Safaricom, Kenya’s largest telecommunications network provider, has expressed openness to a potential partnership with Elon Musk’s satellite internet provider, Starlink. This development signals a significant shift in the dynamics of Kenya’s telecommunication and internet service sectors, which have been dominated by Safaricom for decades.

Speaking to Bloomberg, Safaricom CEO Peter Ndegwa explained that partnering with Starlink would enhance Safaricom’s service offerings, particularly in areas where traditional fibre optic infrastructure struggles to reach. Ndegwa highlighted that Starlink’s satellite technology is highly effective in providing internet services to remote areas and underserved regions, making it a complementary asset to Safaricom’s existing infrastructure.

Addressing the Challenges of Rural Connectivity

One of the key motivations behind the potential partnership between Safaricom and Starlink is the challenge of expanding internet connectivity to rural areas. While Safaricom has achieved an impressive 95% 4G network coverage across Kenya, many rural and remote areas remain underserved. Fibre-optic cables, widely regarded as the gold standard for high-speed internet, are challenging and costly to deploy in these regions due to difficult terrain and sparse populations.

Starlink, which leverages a constellation of low-Earth orbit (LEO) satellites to provide global internet coverage, presents a solution to this problem. The satellite-based system is designed to offer high-speed internet in areas where traditional infrastructure is not feasible. According to Ndegwa, discussions between Safaricom and Starlink have already taken place, and further talks are expected in the future to explore how the two technologies can complement each other.

“From a satellite perspective, we have to partner with Starlink or other satellite providers in the future to ensure that this technology integrates with what we offer. We’ve had some discussions, and we’ll continue to engage to the extent that it complements what we are doing,” Ndegwa said in the interview.

Starlink’s Disruption in the Kenyan Market

Starlink entered the Kenyan market in 2023, offering competitive pricing packages and faster internet speeds, which immediately disrupted the local internet landscape. Its entry posed a challenge to established players like Safaricom, which had long enjoyed a dominant position in the country’s telecommunication sector. Starlink’s satellite internet services have become particularly popular with users in remote areas who previously had limited or no access to reliable internet connections.

Starlink’s standard kit costs between Ksh. 39,500 and Ksh. 74,000, while its monthly subscription packages start at Ksh. 6,500. However, in an effort to make its services more accessible to a broader demographic, Starlink introduced a more affordable mini kit priced at Ksh. 27,000, with a monthly package beginning at Ksh. 1,300. The mini kit, which is smaller and more portable, is expected to appeal to individuals and small businesses that require internet access on the go or in locations without fixed broadband infrastructure.

Safaricom’s Response to Starlink’s Entry

While some analysts have speculated that Safaricom is wary of Starlink’s rapid rise, Ndegwa refuted these claims, emphasizing that Safaricom is not concerned about competition but is instead focused on maintaining its leadership in the market. “I wouldn’t call it dominance. We’ve been successful because we have invested in Kenya for a long time,” Ndegwa remarked. “We invest between USD 300 million and USD 350 million every year to expand infrastructure and create access, sharpening our ability to compete.”

Ndegwa further elaborated that Safaricom is committed to ensuring a level playing field in the market while emphasizing the company’s substantial contributions to the Kenyan economy. “We pay a billion US dollars in taxes every year. We are the largest business listed on the stock exchange. Clearly, we have a voice, and we need to make sure that voice is heard, but we don’t want to limit consumer choice,” he noted.

Regulatory Concerns and Public Participation

Safaricom’s recent letter to the Communications Authority of Kenya (CA) raised eyebrows, with some critics interpreting it as an attempt to curb Starlink’s growth. In the letter, Safaricom expressed concerns about the regulator’s decision to grant licences to satellite internet providers like Starlink without considering the long-term implications on the market.

However, Ndegwa was quick to clarify Safaricom’s position, stating that the letter was part of a broader public participation process enshrined in the Kenyan Constitution. He stressed that Safaricom does not have the authority to block Starlink or any other satellite provider from entering the Kenyan market, as regulatory decisions ultimately lie with the government. “I think there’s a misconception about Safaricom getting in the way. We’re not the regulator. We expressed our views as part of public participation, which is enshrined in the Constitution.”

The Role of Government and Healthy Competition

The Kenyan government, led by President William Ruto, has welcomed Starlink’s entry into the local market. During a roundtable discussion in New York, President Ruto highlighted that the presence of companies like Starlink creates healthy competition, which drives service providers like Safaricom to improve their offerings. “I have my CEO for Safaricom, sometimes he’s not very happy with me for bringing other characters like Elon Musk and others into the space. But competition keeps you ahead, and Peter (Ndegwa) has been doing pretty well,” Ruto said.

The government’s support for Starlink and other satellite internet providers aligns with its broader agenda to enhance digital connectivity across the country. Initiatives such as the recently launched National Broadband Strategy aim to ensure that all Kenyans have access to affordable and reliable internet services by 2030. Satellite technology is seen as a critical component of this strategy, particularly for reaching the approximately 30% of the population that remains underserved by current infrastructure.

Safaricom’s Recent Innovations

In response to the increased competition, Safaricom has taken steps to upgrade its services, particularly its fibre internet offerings. The company recently introduced a new Platinum package that offers internet speeds of up to 1,000 Mbps, targeting heavy internet users such as gamers, content creators, and businesses with high data demands. This move is part of Safaricom’s broader strategy to solidify its position in the high-speed internet market, which is becoming increasingly competitive due to the presence of new players like Starlink.

In addition to the Platinum package, Safaricom has expanded its fibre-to-the-home (FTTH) network, which is now available in more than 300,000 households across Kenya. The company is also exploring partnerships with other global tech giants to enhance its digital services and diversify its revenue streams.

The Future of Internet Services in Kenya

As Kenya continues to position itself as a hub for technology and innovation in Africa, the competition between Safaricom and Starlink is likely to intensify. The partnership between the two companies, if realized, could reshape the internet landscape in Kenya by combining the strengths of both fibre and satellite technologies to provide seamless coverage across the country.

For now, Safaricom remains the dominant player in Kenya’s telecommunications market, but the rise of satellite internet providers like Starlink signals a new era of competition and innovation. As more Kenyans gain access to high-speed internet, the impact on education, healthcare, agriculture, and other sectors will be profound, driving economic growth and improving quality of life for millions of people.

With both Safaricom and Starlink vying for a share of the Kenyan market, consumers can look forward to better services, more options, and potentially lower prices as competition heats up. Whether through partnership or rivalry, the future of internet connectivity in Kenya looks promising, with the potential for significant advancements in both urban and rural areas.

In conclusion, the discussions between Safaricom and Starlink reflect broader global trends in telecommunications, where traditional service providers are increasingly looking to satellite technology to bridge the digital divide. The outcome of these discussions will be closely watched, not just in Kenya, but across Africa, as the continent continues to embrace the digital revolution.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

30th September, 2024