“Licensees or service providers are at liberty to raise any issue in the market with the ICT regulator,” CA told TechCabal.

On July 15, Safaricom asked the regulator to block satellite ISPs with operations in other countries, a move that could lock out Starlink which is the biggest satellite internet provider in Kenya. The Elon Musk-owned company relies on resellers to distribute its kits and install the service.

CA will now investigate and address Safaricom’s concerns, even as telco experts warn that the telco’s move could reverse gains Kenya has made in increasing internet access and reducing data costs.

Safaricom also alleged security risks to the country if the companies are allowed to operate without a physical presence or partnerships with local firms. It said licensing such companies “would mean negligible control for the government to ensure accountability for any non-compliance issues.”

“The authority independently examines such issues within its mandate and regulatory framework and responds appropriately. It is a normal practice as the Authority seeks to facilitate the development of the dynamic and rapidly evolving ICT sector,” CA said.

Safaricom did not immediately respond to a request for comments.

Safaricom dominates Kenya’s data market with a 36.7% market share, followed by Jamii Telecommunications and Wananchi Group at 23.2% and 22.7% respectively. It has laid 14,000km of fiber optic cables, connecting over 400,000 subscribers.

Starlink’s expansion, which offers faster speeds and relatively lower prices, could slow Safaricom’s data business growth. In 2023, the company’s mobile money service M-Pesa and data services pushed it to the first profit in three years.

Safaricom’s data revenue rose 18% to $1.4 billion, as call revenues shrank 0.6% to $608.4 million–continuing a trend observed in recent years.

Starlink’s new satellite updates could further upset local telcos’ call and messaging services if allowed to continue operating in Kenya. The satellite ISP announced on Monday that its upgrades will now bring call services, allowing users to bypass local providers.   

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The share sale will allow the bank to meet and surpass a new working capital requirement of ₦500 billion, adjusted by the Central Bank in February 2024. 

“A decision has not been reached if the shares and bonds will be issued in tranches, series, or proportions, so it’s possible to see multiple issuances until the said amount is raised,” said Nelson Abudah, a research analyst at Afrinvest.  

Abudah also noted that GTCO’s would prefer to raise the amount on the NGX but there’s it’s doubtful the local market is robust enough for the size of capital it’s looking to raise, driving a need to look elsewhere. 

“It calls into question the depth and size of the NGX. On one hand, there’s the reality that the NGX can’t create enough funds for such an amount to be raised. Then again, there’s the fact that it’s not only GTCO that’s looking to tap into the Nigerian market at this point in time,” Abudah said.  

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. 

The requirements, which increase capitalisation limits tenfold, have led to a flurry of announcements by Access Holdings, GTCO, Stanbic IBTC, First Bank Plc, and UBA about their intentions to raise additional capital. 

FCMB, like its peers in the tier 2 banking category, has a target of ₦200 billion.

The bank said in a filing on the Nigerian Exchange on Wednesday that it will exploit different options for the raise. Among those options include issuing shares to investors in the Nigerian and international capital markets.  The price of the shares will be determined through book-building or any other acceptable valuation method or combination of methods. 

The financial institution will also explore the option of further increasing the share capital of the company “to an amount sufficient to enable it to meet the statutory minimum capital requirement as may be necessary.”

FCMB’s shares closed at N7 on the Nigerian Exchange, and its market capitalisation was N140 billion as of Wednesday, May 1, 2024.   

Stanbic joins industry peers like Access Holdings, GTCO, and Zenith Bank Plc, which have made similar moves to increase their capital requirements after a review by the Central Bank. Stanbic IBTC, the banking subsidiary of Stanbic IBTC Holdings Plc, is a Tier 2 bank with a capital requirement of ₦200 billion.  

It plans to issue debt securities worth ₦400 billion and an additional ₦150 billion through a rights issue.

Unlike other financial institutions such as Access Bank, subscription for Stanbic IBTC’s shares will first be by a public rights issue. However, in the event of an under-subscription, the company will offer the unsubscribed shares first to interested existing investors and later to interested investors.

