Internet providers weigh mergers amid market pressure
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Nigeria’s internet service provider sector is showing early signs of consolidation as operators face rising right-of-way costs, regulatory hurdles, and stiff competition from mobile carriers offering retail data, including fibre-to-home broadband.
Operators say larger, combined resources from consolidated ISPs can enable greater investment in network maintenance, redundancy, and coverage expansion. This could mean fewer outages, faster internet speeds, and more reliable service for customers.
The market remains highly fragmented, with 231 licensed internet service providers as of early 2026, up from 224 at the end of 2025, according to the Nigerian Communications Commission. For smaller players, sustaining profitability in such a crowded landscape is becoming ever more challenging.
This year, at least seven new internet service providers, including Amazon Kuiper Nigeria Limited, Boost ISP, Dasol Solutions Services, Fibre Sonic, Intellivision Technologies, Wetom Technologies, and Granet Technologies, have entered Nigeria’s already crowded market. The sector remains dominated by major operators such as Spectranet, Elon Musk’s Starlink, FibreOne, ipNX, and Tizeti. Most of the newcomers are concentrated in Lagos, with a few in Abuja and Imo State.
The Chief Executive Officer of FibreOne, Lanre Ore, said the fragmented nature of the sector is driving operators to explore partnerships, acquisitions, and other consolidation strategies to survive.
“The Nigerian ISP market is highly competitive and price-sensitive,” Ore told The PUNCH. “Only operators with strong financial and operational capacity can consistently deliver quality service. We anticipate more acquisition and partnership activity in the coming years.”
Despite clear regulatory frameworks, ISPs face a range of challenges that make expansion costly. One of the most pressing is the disparity in right-of-way charges. While the Federal Government sets a benchmark of N145 per metre, some state governments charge as much as N5,000. This wide gap makes fibre deployment uneconomical in several regions, particularly outside major urban centres.
“RoW and various state levies are some of the biggest hurdles to broadband rollout,” Ore said. “Without harmonisation, operators either avoid certain areas or pass costs to consumers, which limits penetration and service quality.”
Licensing costs remain modest by international standards. A standard five-year Individual ISP licence costs N500,000, with additional fees for each approved service location and application charges of roughly five per cent of the licence fee. New entrants can initially test the market through an Interim Service Authorisation at N250,000 before committing to full licensing.
Another operator, who preferred not to be named, said investors often prefer to back companies with scale, operational capacity, and predictable revenue streams.
“Consolidated ISPs are more likely to attract foreign investment, partnerships, or even technology collaborations, which can bring in new infrastructure, expertise, and innovation,” the executive said.
Fibre cuts are another recurring issue adding to the pressure faced by operators. Nationwide, tens of thousands of fibre cuts are recorded annually, leading to service disruptions, customer churn, and a 10–15 per cent increase in repair and maintenance costs.
“Resources that could be used to expand coverage are instead spent fixing avoidable damage,” Ore noted.
Energy costs further strain operations. An unreliable grid power forces operators to rely on diesel generators or solar inverters, with diesel prices rising from about N300 per litre in 2022 to over N1,300 today. For some ISPs, energy now accounts for up to 40 per cent of operating expenses.
Despite the challenges, Nigeria’s ISP market offers long-term growth potential. Increasing smartphone adoption, demand for remote work solutions, and government initiatives to expand digital services in schools and rural areas are driving interest from investors and technology companies alike.
The internet itself is structured as a hierarchy of networks. Tier 1 ISPs form the backbone, connecting all corners of the web through peering agreements without paying fees. Major Tier 1 providers include AT&T, MainOne Cable, Globacom, BT, and Verizon. Tier 2 ISPs buy access from Tier 1 networks and resell it to businesses and consumers, while Tier 3 ISPs purchase bandwidth from Tier 2 providers to reach end users. Multi-homed Tier 3 operators connect through multiple upstream providers for redundancy, while single-homed ones rely on just one. This hierarchy ensures that data flows efficiently from global backbones to local networks and individual subscribers, a structure that Nigeria’s ISPs rely on heavily for their services.
Mergers and strategic partnerships could also benefit consumers by reducing service disruptions, improving network quality, and expanding coverage in underserved regions. However, consolidation must be carefully managed to prevent excessive market concentration and ensure competitive pricing.
The Executive Director of Business Development at Broadbased Communications Ltd, Chidi Ibisi, said smaller ISPs could not compete directly with major operators and called for a framework that would allow all players to operate harmoniously, according to a report by Nairametrics. He warned that dominant providers might crowd out smaller companies, not necessarily through unfair practices, but through their greater investment capacity and nationwide reach.
ISPs play a critical role in improving broadband penetration by delivering last-mile connectivity that links backbone infrastructure to homes, businesses, and communities.
Operators say they help expand coverage, improve service quality, and drive adoption by deploying fibre, fixed wireless, and other access technologies, particularly in underserved areas. According to them, stronger ISP participation can accelerate broadband growth through infrastructure investment, affordable service offerings, and partnerships with wholesale network providers. Nigeria’s broadband penetration recently crossed the 50 per cent mark, but experts said further progress would depend on reducing operating costs, addressing right-of-way challenges, and encouraging greater network expansion nationwide.
