Customers interested in renting the Starlink kit, which costs $350 (KES 45,000), will pay a one-time activation fee of $21. They can choose between a 50GB plan for $10 (KES 1,300) or an unlimited package for $50.50 (KES 6,500). Both plans offer speeds of up to 200 Mbps.

In June 2024, Starlink introduced a monthly budget package of $10 (KES 1,300), a move that forced local internet service providers (ISPs)  to introduce promotions to retain customers.

Since its launch in Kenya in July 2023, the number of Starlink users has grown by more than tenfold, which shows favourable adoption of Elon Musk-owned satellite internet service. Starlink competes with existing players like Skynet and NTvsat. 

Three months before it launched in Kenya,  the country had only 405 satellite internet subscribers. This number jumped to 1,354 within two months of Starlink’s arrival and further increased to over 4,808 by March 2024, according to data from Kenya’s Communications Authority (CA).

Starlink’s presence in Kenya has also compelled existing internet service providers (ISPs) to refine their offerings to retain or attract more customers. 

Safaricom, which had over 522,000 fixed data subscriptions as of March 2024, started offering 4G and 5G routers to appeal to customers outside its fibre network coverage. The company announced plans for a satellite service in 2023  but has yet to launch it.

Jamii Telecoms, another provider with a fibre product and the second-largest market share in fixed data subscriptions, has been expanding its service to the outskirts of Nairobi to compete more aggressively in the home internet market.

Starlink’s popularity has been accelerated by its ability to serve customers dissatisfied with traditional ISPs’ limited offerings, particularly in rural areas. The company’s promise of providing broadband services beyond the reach of these established providers has made it a popular choice.

Among the 242 ISPs left in Nigeria, only 106 are operational, according to NCC data for the first quarter. These 106 active ISPs serve a total of 262,206 subscribers, less than 3% of the total internet market. The largest ISP, Spectranet, has over 43% of the total industry subscribers with 113,869 subscribers.

TechCabal found that 22 ISPs have licences that will expire this year. A company like InterWeb Satcom Limited, founded by Nigerian senator Monday Okpebholo, is no longer active online; its licence will expire at the end of July

“The smallholders are all likely to just fizzle out one by one. The mid-sized may try merger if there is a regulatory environment change to offer protection from the MNO‘s onslaught on predatory pricing. This may encourage investors to promote mergers and infuse more capital. Else, they may soon start to die off the way of the smallholders,” Biodun Omoniyi, CEO of VDT Communications, told TechCabal.  

ISPs which act as bridges between homes, businesses, institutions, and the internet, provide the infrastructure necessary for users to access websites, communicate, and consume media and entertainment, are grappling with multiple challenges including energy costs which shot up more than 250% in the past year. The energy cost affected facilities and colocation costs which grew to 200%, according to Omoniyi. 

The capital expenditure (equipment spending) of local ISPs went up more than 200% in the past year due to foreign exchange increases. The companies are also battling with increased staff costs as a result of a growing wave of workers relocating abroad and creating gaps that take ISP companies a longer time and more money to fill, according to Temitope Osunrinde, a telecom expert and vice president at Tizeti, an internet provider. Other challenges include inflation and a declining market value due to increased competition. 

The ISP market is divided into three broad segments, including the mobile network operators (MNOs) and multinationals; the mid-tier broadband companies that offer fixed broadband comprising wireless and fibre optics operators; and the small-holder operators.

“ISPs need an ISP licence. If they have the equipment they are selling and installing, they also need a Sales and Installation licence,” an NCC spokesperson said. An ISP licence costs ₦500,000.

The four MNOs MTN Nigeria, Airtel, Globacom, and 9mobile lead the internet market in Nigeria. However, because of their UASL licence which allows them to operate voice and other services, the MNOs are often not described as ISPs because they are mobile-dependent. 

“ISP”, the term, is loosely used for mid-tier fixed broadband companies and smaller operators whose internet service licence only permits them to provide internet services. The companies include Spectranet, FiberOne, Tizeti, MainOne, iPNX, VDT Communications, Starlink, and many others. 

Internet Service Providers earn income from the purchase of large and redundant internet connections. They resell these as smaller connections to consumers and businesses. ISPs usually have a fixed price for providing a certain speed and bandwidth amount. They can also offer multiple pricing tiers depending on how fast a connection you want and how much bandwidth you want to use over a month. 

The problem with this revenue model is the competitive advantage it gives the MNOs who make money off the ISPs from the sale of redundant internet connections as well as the income they make from selling the internet directly to consumers.  

Competition from telcos and new players like Starlink and the West Indian Ocean Cable Company (WIOCC) appear to have sealed the fate of many local internet providers. 

