Kenyans are using record amounts of internet data, but the value of cash flowing across mobile networks are not translating into proportionate revenues for operators.
Fresh industry statistics published by the Communications Authority of Kenya (CA) paint a picture of an ecosystem where internet data has become indispensable, yet the earnings made per megabyte (MB) by service providers are steadily shrinking, creating a profitability puzzle for local telecoms.
According to the latest release by the CA, the number of mobile data subscriptions rose from 52.5 million in June 2024 to 58.6 million in the corresponding month this year, underscoring a near-universal adoption of internet-enabled devices in the market.
What's more striking, however, is the leap in usage volumes, which climbed almost 40 percent within the year, from 448.2 million gigabytes (GB) in June last year to 620 million GB in June this year.
The rise reflects the deepening integration of digital services into everyday life, from video streaming and mobile payments to ride-hailing and remote work operations.
Despite the growth, the price of data has edged downwards.
The CA report shows that Pay-As-You-Go tariffs for data fell from Sh4.59 to Sh4.47 per MB within the year, with effective charges even lower once bundle promotions and unlimited packages are taken into account.
This means that operators are handling much larger traffic volumes but generating less revenue per unit, even as the cost of expanding networks continues to rise.
The strain is clear in the investment required to keep pace with demand. By June 2024, Kenya's lit international bandwidth capacity had risen to 21 terabits per second, boosted by additional undersea cable capacity from SEACOM and PEACE.
Lit international bandwidth capacity refers to the total equipped capacity of international communication links, such as fiber-optic cables and satellite uplinks, that are actively in use at a given time.
It represents the maximum amount of data that can be transmitted internationally and is a key indicator of a country's international internet connectivity.
Yet, despite the enhanced capacity, local utilisation stood at just over half, leaving telcos paying for supply that is not fully converted into earnings.
At the same time, the operators are committing billions of shillings annually to expand 4G coverage, roll-out 5G services and meet rising spectrum costs. These obligations make for an expensive balancing act in a market where effective unit prices continue to slide.
The situation is further complicated by the rising dominance of over-the-top platforms such as WhatsApp, TikTok and YouTube, among others, which now account for much of the traffic on Kenyan networks, yet the revenues largely flow offshore.
CA data shows international SMS traffic fell by more than half, reflecting a near-complete shift to internet-based messaging. Consumers, on the other hand, have been the biggest winners.
The steady fall in data tariffs has lowered barriers to access, helping make Kenya one of Africa's most digitally connected economies.
Affordable connectivity is fuelling growth in areas such as e-commerce, digital entertainment, and fintech, with households and businesses alike relying on mobile internet for daily transactions, learning, and leisure.
Kenya’s internet affordability has earned its favourable comparisons across the region, where some neighbouring peers still face significantly higher costs relative to incomes.
In August last year, an assessment by the World Bank showed that Kenya had the lowest pricing on mobile data as a proportion of monthly per capita gross national income within the East African region, with the purchase of a 2GB package taking up 1.97 percent of an average person's monthly income.
For the operators, however, the sustainability of the model is less clear. While selling more gigabytes at lower margins may be good for market expansion, it leaves the firms exposed to rising costs of infrastructure without a clear path to higher returns.
In advanced economies, such as in Europe, regulators have floated the proposal to have big tech companies contribute to the cost of running telecom networks, because platforms generating the most traffic should share in financing infrastructure.
