Satellite communication service providers, including Starlink, will pay up to 0.4 percent of their gross annual turnover every year to the government in addition to a one-off Sh15 million for licence fee as Kenya seeks to cash in on well-oiled multinationals jostling to offer Internet in the country.
The proposal by the Communications Authority of Kenya (CA), if approved, will introduce an annual operating fee under the satellite landing rights (SLR). The minimum charge will be Sh4 million or 0.4 percent of annual sales in the country, whichever is higher.
This means that satellite Internet providers will pay more to the taxman as their sales grow.
“This change (new licence) aims to ensure technology neutrality and allow investors to land signals using any technology," CA says in the proposal contained in the Review of the Telecommunications Market Structure 2024, which is currently out for public scrutiny.
"Furthermore, this new Licence category will expand its scope to accommodate investors looking to leverage Kenya's unique location to establish and operate the following three types of infrastructure."
The three groups of infrastructure referred to by the regulator are terrestrial cables, satellite hub and telemetry, tracking and space research.
Currently, the SLR license goes for $12,500 (Sh1.61 million at current exchange rates) and the proposal will hike this amount nine times, eating into the books of the firms. The license is valid for 15 years.
Starlink entered Kenya in July 2023 and its presence has triggered protests by rivals notably Safaricom even as the government sets sights on the lucrative revenue stream in the form of hiking the SLR fees and related charges.
Satellite landing rights are approvals granted to a foreign-owned satellite to deliver communication signals traffic into a country's territory. Starlink, owned by US billionaire Elon Musk is the biggest firm offering satellite-backed services in Kenya.
The regulatory approvals are a must for satellite operators to legally offer their services within a specific jurisdiction. The CA adds that the landing rights licence (LRL) will be lumped together with the SLR to form a single license that will expand the range of services that firms can offer.
These will include terrestrial cables that only transit through Kenya destined to neighbouring countries and satellite hubs that exclusively serve clients outside Kenya.
The LRL will also allow firms to offer services beyond traditional communication services, such as telemetry, tracking and space research.
The proposal comes at a time when firms like Starlink have entered Kenya, angling for a share of the rising demand for Internet services, forcing local firms to improve the quality of services.
Subscribers have been enjoying faster Internet services with speed for fixed Internet hitting 11.9 megabytes per second (Mbps) in October last year from 9.78 mbps as firms raced to meet stiff competition in the wake of Starlink's entry.
Besides faster speeds, the firms are battling through discounts for the monthly Internet rates amid the spike in demand for the services.
Other firms offering satellite-backed Internet and communication services in Kenya include NTvsat of Germany, the California-based Viasat and Indigo Telecom.
Starlink is the most high-profile firm offering satellite Internet services and whose entry has rattled local players notably Safaricom who have in turn sought to halt its entry.
The entry of the Elon Musk-owned Starlink has been key to growing the number of customers relying on satellite-backed Internet to 8,324 as of June last year which is a 1,301 percent jump from 594 in 2022.
But Safaricom, which dominates the fixed Internet market in Kenya, has been critical of Starlink's operating model, adding that the firm (Starlink) should be compelled to partner with local firms.
The telco in August last year wrote to CA requesting the regulator to reconsider Starlink's entry, adding that it would allow illegal connections and interference to existing mobile networks.
Safaricom, which controls 36 percent of the Kenyan fixed Internet market wanted Starlink to only be allowed to operate as infrastructure providers and their operating license given to existing mobile network operators.
Starlink held 0.5 percent of the Internet in Kenya or 8,063 subscribers as of June last year and the numbers are expected to rise given its growing popularity amongst homes and institutions. The fixed Internet market is emerging as a major fighting ground for local and foreign firms amid a growing demand by homes, businesses and learning institutions.
The county governments of Nairobi and Murang'a onboarded Starlink last year, underlining the growing popularity of the firm's Internet, famed for its high speed and availability even in remote areas.