“The entry of major players like Starlink, WIOCC, Glo, and MTN introduces intense competition. These companies have significant resources, broader networks, and the ability to offer competitive pricing due to economies of scale,” Manish Kochhar, former head of fibre networks at Globacom, told TechCabal. 

Starlink, which began operations in 2023 in Nigeria, did not waste time to become the fourth-largest operator in the ISP market before the end of that year. It climbed to third-largest ISP with 23,897 subscribers in May 2024. Starlink could claim more market share by collaborating with telcos, Kochhar said. 

MTN Nigeria and Globacom have also been involved in the ISP market with the deployment of Fibre To The Home (FTTN both serving 7,641 and 2681 subscribers respectively. 

Biodun Omoniyi recommends protection of the mid-tier and smaller operators from “predatory” pricing. 

“Strict nationalisation of service pricing to consumers is another dynamic cost-reflective pricing that allows operators to adjust in weeks and not years, which would also help,” Omoniyi said. 

On Tuesday night, Safaricom reported an internet outage due to a problem with one of its underground cables. However, internet observatory platform Netblocks disputed this claim, stating no evidence of physical cable damage. Major undersea cable companies serving East Africa, including TEAMs, SEACOM, and Eassy, also didn’t report service disruptions on their cables.

The company’s CEO, Peter Ndegwa, later claimed the entire telco industry was affected. However, other internet service providers in the region did not announce the outage, save for Airtel Kenya, which said that its services were intermittent but not completely unavailable. Customers were surprised by how quickly Safaricom fixed the outage, considering undersea cable cuts usually take days or weeks to identify and repair. 

Telecom companies often have built-in redundancies to handle outages. Safaricom might have been able to reroute traffic through alternative channels while they diagnosed the main problem, which would explain why services were available after a short period

Safaricom’s internet disruption irked customers and some of its biggest creative partners, including social media influencers. Tens of them, including former rugby player and chef Ombachi Dennis, cut ties with the company. “I won’t be working with you, as your values are not aligned with mine,” Ombachi posted on X.

Some Safaricom customers also started selling their shares. The telco’s share price has dipped 3.6% today and is currently selling at KES 17.00 ($0.13).

“For the first time, Safaricom is in a real panic; there is no traditional arrogance,” a social media user noted on X. 

The outage became a public relations nightmare for the operator, with over 27 million monthly active mobile data users in Kenya. The telco’s CEO, Peter Ndegwa, “sincerely apologised” for the outage in a statement on X.

In 2022, Kenya’s ICT regulator, the Communications Authority (CA), issued new guidelines that mandated customer compensation (airtime equivalent) during network outages, except for disruptions from scheduled maintenance, natural disasters, or accidental damage. Considering the outage arose from accidental damage, per Safaricom, it is unlikely the affected customers will be compensated. 

Starlink’s high speeds of over 100 megabits per second (Mbps) have contributed to a growth in satellite internet use. Satellite internet services are particularly attractive to customers not served by traditional broadband providers such as Safaricom, and Telkom Kenya. These customers include niche corporate clients with needs beyond standard fibre or fixed broadband and residents in remote, “upcountry” locations where traditional infrastructure is lacking. 

“The launch of Starlink’s internet services in the country played a major role in driving the uptake of broadband services. Generally, the sector is expected to keep growing following the rollout of new technologies and services,” the report stated.

The data shows a shift in Kenyan satellite internet usage. Over 93% of users now use high-speed internet plans, ranging from 100 Mbps to 1 gigabit per second (Gbps), which only Starlink provides. This is a significant change compared to traditional options, although most broadband users still use local internet service providers with lower speeds.

Starlink’s popularity has been accelerated by its ability to serve customers unsatisfied with the offerings of established players who prefer serving customers in urban areas. The company promised to provide broadband services beyond the reach of these traditional providers, and it has become a popular choice for this niche market.

While Starlink is Kenya’s latest major satellite service provider, there are other players, including Skynet and NTvsat, in the market. Safaricom, Kenya’s biggest telco, announced plans for a satellite service a year ago but hasn’t launched it yet.

Images of Kenyan police teargassing protesters and using water canons have gone viral as social media has played a part in amplifying the message of the protesters: reject the finance bill. The scale of the protests surprised the government and authorities considered shuttering internet access to derail Tuesday’s protests, one person familiar with the talks told TechCabal.

Internet shutdowns are common in African countries to suppress opposition during protests or polls. In 2022, seven African countries, including Uganda and Ethiopia, shut down the internet nine times. However, Kenya has never shut down the internet to quell protests. 

