overthrown. However, some progress may be expected following the passing of the National Communications Law in October 2017, aimed at setting a legal and regulatory framework for the telecoms sector. The Law made provision for a National Communications Agency charged with encouraging market competition and overseeing the use of ICTs in promoting economic development. A Director for the Agency was appointed in 2018.

Through the anarchy which continues to disrupt the country, the telecoms market, dominated by the competitive mobile sector where seven networks compete for customers, has flourished. Some of these mobile services operators also offer fixed-line and internet services. Tariffs are among the lowest in Africa, and although the absence of regulation led to problems with frequency spectrum coordination and interconnection between networks these issues are to be addressed by the new telecom regulator.

The country's access to international submarine fibre optic cables was delayed until 2014, largely due to concerns resulting from piracy as well as to social difficulties and political anarchy. The landing of the first cable ended Somalia's dependence on expensive satellite connectivity for internet access. Consequently, Somalia's Internet Service Providers (ISPs) have been able to provide much improved services, though international bandwidth remains very limited. This is set to change with two key submarine cables: the 1,500km G2A cable (with a terrestrial connection to Addis Ababa in Ethiopia, expected to be ready for service at the end of 2018), and the 5,500km DARE cable.

There are also fibre-optic broadband links connecting Somalia across the Kenya border and linking to directly into Hormuud Telecom's network.

The forming of a new government in 2017 has given rise to hopes that the country may stabilise and become more attractive to foreign investment, which is needed to take the telecoms and broadband sector to the next level. The new government is beginning to regulate the sector and is planning to issue new spectrum licences that will allow the operation of high-speed mobile broadband technologies.

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BuddeComm notes that the outbreak of the Coronavirus in 2020 is having a significant impact on production and supply chains globally. During the coming year the telecoms sector to various degrees is likely to experience a downturn in mobile device production, while it may also be difficult for network operators to manage workflows when maintaining and upgrading existing infrastructure. Overall progress towards 5G may be postponed or slowed down in some countries.

On the consumer side, spending on telecoms services and devices is under pressure from the financial effect of large-scale job losses and the consequent restriction on disposable incomes. However, the crucial nature of telecom services, both for general communication as well as a tool for home-working, will offset such pressures. In many markets the net effect should be a steady though reduced increased in subscriber growth.

Although it is challenging to predict and interpret the long-term impacts of the crisis as it develops, these have been acknowledged in the industry forecasts contained in this report.

The report also covers the responses of the telecom operators as well as government agencies and regulators as they react to the crisis to ensure that citizens can continue to make optimum use of telecom services. This can be reflected in subsidy schemes and the promotion of tele-health and tele-education, among other solutions.

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