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Twelve Nigerian Internet service providers (ISPs) have failed to renew their licenses, highlighting financial and operational challenges within the sector. Each renewable license costs ₦500,000 and lasts for five years. Although this amount may seem modest, it appears to be more than many operators in Nigeria can afford.
The Nigerian Communications Commission (NCC) recently expressed concerns over the growing trend of ISPs not renewing their licenses, which has led to a steady decline in the number of active operators in the telecom market segment.
The reasons for non-renewal extend beyond financial difficulties. Prof. Umar Danbatta, the immediate past Executive Vice Chairman of the NCC, revealed that by March 2022, 568 licensed ISPs had become inactive primarily due to anti-competition practices within the industry.
Prof. Danbatta also cited additional challenges faced by ISPs, including inadequate spectrum, high bandwidth costs, expensive Right of Way charges, and poor corporate governance practices within the companies.
ISPs have pointed out that competition with mobile network operators (MNOs) — regarded as the major players — is intense and often unfavorable. While ISPs, predominantly indigenous firms licensed by the NCC to provide only Internet services, MNOs such as MTN, Airtel, Globacom, and 9mobile offer Internet services in addition to voice and other services under their Unified Access Service License (UASL).
Industry analysts argue that the launch of 5G by MTN and Airtel has exacerbated the situation, prompting some enterprise subscribers to switch from traditional ISPs to 5G routers.
MNOs continue to dominate the Internet market. According to recent data published by the NCC, the leading ISPs collectively recorded a cumulative 262,206 active customers in Q1 2024, a clear indication of the challenges facing smaller ISPs in maintaining their customer base.
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