The country’s Communications Authority has “no intention whatsoever to shut down internet traffic or interfere with the quality of connectivity,” it said in a Monday statement. An internet shutdown would be “a betrayal of the constitution” and could “sabotage the fast-growing digital economy,” the statement said.

Civil society groups like the Law Society of Kenya argued that an internet shutdown would undermine citizens’ rights to demonstrate and participate in policymaking. 

Parliament will deliberate on the 2024 Finance Bill on Tuesday after it passed a second reading on Thursday. If the bill is ratified at the committee stage—a likely outcome given broad support from MPs in the ruling coalition— President William Ruto is expected to sign it into law on Thursday.

Millions of Kenyans, led by young people, have opposed the 2024 Finance Bill. This discontent has spilled into the digital space, with Kenyans using internet platforms to protest the bill. To spread awareness and visibility of the protests beyond the physical locations in tens of Kenyan towns, social media networks like TikTok and X have become platforms for Kenyans to livestream demonstrations against the proposed tax hikes.

The hashtag #RejectTheFinanceBill2024, has gained traction on X, with over 4 million impressions on Tuesday morning. It has also drawn the attention of Kenyans in the diaspora, who have organised demonstrations abroad.

“I am so angry about this Finance Bill. Although they have removed the tax on bread, we know they have sneaked in other taxes, including a 16% VAT on remittances,” Purity Mwamoyo said while demonstrating with other Kenyans in Washington, DC.

The demonstrations began on June 18 and intensified two days later when parliament members voted to advance the bill to the committee stage.

Tijani’s early focus has been 3MTT, a program to train 3 million Nigerians on digital skills. He has also begun plans to create an AI framework. But without increasing internet access, these goals will be difficult to achieve. 

In March, the minister set up a $2 billion fibre fund to connect the 774 local government areas in the country. The World Bank and a few partners have indicated an interest in the project, but a source close to the minister said talks are still ongoing to get other partners involved. For telecom operators, these measures do not solve the immediate challenges. 

The telecom companies responsible for expanding internet access face several problems: fiber cuts, multiple taxes, excessive right-of-way fees, insecurity, high energy costs, and inflation. 

The Federal government also plans to reintroduce a 5% telecom service tax it suspended in 2023 as part of negotiations with the World Bank for a $750 million loan meant to boost electricity infrastructure in the country. If that telecom tax is reintroduced, it will increase the taxes companies pay to the federal, state, and local governments to 53, according to the Association of Licenced Telecom Operators of Nigeria (ALTON). 

On May 2, three operators, MTN, Airtel, and Globacom saw their operations disrupted by an agency of the Kaduna State government which sealed off six base stations over claims of unpaid N5.3 billion taxes.  

“Nigeria is not going to meet its broadband penetration target,” said Ikemesit Effiong, partner and head of research at SBM Intelligence. Data released by SBM Intelligence in April 2024 found that Nigerians now spend less on communication and entertainment despite relative price stability in voice and data tariffs.

Airtel’s profit plunged by 99% in 2023 and revenue dipped 5.3% to $4.9 billion, forcing the company to outsource more of its tower operations to IHS. It also initiated a share buy-back programme to reduce its debt exposure. On Monday, April 22, 2024, the company bought back 11.9 million shares from Citigroup.

On an investor call in March, Ralph Mupita, CEO of MTN Group said the company aims to cut its expenses by $368.51 million (7-8 billion rand) in the next three years, especially in Nigeria. It also plans to raise the prices of its data and voice services. The company also plans to reduce its capital expenditure in 2024 and focus on maximising the utility of its previous investments. 

“The company will optimise latent capacity and implement radio planning strategies to minimise potential impacts and disruptions to MTN’s network quality,” MTN noted in a corporate filing on May 3, 2024. 

Broadband penetration, which measures a population’s access to the internet, depends on the investments telecom operators make in infrastructure, three industry experts told TechCabal. 

Those investments have declined since 2021 when the industry hit a peak of over ₦1 trillion and foreign investment of $753 million. With domestic and foreign investments down by almost half from 2022, operators are trimming operational costs. 

That tradeoff has meant little improvement in the quality of internet service. The country’s internet speed remains one of the lowest in the world at 17.65 Mbps, ranking 148 out of 172 countries in January 2024, according to a report by Data Pandas’. The global average speed is over 50 Mbps, and South Africa leads the continent with a broadband speed of 54Mbps. 

Access is also unevenly distributed with urban areas experiencing more quality internet than rural areas.

“Broadband infrastructure will only be deployed by operators in areas where they are confident there will be returns on their investments,” said Rotimi Akapo, partner and head of Telecommunications, Media, and Technology Practice Group, at Advocaat Law Practice. 

