Elon Musk announced in a tweet (as otherwise) that the Nigerian government has approved Starlink as an Internet Service Provider. Let’s understand the implications and what that means for you as an investor.
What is Starlink?
Starlink is a high-speed Internet connection delivered by low-earth orbiting satellites (LEO).
Why is this a Big Deal?
Starlink solves the problems of access and speed of internet services in Nigeria, especially in rural areas. According to the “Digital 2022 Nigeria” report by Data Reportal internet penetration in Nigeria stands at 51% in January 2022. Thus, 49% of Nigerians or 104.9 million Nigerians, did not use the internet.
The low consumption is due to the infrastructure deficit in Nigeria. Nigerians get internet access mainly through data sold by GSM companies like MTNN and Airtel Nigeria. There are not enough physical mobile phone towers to transfer data across Nigeria, especially in the 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 cell phone internet speed per cell is 17.38Mbps, while a fixed internet wireless connection is 10.06Mbps. In contrast, the speed of Starlinks is 104Mbps, ten times faster. In context, the US FCC defines broadband as having speeds greater than 25Mbps or more.
With faster internet services, more internet applications can operate in Nigeria. All commercial trucks, for example, can be equipped with trackers to provide accurate and timely traffic flow information to assist road safety and other emergency crews. What about banks? All branches could theoretically be connected online and in real time to the headquarters, reducing the transaction time for clearing checks in the economy.
Which specific sectors will receive a boost?
The big win will be a fall in data prices in Nigeria. Starlink can be viewed as more “stock”. Although its purpose is the under-served internet sites, its speed will make it a viable choice for all Nigerians. Many start-ups in “high speed” Lagos will gladly pay to access speeds over 100Kmps. This new competition introduced by Starlink will see prices fall, which is great.
Fast broadband internet access will significantly expand all sectors in Nigeria but will allow me to touch sectors with significant Public and Private sectors intersect.
- Agriculture; This is the mainstay of Nigeria’s economic growth, contributing more than 22% of GDP growth. Nigeria’s 2020 vision agenda seeks the intensive use of satellite imagery to predict weather and or climate change that affect agricultural production. Nigeria’s challenge has worked these initiatives to impact. A Nigerian company, Cellulant for example, has developed the Growth Enhancement Scheme (GES) e-wallet used by about 14.5 million farmers in Nigeria to obtain subsidized fertilizers via SMS.
- Cellulant, through its blockchain-based mobile platform Agrikore, seeks to link the database of its farmers in Nigeria to the agricultural markets. Starlink’s powerful internet service in Nigeria’s food baskets will enable farmers to use smartphones, not just USSD, in solutions like Agrikole to get weather and agricultural prices. Merchandise exchanges such as NGEX’s comX will be able to expand the “chain of custody” and control of goods from farm to warehouse, de-escalating the trading business and enabling effective warranty.
- Education and Health; According to the United Nations, more than half of the out-of-school children live in sub-Saharan Africa. 89% of students in sub-Saharan Africa do not have access to internet connection. This is one problem that Starlink can solve.
- By deploying the Internet to rural, underserved communities, the Ministry of Education can carry out distance learning. A math class can be recorded in a classroom in Abuja and simultaneously broadcast across Nigeria to all students in a free viewable educational portal. This is a way to artificially reduce the deficit of science teachers in schools. Bridge International Academics, for example, is a data-driven cheap school where teachers use tablets and smartphones. Both teachers and students are monitored and earned in terms of participation and effectiveness. This innovative use of data can only occur in fast internet environments; with the Starlink providing access, schools like Bridge can expand and expand.
Healthcare, like education, can take advantage of the fast internet to add productivity improvements in Nigeria’s rural health delivery. Rural telemedicine becomes a reality when there is a fast, reliable video-capable internet in rural communities. A doctor can sit in Atlanta or Lagos and see patients in rural communities with the help of an educated nurse.
Does that mean GSM stock prices will fall?
No, instead, I see Starlink’s entry as enhancing the richness of the services provided by MTNN and Airtel. Both GSM companies now have Mobile Phone licenses. Starlink enabling the internet in rural areas across Nigeria will mean that more Nigerians will look at mobile phone money as a viable and reliable means of saving.
A Starlink device can be configured and receive fast internet in less than 30 minutes. The Internet connects and enriches communities and reduces the cost of marketing. One critical use of the Starlink enabled internet is that the Federal Government can deploy Starlink to transmit census data and election results from all departments and LGAs to the headquarters in Abuja.
The internet is finally here.