The debt issuance programme will include securities such as “senior unsecured or secured; subordinated; convertible; preferred; equity-linked or such other forms of debt obligations.” The programme will come in the form of public offering, private placement, additional tier one or tier two capital raising, investments, book building process, or any other method. 

In a parliamentary hearing on Friday, John Tanui, the ICT principal secretary, argued that banning the app carries several risks, including the emergence of splinternets, inhibiting competition, and limiting freedom of expression. Tanui also said banning TikTok would hurt telcos’ data revenues.

The ministry recommended a partial regulation in consultation with ByteDance to address concerns raised within the limits of Kenyan laws. It proposed expanding the mandate of the Communication Authority of Kenya (CAK) to oversee new media platforms, including monitoring content published online.

It also wants TikTok to publish quarterly compliance reports detailing actions taken regarding published negative content.

The social media app has come under increased government scrutiny. Interior Minister Kithure Kindiki told a parliamentary hearing in March 2024 that criminals used TikTok “to spread malicious propaganda, steal popular accounts through identity theft and impersonation” and “conduct fraud by duping Kenyans into fake forex trades and fake job recruitments.”

The interior minister’s comments came eight months after Bob Ndolo, the CEO of Bridget Consultancy, filed a petition asking for a TikTok ban because the social media app promotes hate speech, sexual violence, and vulgarity.  

According to the ministry, the app has an estimated 10.6 million users in the country with some earning a living by posting content. In a Reuters Institute report released in 2023, Kenya ranked top in TikTok usage, with about 54% of the population using the social media site. 

“The regulation of TikTok and similar platforms instead of a ban is a win-win solution. Regulation will maintain access to global social media platforms, which will enhance the free flow of information and ideas across borders, enabling Kenyan internet users to be competitive in the global digital landscape,” Tanu said.

“TikTok serves as a diverse platform for expression, encompassing creativity, political commentary, and cultural representation. Banning TikTok limits the channels through which individuals express themselves, potentially stifling a range of perspectives and creative voices.”

UBA assigned a nominal value of ₦0.50 kobo per share, but the actual selling price will be disclosed at an annual general meeting scheduled for May 24, 2024. Unlike First Bank and Access, UBA has not disclosed how much it will raise, although banks of its size are now expected to have a minimum paid-up capital of N500 billion. 

The bank will also raise additional capital by selling preference shares, convertible and/or non-convertible notes, bonds, or other instruments.

“UBA closed yesterday at N25 per share. But it will have to sell at a discount to the market to get investors to buy,” said a stock exchange market analyst. 

In a corporate disclosure on Monday, UBA noted that its total assets grew by 5% year-to-date to N974.47 billion in March 2024 compared to N931.95 billion in December 2023. This was responsible for a 121% growth in cash and cash equivalents during the period under review.

The last recapitilasation drive in Nigerian banking happened in 2004 when the CBN raised the capital base from ₦2 billion to ₦25 billion. The mergers and acquisitions that resulted from that process reduced the number of banks from 89 to 25. 

Similar mergers and acquisitions are expected to happen before the CBN’s 24-month deadline although the country’s tier-1 banks are generally expected to raise the required amounts relatively easily. 

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. 

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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. 

The plan restricts the drivers to main city centres such as Ikeja Central Area, Surulere, Lekki, Victoria Island, and Ikoyi in Nigeria’s commercial capital, the only place Moove operates under the Uber brand in the country. 

The company was responding to speculations that drivers are leaving the platform in droves due to an expensive daily remittance. Moove is also facing aggressive Lagos state task force officers who either impound the company’s vehicles or deflate their tyres. . 

Moove told TechCabal that it is yet to start discussion with the government on bringing a solution to the constant harassments of its drivers. 

Apart from getting beaten by touts, Moove drivers are also concerned about the conditions and the cost of operating on the platform. According to a driver who recently left the platform, drivers are limited to at most 12 trips within 12 hours for 6 days and are mandated to pay N9,400 per day for 48 months, in addition to the daily 25% commission to Uber. 

Moove’s remittance rates are almost the same as Lagride, another drive-to-own e-hailing platform backed by the Lagos state government and managed by a private company, Ibile Holdings. Drivers on Lagride are expected to remit N9,000 per day to own the vehicle, in addition to a 25% commission (used to be 20% as of January) to the managing company. GAC was supposed to be maintaining the vehicles for the drivers, but a driver told TechCabal that the company has deviated from the plan and drivers are now required to maintain the car themselves with no compensation. 