Operators are also choosing to invest in the states with friendly regulations. Only four states have waived expensive right-of-way fees,  which are charged for laying fibre optic cables. Some experts believe this may lead to preferential broadband access. 

TechCabal also learned that tower operators are switching off some base stations due to difficulty in sourcing diesel to power them. In March 2024, the average price of a litre of diesel was N1,341 up from N840 in March 2021. Tower operators depend on electricity provided mainly by diesel-powered generators. 

Gbenga Adebayo, president of ALTON believes the industry should review service tariffs. Telecom service tariffs have not been reviewed in the past ten years despite macroeconomic changes. He also pointed out that every other industry has increased prices including government-owned service providers except telecom operators. 

“The federal government must put its teeth into this fight to compel states to either relinquish or at least significantly reduce the right of way fees that we have now,” said Ikemesit Effiong. 

MTN, the largest telecom operator in the country, saw over 2.8 million subscribers drop from its internet business leaving 67.8 million subscribers in January from 70.6 million subscribers in December. The decline was the most MTN Nigeria has seen since May 2023. 

[ad]

The drop, however, didn’t affect Airtel and Globacom as both telcos gained subscribers in the same month, according to the latest data from the regulator. Airtel gained the most subscribers in January with 890,935 subscribers joining the network and helping to solidify its position as the second-largest internet service provider with 45.9 million subscribers. Globacom also gained 192,313 subscribers in January. 

Subscriber gains from Airtel and Globacom helped to reduce the impact of MTN’s subscriber decline on the industry. Airtel grew its subscriber base from 45.0 million subscribers to 45.9 million subscribers. Globacom also grew its subscriber base from 43.9 million subscribers to 44.1 million subscribers. 

In December 2023, the NCC directed all the telecom operators in the country to deregister all phone lines without a NIN and those with unverified NINs. A spokesperson for MTN Nigeria told TechCabal that the operator started compliance almost immediately after the directive was issued. The company also made several advertorials regarding the directive which led many subscribers to take steps to update or register their NIN.

The deadline was supposed to have expired on March 29, 2024, however, the NCC has now extended the deadline for the disconnection of unlinked lines to July 31, 2024, per TheCable. 

The telecom operator has had a history of fines with the NCC which it is still trying to put behind it. In 2015, the company was fined $5.2 billion for failing to disconnect customers with unregistered SIM cards. 

MTN Nigeria’s subscription decline dented the overall industry internet figures in January. According to the NCC, the total number of subscribers that dropped off across all networks was 1.84 million leaving operators with 161.5 million subscribers from 163.3 million in December 2023. Aside from MTN Nigeria, 9Mobile continued its nearly nine-year decline with 94,824 subscribers leaving the network in January. 9Mobile now has 3.53 million subscribers. 

It was supposed to be a productive morning finalising a crucial project for a client, but the recent internet disruptions in Nigeria had thrown her entire schedule into disarray. Frustrated, Aisha glanced at her phone, the meagre 1Mbps speed a stark reminder of the nationwide struggle.

Aisha is not alone. Across the country, Nigerians are experiencing severe internet disruption after major cuts to the subsea cable of Nigeria’s major internet service provider, MainOne. Businesses are struggling to complete essential banking transactions, remote workers like Aisha are scrambling for alternative internet solutions, and startups are facing lost revenue and project delays.

“We saw almost a 50% drop in the number of customer sign-ups and customer activities during the period,” Adedeji Olowe, CEO of LendSqr, told  TechCabal. 

For Babatunde Akin-Moses, CEO of Sycamore, a peer-to-peer lending platform, the latest internet outage has made it difficult to disburse loans. Banks reliant on Microsoft Azure for critical services faced delays in disbursing loans, as the cloud platform was also affected. Similarly, borrowers were unable to make repayments due to failed debit transactions initiated by the banks.

Other founders who spoke to TechCabal claim that the internet outages have led to project delays and have affected both internal and external communications. 

“We identified tasks that can be completed offline and focused on them, allowing for some level of continued productivity,” Dennis Mary, CEO and founder of Yuki, a web3 startup, told TechCabal.

“I was unable to access the LMS platform for my company’s training,” said Ire, a growth marketer who had tried completing an online course. 

A return to normalcy?

Per Bloomberg, the broken subsea cable is expected to take weeks or months to fix. Ghana’s communication regulator also estimates that repairs would take at least five weeks to complete. 

However, MTN, which holds the largest market share of Nigeria’s telecom market and is the most affected by the outages, has been proactive in taming the outage. The mobile network provider said it is teaming up with ACE and the West Africa undersea cable systems (WACS) to send a dedicated vessel to repair the affected cables. Since then,  TechCabal can confirm that its network service has slightly improved. 

