Why Musk’s Starlink Chose Nigeria as First African Market

By Mark Kawalya

Starlink is a satellite internet service provider and the brainchild of South African native and billionaire Elon Musk. Owing to his heritage, it was expected that South Africa would be the first country to have Starlink Internet services offered. However, the deployment date is still unknown as Starlink’s parent company, SpaceX, tries to navigate the intricate maze of regulatory hurdles, like the 30% black ownership required to get a communications licence in the country.

Nigeria offered an attractive alternative, as the country has key metrics that offer considerable positives for market entry, such as:

  • Having a GDP of $442 billion (2021) which is the largest in Africa.
  • Being home to the largest population in Africa of over 218 million people. (2022)
  • Having the highest number of internet users in Africa, with more than 109 million people using their phones for connectivity.

However, broadband penetration trails that of other countries such as South Africa, Egypt and smaller countries such as the Seychelles and Mauritius.

The Nigerian Communications Commission (NCC) puts broadband penetration at 47.36% in December 2022, equating to 90 million subscribers. The government of Nigeria has plans to increase the penetration rate to 70% by 2025.

Currently, Starlink has 1 million worldwide subscribers, which could be eclipsed if the firm takes hold of a sizeable share of the Nigerian market.

What Starlink’s Entry Means for the Nigerian Market

The telecommunications sector in Nigeria is fiercely competitive and highly lucrative. In Q3 of 2022, the sector contributed nearly 13% to the country’s GDP.

South African-owned teleco MTN is the leading operator, holding more than 40% of the market share. The firm also made a large after-tax profit of $800 million in 2022.

MTN offers home broadband with capped plans ranging from ₦8,000 (US$17) for 30 GB + 5GB YouTube to ₦150,000 (US$325) for 1.5TB that lasts one year.

MTN’s unlimited plans range from ₦5,000 (US$10) for 30GB + 5GB YouTube to ₦60,000 (US$130) for 550GB

In comparison, Starlink offers one plan at ₦19,260 (just over $40) per month for unlimited data, making MTN’s broadband packages less attractive.

However, Nigerians will need to pay ₦268,584 (around $600) upfront to buy the Starlink start-up kit. This includes the satellite dish, mount, and Wi-Fi router. These high setup costs are likely to be prohibitive for many Nigerians, especially those in the rural areas who are a key target market.

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