Kenyan low-cost ISP Poa Internet secures $28 million in round led by AfDB-backed Africa50, plans to link region with cheap, limit-free connectivity
In 2020, Africa50, an infrastructure financier backed by the Africa Development Bank (AfDB) Group and a good number of African governments, hosted an innovation challenge that sought affordable and reliable solutions for last-mile internet connectivity across the continent. A proposal by Poa Internet, a Kenyan startup beat 673 others from across the world as a result of which it was added to Africa50’s investment pipeline in addition to winning a cash prize.
Slightly over one year after the win, the internet service provider (ISP) has received $28 million in a Series C funding round led by Africa50, bringing the total amount it has raised to date to $36 million. Also participating in the latest round was Novastar Ventures, one of the firm’s earliest backers.
Poa plans to use the new funding to grow its reach, first across Kenya then progressively to other countries in the continent.
“We are focused on Kenya at the moment, but the problem we’re solving is continent-wide. And for us, it’s not just about getting people some connectivity. Our aim is to get a lot of people online and to give them a meaningful internet experience like the ability to stream videos, without worrying about how much data they’re consuming,” Poa Internet’s CEO and founder, Andy Halsall, told TechCrunch.
Poa Internet currently serves over 12,000 customers (homes and small businesses) in Nairobi’s low and middle-income neighborhoods, and tens of thousands more through its street Wi-Fi connections. The startup has laid out its fiber network in neighborhoods that are typically not the first target markets for its competitors like Safaricom Home by East Africa’s biggest telco Safaricom, Faiba by Jamii Telecommunication Limited and Zuku.
Poa Internet charges its customers a monthly fee of about $13, which is half the market rate, giving it a competitive edge. Its customers also have unlimited data usage, another aspect that makes their products attractive to internet users in the country, where major ISPs offer monthly subscription bundles with data caps.
The startup has also set up Wi-Fi hotspots in public areas, where users pay about $0.18 for 1 GB of data, 10 times cheaper than the country’s telcos charge for a similar bundle of non-expiring internet.
“Our internet speeds are 4mbps, which is fast enough for video, because everyone wants to stream Netflix, use YouTube, download movies and make video calls. So, we’ve designed our service to be fast enough to deliver video, but most importantly, our price is a winning factor,” said Halsall.
“Our primary focus is to get the price as low as possible and to operate in the communities that don’t have fiber connectivity or are unlikely to get fiber. Therefore, we’re not really going to compete really against anyone because we are going after a market sector that is not well served.”
Affordability remains one of the main roadblocks to internet access across the continent and Poa Internet service has been trying to solve this puzzle since it entered Kenya in 2015.
Africa, and more narrowly sub-Saharan Africa, has the most expensive internet prices in the world, and this negatively impacts on the continent’s ability to grow its digital economies and to adapt to situations like the Covid pandemic. The pandemic’s containment measures, for instance, required most people to work from home and for students to continue learning online — but this remained impractical in most countries across the continent due to the lack of necessary gadgets and internet connectivity, partly due to underdeveloped infrastructure and pricing.
Benefits of affordable data and a more connected continent are massive in that as more people get connected sectors such as e-commerce and e-learning will experience a take-off.
There were 303 million people, which is less than a third of the population, connected to the mobile internet according to the 2021 GSM Association, an industry organization representing mobile operators, mobile economy report. This figure is expected to grow to about 40% of this population by 2025. However, while mobile internet contributes a great deal in getting people online, as Halsall hinted earlier, the experience of limited connectivity is incomparable to freedom that comes with a limitless connection.
“Poa has been instrumental in bridging the needs of last- mile connectivity, and their ultra-low-cost solutions can be used to address the significant connectivity gaps in Kenya and across the continent as a whole. This is particularly important at a time when societies and economic activities are increasingly becoming digitized as a result of the COVID-19 pandemic,” said Africa50 managing director and head of infrastructure investments at Africa50, Raza Hasnani.
Africa50 currently has 31 shareholders including the AfDB, the Central Bank of West African States (BCEAO), Bank Al-Maghrib (the Central Bank of the Kingdom of Morocco, and 28 African countries.
“Increasing access to reliable and affordable internet connectivity is strongly aligned with the key pillars of Africa50’s strategy, and we are excited to be part of this high impact journey and to support Poa’s growth in Africa,” said Hasnani.