In a message to its customers on Monday, MTN said that it was working towards full restoration of its services. “Please accept our heartfelt apologies for glitches you may still be experiencing with a few services and be assured that work is ongoing towards full restoration,” MTN’s text to its customers read.

While the MTN network has been severely affected, people who spoke to TechCabal said that network reception on Glo—which runs a different submarine cable along the west coast of Africa between Nigeria and the UK—and Airtel have been okay. Several others have explored alternative internet service providers like Tizeti, FiberOne, and Elon Musk’s satellite-based Starlink to hedge against the bad network. 

“I have tried using VPN, but the result was the same, I just had to go to a coworking space,” Shadrach, a web developer told TechCabal.

Over 1.4 million kilometres of these cables are spread across the earth’s oceans, with France, the US, and Japan being the major suppliers. According to data from Submarine Networks, Egypt has the most subsea cables landing in the continent, with 15. This is followed closely by South Africa and Djibouti, with 11, while Nigeria, Cameroon, and Kenya have six each.

Although the scale of the incident was unprecedented in Africa, cable cuts are relatively common. Around 100 of them happen on an annual basis, on average. Most service providers try to avoid a single point of failure by spreading their network capacity over multiple cables as a backup, which is why you don’t often hear of them. The most common cause of cable faults is human activities. However, MainOne ruled out human activity as the cause of the internet disruption in Africa and suggested it was caused by “some form of seismic activity on the seabed.”

Estimates vary over when full service will be restored. Ghana’s National Communications Authority (NCA) said complete repairs could take up to five weeks. 

Some internet users in Nigeria observed that some Google services, like YouTube, remained accessible during the outage. Mobile network Globacom also announced that it was unaffected by the disruption. Meanwhile, the Nigerian Communications Commission (NCC) disclosed that internet services are now at 90% capacity.

In South Africa, four undersea cables went offline at once. The load-shedding challenge combined with the internet outage has made Starlink an appealing alternative to South African customers as it doesn’t use terrestrial or undersea backhaul infrastructure.

While the productivity and financial losses due to the outage may be unquantifiable at the moment, the silver lining may be that it lays bare the importance of building a more robust internet infrastructure on the African continent. 

The number of 4G sites deployed by MTN Nigeria grew 2.7%, said Karl Toriola, the company’s CEO, during an investor call on Monday. That infrastructure expansion increased 4G usage among its customers from 79.1% to 81.5%. 

The number of MTN’s 5G sites saw the most growth rising from 588 to 2,106 sites and pushing 5G penetration to 11.3% from 3.1%. 

Airtel, another major telco, deployed its 5G networks in four cities, including Lagos and Abeokuta and is currently testing the network in Oshogbo. 

Telcos pour billions into infrastructure 

MTN Nigeria and Airtel Africa spent a combined ₦613 billion to expand their 4G and 5G networks by the end of 2022, regulatory filings from both companies show. 

MTN spent N504.33 billion on its network rollout, while Airtel invested N108.79 billion in the same period. Smartphone vendors also responded by increasing shipments of mostly 4G and 5G enabled devices, with data from Canalys showing a 12% growth in smartphone shipments to Africa in 2023. 

As of January 2024, TECNO leads the smartphone vendor market with 26.03%, followed by a sister brand, Infinix, with 20.88%. Samsung is in third place with 11.43%, while Apple is in fourth place with 9.66% of the market.

Growing infrastructure drives usage

By December 2023, 1.04% of internet subscribers in Nigeria used 5G. 4G users also grew to 31.33%, data from the Nigerian Communications Commission (NCC) showed. 

There were only 2.18 million 3G subscriptions in December 2023, while 2G usage, which still accounts for more than half of mobile internet subscriptions (57.84%), also declined.

The growth in 4G and 5G subscriptions happened despite supply chain disruptions and inflationary pressures that raised the prices of smartphones by 30%, data from GSMA showed. In response to those pressures, telecom companies partnered with asset financing companies and smartphone manufacturers to offer flexible financing options. 

Airtel’s partnership with iTel allows customers to buy a range of well-priced smartphones. 

“These deals are helping subscribers acquire 4G/5G devices and routers,” Sam Adeoye, Airtel Nigeria’s head of public relations, added. 

There’s a rising demand for smartphone financing given rising inflation in Nigeria, said Aisha Hussaini, founder of Keza Africa, a device financing startup. 

“Even people who would not have opted for device financing are now choosing it because of the naira devaluation,” Hussaini said.