More Industry InsightsKenya: Low-cost ISP poa! Internet bags US$28 million in funding to expand its coverage across the country

February 16, 2022by myles0

There is a small group of African ISPs that are doing the ‘heavy lifting’ of addressing lower income customers. poa! Internet is one of them and it has just raised US$28 million to increase its scale. Russell Southwood spoke to CEO Andy Halsall about what the company has planned and the current state of the market.

When Covid-19 hit poa! Internet was in the process of going out to raise its next financing round. Inevitably it has had to throttle back on its ambitions over the main period of the pandemic: “We’re not growing as quickly as we did pre-Covid. We have had to control CAPEX spend and not burn out early. It’s been slightly frustrating.”

The good news has been that existing customers have been using a great deal more data, moving from 160 GB per month pre-Covid to 220 GB during Covid. Better still these increased volumes have continued: “It’s only going one way.”

Its current footprint is semi-informal settlements in Nairobi and surrounding areas, the latest being Donholm, Jogoo Road and Umoja. Currently it reaches 200,000 homes with an estimated 750,000 people. Its list of places earmarked for further expansion are more communities in Nairobi and other urban areas like Mombasa and other towns. Once that part of the expansion is complete it will look at other African countries.

Its primary service is residential home broadband, for which it has 12,000 customers. But it started with Wi-Fi hot-spots and they continue to play an important role as a customer pipeline. There are currently 50,000 hot-spot customers. Its products are targeted at the lower income, “low-end middle class”. Its customers are relatively young (in their 20s), still single or living with their family and relatively tech-savvy.

Any registered customer can get 100MB a day of free data: “We want to shift people to the mindset of consuming a lot of data. Currently most people don’t have fibre to the home and their experience is using expensive 4G mobile data in bundles. Using the internet is about consuming more data than you would using mobile bundles.” This is why the average data use by Safaricom mobile customers is in the hundreds of MBs rather than GBs.

According to Halsall, poa! Internet customers “use the internet like people do elsewhere. They stream movies, educate their kids, do Zoom calls, all those sort of things. Their profile is very similar to someone in California. The volume driver is downloading movies and YouTube. These activities are just not viable on 4G mobile.”

The data market in Kenya continues to evolve. The volume operators are Safaricom and Airtel. The former has 16 million plus mobile data subscribers and continues to dominate the market. But it and most of the household fibre providers (for example, JTL’s Faiba and Zuku) are focused on high-end neighborhoods and fibre roll-outs and footprint expansion have slowed down: “Everyone has done well out of Covid-19.” These increased volumes have seen wholesale bandwidth prices drop by an estimated 5-10%.

The kick-starter of its finance process was winning an innovation challenge run by Africa 50, who put it into its investment pipeline. It has now raised US$28 million to finance its expansion plans.

The key takeaway is that household fibre is starting to scale rapidly:”Fibre is now passing something like 0.5-0.75 million households and the total market might be somewhere between 1-1.5 million households. There are 10 million who won’t get fibre (through existing investment choices). These are the communities we’re trying to connect. 4G/.5G won’t be used for streaming and that’s where we come in.”

In Brief

Nigeria: Casava, Nigeria’s digital insurance company has secured $4 million in pre-seed funding to provide affordable and accessible insurance products for millions of Nigerians. Starting with income protection and health insurance, the insurtech startup is leveraging artificial intelligence and behavioural science to deliver game-changing claims and benefits products.

Liberia: On 27 January 2021 Liberia’s president George Weah attended the ceremony to officially launch LTC Mobile (formerly LIBTELCO’s) new 4G LTE network, which The New Dawn Liberia notes includes VoLTE capability.

Nigeria: MTN Group has announced the successful completion of its Series 1 offer for the sale of 575 million shares in MTN Nigeria to local investors. The offer, which was implemented by way of a bookbuild to qualified institutional investors and a fixed price offer to retail investors, was 1.39 times oversubscribed with a total of 802.0 million shares subscribed for by more than 126,000 investors. A total of 661.25 million MTN Nigeria shares were allocated, comprising the 575 million offer shares and the 15% greenshoe of an additional 86.25 million shares. Gross proceeds from the offer amount to approximately ZAR4.3 billion (USD280.7 million).

Amdocs, a provider of software and services to communications and media companies, today announced that it has partnered with Vodacom Group (Vodacom), a leading African connectivity, digital and financial services company, to create an African Centre of Excellence (COE). The COE will enable Vodacom to deliver next-generation experiences to its customers in Tanzania, Mozambique and the Democratic Republic of Congo (DRC) by introducing a standardised, flexible configuration, monitoring and monetisation of differentiated services while providing a unified IT architecture across the three countries.

Segun Ogunsanya, the Group Chief Executive Officer & Managing Director at Airtel Africa has announced that Airtel Africa plc is going to join the FTSE100 on the London Stock Exchange. The FTSE100 is one of the most important benchmarks for global business and includes the top 100 companies listed on the London Stock Exchange with the highest market capitalisation. Also US technology giant Google will invest up to $1 billion in Indian telecoms giant Airtel as part of its Google for India Digitization Fund.

Uganda: Yo-Uganda Limited has been granted a Payment System Operator License by the Bank of Uganda. The license issuance comes after Yo!’s successful fulfillment of the requirements under the Large Funds Transfer System Class of the National Payment Systems Regulations, 2021.

Eutelsat Communications (Euronext Paris: ETL) and Intersat, one of Africa’s leading providers of Internet solutions, have signed a multi-year deal representing several hundred Mbps to address the connectivity needs of enterprises, institutions and individuals in Gambia, Guinea Bissau and Senegal. Under the agreement, which represents the totality of the available capacity over these countries, Intersat will leverage the unparalleled coverage and reach of Eutelsat Konnect to provide a robust and high-quality Internet service to customers located beyond the limits of terrestrial infrastructure.

Namibia: Co-creation Hub, is excited to announce the commencement of CcHUB Seedr in Namibia. CcHUB Seedr is an acceleration programme that is designed to support impact-driven founders in emerging startup ecosystems, build sustainable businesses, and raise funds to expand and improve their operations. After a thorough review process in collaboration with CcHUB’s local partner – Startup Namibia, three startups were selected for the first cohort.

Chad’s finance ministry has issued a decree exempting imports of telecoms-related equipment and accessories – including handsets, modems, routers and tablets – from import duties and taxes for a period of five years. The government is hoping that the decision will lower the barrier to entry for the public to participate in the digital economy.

Source: balancing act

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