Elon Musk announced through a tweet (how else) that the Nigerian government approved Starlink as an Internet service provider. Let’s understand the implications and what this means for you as an investor.
What is StarLink?
Starlink is high-speed Internet access delivered via Low Earth Orbit (LEO) satellites.
Why is this such a big deal?
Starlink solves the problems of access and speed of internet services in Nigeria, especially in rural areas. According to Data Reportal’s “Digital 2022 Nigeria” report, Internet penetration in Nigeria is 51% as of January 2022. Therefore, 49% of Nigerians or 104.9 million Nigerians did not use the Internet.
The low uptake is due to the infrastructure deficit in Nigeria. Nigerians gain access to the Internet primarily through data sold by GSM companies such as MTNN and Airtel Nigeria. There are not enough physical cell phone towers to transmit data across Nigeria, especially in rural areas. 53.4% of Nigerians live in urban centers and 46.6% live in rural areas.
Speed is a crucial advantage of Starlink. Ookla indicates that the average speed of mobile internet via cellular is 17.38Mbps, while the fixed wireless internet connection is 10.06Mbps. In contrast, the speed of Starlinks is 104 Mbps, ten times faster. For context, the US FCC defines broadband as speeds of 25+ Mbps or more.
With faster Internet services, more Internet applications can be operational in Nigeria. All commercial trucks, for example, can be equipped with trackers to provide accurate and timely traffic flow information to aid road safety and other emergency teams. What about the banks? In theory, all branches could be connected online and in real time with the central office, reducing the transaction time for check clearing in the economy.
Which specific sectors will receive a boost?
The big win will be a drop in data prices in Nigeria. Starlink can be seen as more “offer”. Although it targets unattended internet locations, its speed will make it a viable option for all Nigerians. Many startups in “high speed” Lagos will gladly pay to access speeds of over 100Kmps. This new competition brought by Starlink will drive prices down, which is great.
Fast broadband internet access will significantly expand all sectors in Nigeria, but let me refer to sectors with significant public and private sector intersections.
- Agriculture; This is the mainstay of Nigeria’s economic growth, contributing over 22% of GDP growth. Nigeria’s vision 2020 agenda calls for the intensive use of satellite imagery to predict the weather or climate changes that affect agricultural production. Nigeria’s challenge has been to operationalize these initiatives to generate impact. The Nigerian company, Cellulant, for example, developed the Growth Enhancement Scheme (GES) e-wallet used by some 14.5 million farmers in Nigeria to purchase subsidized fertilizer via SMS.
- Cellulant, through its blockchain-based mobile platform Agrikore, seeks to connect its database of farmers in Nigeria with agricultural markets. A Power Starlink internet service in Nigerian food baskets will allow farmers to use smartphones, not just USSD, in solutions like Agrikole to get weather and farm price data. Commodity exchanges like comX by NGEX will be able to expand the “chain of custody” and verification of commodities from farm to warehouse, taking the risk out of commodity exchanges and enabling efficient collateral.
- Education and health; According to the United Nations, more than half of children out of school live in sub-Saharan Africa. 89% of students in sub-Saharan Africa do not have access to an Internet connection. This is a problem that Starlink can solve.
- By deploying the Internet in underserved rural communities, the Ministry of Education is able to conduct remote learning. A math lesson can be recorded in a classroom in Abuja and simulcast across Nigeria to all students on a free educational portal. This is a way of artificially reducing the deficit of science teachers in schools. Bridge International Academics, for example, is a low-cost, data-driven school where teachers use tablets and smartphones. Both teachers and students are monitored and graded on attendance and performance. This innovative use of data can only happen in fast internet environments; With Starlink providing access, schools like Bridge can expand and scale.
Health care, like education, can take advantage of the speed of the Internet to add productivity improvements in the delivery of health services in rural Nigeria. Rural telemedicine becomes a reality when there is fast, reliable Internet with video capability in rural communities. A doctor can sit in Atlanta or Lagos and see patients in rural communities with the help of a trained nurse.
Does this mean GSM share prices will fall?
No, instead I see Starlink’s entry as a boost to the fortunes of services provided by MTNN and Airtel. Both GSM companies now have mobile money licences. Starlink, enabling the internet in rural Nigeria, will mean more Nigerians will see mobile money as a viable and reliable means of saving.
A Starlink device can be set up and receive fast internet in less than 30 minutes. The Internet connects and enriches communities and lowers the cost of doing business. A critical use of the Internet enabled by Starlink is that the federal government can implement Starlink to transmit census data and election results from all districts and LGAs to the headquarters in Abuja.
Internet is finally here.