Nigeria’s ISP Market Shrinks as Operators Struggle with License Renewals

The number of active Internet Service Providers (ISPs) in Nigeria has fallen to 242 as of July, a decrease from 252 in May. This drop results from several operators failing to renew their licenses. Despite new licenses being issued to Sulfman Consulting Ltd. and NGCOM Lastmile Solution Ltd. on July 1, 12 ISPs exited the market in June.

Key Points:

• Decline in ISP Numbers: The Nigerian Communications Commission (NCC) reported that many ISPs are not renewing their licenses, which cost N500,000 for a five-year term. As a result, the number of active ISPs continues to decrease.
• Militating Factors: Former NCC Executive Vice Chairman Prof. Umar Danbatta identified several challenges facing ISPs, including anti-competitive practices, inadequate spectrum, high bandwidth prices, costly Right of Way, and poor corporate governance. These issues have contributed to the inactivity of 568 licensed ISPs as of March 2022.
• Competition with Mobile Operators: ISPs face stiff competition from mobile network operators (MNOs) like MTN, Airtel, Globacom, and 9mobile, who offer internet services alongside their voice services. The launch of 5G by MTN and Airtel has exacerbated this competition, leading some enterprise customers to switch to 5G services.
• ISP Customer Data: As of Q1 2024, the leading 106 ISPs had a cumulative 262,206 active customers. In contrast, the four major MNOs had 163.8 million active internet subscriptions, highlighting the dominance of MNOs in the market.

Call for Government Intervention:

David Omoniyi, CEO of VDT Communications Limited, a leading ISP, has urged the government to support ISPs. He emphasized the critical role ISPs play in achieving ubiquitous broadband and the success of the National Broadband Plan 2020-2025. Omoniyi noted that ISPs, often classified as SMEs, are struggling and require government assistance to continue providing last-mile services.

As Nigeria aims to improve its broadband infrastructure, the challenges faced by ISPs and the need for government intervention remain crucial topics for ensuring equitable and widespread internet access across the country.