The agreement between Moove and Uber is such that drivers are allowed to lease the vehicles on a drive-to-own basis and drive under Uber. This means they remit a N9400 daily amount to Moove and also pay a 25% commission to Uber on every ride. 

Taiwo Ajibola, regional managing director, Moove Nigeria, told TechCabal that enforcing the geofencing plan was aligned with the company’s original mission of targeting customers in specific urban areas, mainly commercial and industrial districts. Drivers in the past had been driving the Suzuki S Presso outside the specified geofencing which was responsible for the vehicle being seen in different parts of the state. 

Ajibola said the rate at which drivers exited the platform has fluctuated over the years. He does not believe the cost of daily remittance is what’s driving many of the drivers away. He insists that the company is making efforts to make its services affordable. For example, Ajibola said, while the going rate for a brand new Suzuki S Presso is around N9.9 million, the last unit of the vehicles Moove acquired in 2022 cost far less because the company bought it in large volume. He declined to say the actual cost of the vehicle. 

“We’ve had some churns as a result of maybe the driver had a change in the job that he had or some other reasons. But the rates have remained the same. The numbers keep fluctuating but really what we are seeing is negligible statistically speaking it is less than what would be any significant impact on the business,” Ajibola said. 

Suzuki S Presso is supplied in Nigeria by CFAO under a drive-to-own arrangement by Moove Africa. Before the S-Presso units were launched into the Nigerian market, Moove drivers were using Suzuki Alto which has a lower purchase price than the S Presso. 

Mike Ojeh, a former Uber driver, told TechCabal that he doesn’t have a problem with the N9400 repayment to Moove. In 2022, he leased a Suzuki Alto, which is cheaper than an S Presso, and was paying N7000 daily to Moove as repayment for the vehicle, as well as Uber’s commission and a maintenance fee. The conditions for 12 rides in 10 hours per day were a major highlight for him, as he always met his target and was able to make more rides to take money home.

Over 218 drivers have graduated from the Moove drive-to-own initiative, according to Ajibola.  

Car dealers who spoke to TechCabal said her best bet, given her budget, was a Nigerian used Toyota Corolla. A combination of foreign exchange volatility, customs duty, and shipping costs are putting the prices of cars beyond the reach of many Nigerians.

“I bought a car worth $600 and got it shipped for $1600. When it got to Nigeria, I had to pay about N3 million ($1,886) to clear the vehicle. This has never happened in the history of our business,” Kolawole, a car dealer, said. 

It now costs at least ₦5 million to buy a foreign-used sedan and ₦3 million for a Nigerian-used one. That is more than double the cost from 2023, according to data supplied by Pankaj Bohhra, co-founder of Fixit45. 

The rise in prices coincides with a decline in imports. The number of cars imported through the Tin-Can Island port, the entry point of choice for many Nigerian imports, dropped from 32,000 units in 2018 to 4008 in 2023, according to Dera Nnadi, the Customs Controller of the Command. 

Local assembly and production have also failed to grow. At a summit in 2020, Yemi Osinbajo, former Vice President, noted that available assembly plants delivered fewer than 14,000 cars.

Prices are forcing many to compromise 

Those prices are forcing adjustments as some companies switch to Nigerian-used official cars or relatively new or unknown brands as cheaper alternatives to Japanese cars, which have always been the preferred option. 

Other companies lease cars or use flexible auto financing for purchases. 

For individual customers, auto loans are still largely unpopular. While many financial institutions offer auto loans, consumers are unaware of them or don’t understand how they work. Ngozi, for instance, believes vehicle financing options have high-interest rates.

Ojurongbe Damilola, head of technical services at Cars45, believes customers are slowly warming up to car loans, citing an increase in financing requests compared to the past year. 

Ultimately, Nigeria’s car market is at a crossroads, and navigating the new normal will cause short-term pains. Local production is unlikely to increase, and as long as macroeconomic conditions remain the same, financing may still not be compelling enough for consumers.