Mawingu eyes bigger slice of broadband market

Farouk Ramji, CEO Mawingu Networks. [File, Standard]

When it launched operations in 2014 to deliver low-cost internet to remote locations across the country, Kenyan internet service provider Mawingu Networks was embarking on an ambitious quest.

The company bet on TV white spaces - spectrum unutilised by television broadcasting - to transmit high-speed internet in remote locations at affordable costs with initial deployments in Nanyuki and Laikipia.

It was a first in Kenya's rapidly-growing internet market, costly to implement with high risks and little prospects of breaking even.

Almost a decade down the line, however, Mawingu Networks is one of the leading tier-three service providers in Kenya and the company is poised to more than double in size in the coming years.

"We are looking at closing an investment round and that will enable Mawingu to grow to an additional 25 counties," explained Farouk Ramji, Mawingu Networks chief executive.

"The idea is not just to provide a pipe because the Internet is becoming commodified and a necessity. We want to make sure we are providing people with access to enable them to do what they want and we want to become that intermediary."

Bandwidth capacity

Data from the Communications Authority, CA indicates that Mawingu Networks has over 15,000 registered subscribers as at June this year giving the company 1.4 per cent of the total data subscription market.

The firm says it has connected more than 6,000 homes and businesses to its network, with 300,000 plus hotspot users across the country in 15 counties.

According to the Kenya National Bureau of Statistics (KNBS), the undersea bandwidth capacity in the country jumped by 30 per cent from 8 million Mbps in 2020 to 10.8 million Mbps last year.

Total utilised bandwidth on the other hand similarly went up 20 per cent from 4 million Mbps in 2020 to 4.8 million Mbps last year.

The big gap between available and utilised capacity has largely been attributed to a lack of infrastructure at the last mile that still leaves millions outside the grid, particularly in rural and remote areas of the country.

Farouk explains that while the company relied on TV white spaces technology in the earlier days, Mawingu has now shifted and is connecting homes and enterprises through the 5GHz wireless microwave channel.

"We buy wholesale capacity from the big players like Safaricom, Telkom Kenya and Liquid and then we bring it to our base station and from then on we are responsible for providing the capacity to the end user," he explained.

Mawingu has dedicated in-house tech teams in 15 counties and the firm provides sales, installation and support services.

"We go for community engagement and below-the-line marketing in these areas and out of the three product lines, our core driver is the home and small business proposition," he says.

In the last year, Mawingu has seen users in its home and business segment grow by 50 per cent and anticipates recording similar growth over the next year.

"We just hit profitability in June this year and I think this is a big differentiator between us and others in the market including start-ups," explained Ramji.

"You will see news of start-ups generating up to 30 million dollars (Sh3.5 billion) on the back of concepts and ideas. We are right now commercially viable and we can do more if we are commercially viable. Now we are able to cover our own operating expenditure."

Return on investment

The company did not disclose the amount of funding it expects in this round but said the money would be used to drive capital expenditure.

In 2015 the company secured a Sh400 million facility from the US Overseas Private Investment Corporation, OPIC to expand its network and roll out in other areas like Samburu and Isiolo.

"We've already proven the economics and the return on investment (ROI) work for this business," explains Ramji.

"We've restructured this in a way and it has taken a lot of effort to get here and now we can set up in a new county in less than two weeks."

According to Farouk, there is still a lot of work to be done in connecting the last mile despite the thousands of kilometres of fibre that have been deployed country-wide.

In this way, the market still presents a lot of opportunities for both large and small ISPs that are launching operations or expanding to new regions.

"Our addressable market is the about 12 million homes across Kenya and we have worked with research partners on finding out where these homes are and their income levels," he explains.

"We've looked at the businesses set up at the town and sub-town level and we are able to geographically pinpoint the distribution of people and densification of homes because the economics of the last mile have to make sense."