Safaricom takes on Musk’s Starlink with subsea cable

Laying of undersea cables. Communications Authority of Kenya (CA) disclosed that Safaricom has made an application for submarine cable landing rights.

Photo credit: File | Nation Media Group

Safaricom is seeking regulatory approval to build its first undersea fibre optic cable, underscoring its need for more bandwidth, high-speed internet and less reliance on third parties in the face of competition from wealthy investors like Elon Musk.

The Communications Authority of Kenya (CA) disclosed that Safaricom has made an application for submarine cable landing rights.

Undersea cables, also known as submarine communications cables, are fibre-optic cables laid on the ocean floor and used to transmit data between continents.

These cables are the backbone of the global internet, carrying the bulk of international communications, including email, webpages and video calls Safaricom is seeking more bandwidth as it expands in the fast-growing data segment in the face of slower growth from the voice business.

But the telecoms operator is facing rivalry, notably from satellite internet providers such as Musk’s Starlink that has since rolled out increasingly competitive pricing options and plans that allow Kenyans to rent the required hardware.

“We are investing more to bring in additional capacity to support increased customer demand for high-speed internet,” said a top Safaricom executive who declined to be named, adding that Safaricom has put together a consortium to build the multi-billion shilling submarine internet cable.

Safaricom declined to provide details such as the length of the fibre-opic cable, the value of the investment or members of the consortium players. It follows Airtel Kenya which is preparing to activate its own new submarine internet cable, underpinning a fresh wave of connections in the region. Currently, Safaricom relies on third parties for connections to the undersea cables.

This includes privately owned SEACOM and Telkom Kenya, which operates and maintains five of the six submarine cables that have landed in the country.

The five include the East African Marine Cable (TEAMS) cable, which is owned 32 percent by Safaricom, Telkom Kenya, 23 percent and the Kenyan government, 20 percent. It links Kenya to the outside world through the United Arab Emirates.

Others are EASSy, Lion 2, DARE 1 and PEACE subsea cable systems that are under Telkom Kenya.

Safaricom’s agreement with SEACOM is set to end in June 2028.

Analysts reckon that Safaricom is racing to diversify its sources of high-speed internet and cut reliance on Telkom Kenya in its quest for more bandwidth.

Ben Roberts, the chairperson of the ICT Sector Board at the Kenya Private Sector Alliance (KEPSA), said new subsea cables are coming up in the race for the country’s booming internet economy.

“But Safaricom possibly are thinking they need their own licence so as not to be dependent on Telkom Kenya,” said Mr Roberts, who is also the former chief executive officer of Liquid Technologies.

The country’s broadband market holds huge potential amid a push by the State to digitise its services and expand ICT services to rural areas.

Starlink, which is riding on the back of one of the world’s richest persons with a net worth of $237 billion (Sh30.6 trillion), is betting on lowering internet costs in a segment dominated by Safaricom, Jamii Telecommunications Limited (JTL) and Zuku.

It has unsettled local telecoms players, with Safaricom, Airtel Kenya and Jamii Telecom having sent protest letters to the CA. The antitrust authority—Competition Authority of Kenya (CAK)—has also been dragged in court over Starlink’s operation.

The number of Kenyans using satellite internet has increased since Starlink entered the Kenyan market in July 2023.

Safaricom in July urged regulators to consider requiring satellite internet providers such as Starlink to partner with local mobile network operators, saying its present dealings could allow illegal connections and harmful interference with mobile networks.

It also cited security risks and lapses in regulatory oversight because of the cross-border nature of satellite services. Starlink currently operates in over 100 countries globally, including 14 in Africa. In many of these markets, their products are still at the test stage.

The firm has disrupted the internet service market in different African countries including Kenya where it more than doubled its market share in just three months, controlling a 1.1 percent stake as at the end of September – up from 0.5 percent at the end of June.

Safaricom maintained the lead with a market share of 36.4 percent, followed by JTL (24 percent) and Wananchi Group (17.5 percent).

Safaricom is ramping up its data business to offset a sluggish performance in mobile calls, where it has seen muted growth because of saturation. Data is one of Safaricom’s fastest-growing revenue lines.

Now, Safaricom is betting on higher internet speed to grow and guard its market share from rivals like Starlink.

The undersea cables are significantly faster than satellite internet connections, with the vast majority of international data transmission relying on subsea fibre-optics due to their much higher bandwidth capabilities.

These undersea cables are capable of transmitting multiple terabits of data per second, offering the fastest and most reliable method of data transfer available today.

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