Summary

  • The Communications Authority of Kenya’s September 2026 consultation proposes a standalone licence for co-location data centres, replacing their current placement under the Network Facilities Provider Tier 2 category.
  • As drafted, an entity holding an NFP or Application Service Provider licence could establish and operate data centres without the separate data-centre licence. Whether an operator qualifies may therefore depend on the legal entity and licence behind the facility.

The proposal draws a line around the operator

The Communications Authority of Kenya (CA) is not proposing to treat a data centre as a telecommunications network simply because networks depend on it. Its consultation paper describes co-location providers as supplying hosting, power, cooling, storage and computing infrastructure. They do not, in the Authority’s account, transmit signals, assign or use spectrum, or provide subscriber-facing services. Yet Kenya’s current licensing arrangement places co-location data-centre operators in the Network Facilities Provider Tier 2 (NFP-T2) category.

The consultation argues that this category was designed mainly for organisations that establish and operate telecommunications network facilities, making the fit imperfect.

That distinction matters because the CA’s market structure was revised in April 2026. The September consultation sits inside a recently updated Unified Licensing Framework, rather than a settled, long-standing data-centre regime. The Authority proposes a standalone data-centre category to retain regulatory visibility over facilities that host systems used by licensed ICT providers while avoiding what it calls over-application of NFP requirements. It is a proposal, not an enacted licence category or a final rule. The CA consultation paper is explicitly marked “Consultation Version.”

The most consequential clause is the exemption. The draft says entities with NFP or Application Service Provider (ASP) licences may establish and operate data centres without a data-centre licence. It therefore does not make the new licence a universal facility-level charge. An operator’s existing authorisation could determine whether the separate category applies at all. The wording points to the licensed entity: it does not say that every company in the same corporate group inherits another entity’s exemption.

A fee schedule with a status gate

For an entity that falls within the new category and does not qualify for the exemption, the proposed charges are KSh 5,000 to apply, KSh 100,000 initially, and an annual operating fee of KSh 80,000 or 0.4 per cent of annual gross turnover, whichever is higher. The proposed licence term is 15 years. At KSh 20 million of annual gross turnover, 0.4 per cent equals KSh 80,000; above that level, the percentage would exceed the floor if the proposal is adopted as written.

That arithmetic is only a sensitivity marker. The consultation does not define in the cited proposal how “annual gross turnover” would be measured, whether it would cover only co-location activity or a wider business, or which reporting period would apply. It also does not set out a final application process. Those details could change in the final framework.

The paper separately says Universal Service Fund (USF) fees will be handled under the law and notes a current 0.5 per cent charge on annual gross revenue with respect to licensed services. The document does not say that this USF charge is to be added mechanically to the proposed 0.4 per cent data-centre fee. They have different stated bases and legal treatment. A cost model that simply adds the two rates would go beyond the proposal.

A facility licence is not a data-sovereignty rule

The draft’s purpose is regulatory visibility and licensing scope. It does not establish where a customer’s data must be stored, who controls workloads, how access is governed, or whether data may cross a border. A data centre’s physical location can be relevant to contracts, law and operations, but a licence category alone proves none of those outcomes.

That is the practical distinction in Heng Lu’s note on data sovereignty: technical capacity to place or restrict a copy is not the same thing as legal authority over a wider data ecosystem. Applied here, the proposed facility licence could help the CA identify and oversee a class of infrastructure operators; it should not be read as a declaration that data hosted in Kenya is under exclusive Kenyan control or protected from every cross-border dependency. The consultation paper does not propose such a data-localisation regime.

The Authority’s public page lists the data-centre proposal under Open Consultations and invites comments within 30 days of publication of the notice. The page does not state the notice’s publication date beside the item. As of 14 October 2026, readers should therefore treat the page’s listing and the stated response window as the available status evidence, not infer a deadline from the month printed on the consultation paper. CA Open Consultations

What the final rule needs to settle

The policy choice is not simply whether the annual floor is affordable. It is how the Authority wants to see co-location infrastructure without treating every host as a network operator. The exemption could reduce duplicate licensing for entities already inside the NFP or ASP framework. It could also make the compliance result differ between two similar facilities if one is operated by a licensed entity and the other by a separate company without that status. That is an implication of the draft’s wording, not a measured market outcome.

The final text should make the unit of regulation explicit: the legal operator, the facility, or both. It should also clarify whether the exemption depends on a current and valid licence, how a licence held by an affiliate is treated, how turnover is calculated, and how the data-centre fee relates to USF obligations. Until then, investors, operators and customers should not assume that a group-level licence automatically covers a separately incorporated facility operator.

The CA’s own roadmap places finalisation and a consequential revision of the telecommunications market structure in FY2026/27, with implementation proposed for FY2027/28. These are target financial years, not guaranteed dates. The current market-structure page describes the framework revised in April 2026 and lists NFP and ASP among its licence categories.

Sources