Kenya Strengthens ICT Investment Appeal with Formal Data Centre Regulations.

Photo Credit of ICT servers: Freepik

The Communications Authority of Kenya (CA) has published the Revised Telecommunications

Market Structure (the Revised Structure), formally bringing commercial data centres within Kenya’s telecommunications licensing regime for the first time.

For global ICT players and data centre investors, this marks a significant and welcome step toward regulatory clarity.

What Has Changed

In April 2026, the CA updated its Unified Licensing Framework (ULF), in place since 2021, by

expressly recognising data centres within the market structure.

Under the previous framework, data centre operators were not explicitly categorised. As a result, licensing was often determined on a case-by-case basis, depending on how the proposed activities mapped onto existing license categories.

The Revised Structure addresses this gap by expressly situating data centres within the licensing

ecosystem, reducing ambiguity and improving predictability for investors.

A Sector in Motion

This reform forms part of a broader trajectory of policy and regulatory developments that have

progressively strengthened Kenya’s position as an attractive destination for digital infrastructure

investment, developments we have previously examined:

• Liberalised ownership rules: the removal of the 30% local shareholding requirement for ICT licensees significantly lowered barriers to foreign participation;

  
  

• Targeted fiscal incentives: the Special Economic Zones regime, together with customs and tax relief on ICT equipment, has improved project economics for large-scale infrastructure

  investments; and

  
  

•  Growing hyperscale interest: Kenya is increasingly viewed as a viable location for hyperscale deployments serving East and Central Africa.

Collectively, these measures signal a deliberate shift toward a more investment-ready digital

economy.

The Licensing Framework for Data Centres

The Revised Structure does not introduce a standalone ‘data centre license’. Instead, it clarifies how data centre activities fit within existing license categories under the ULF. In practice, a functional, activity-based approach applies:

(i) Network Facilities Provider (NFP) License – Likely NFP Tier 2 or Tier 3

Where a data centre operator deploys or owns active or passive communications infrastructure

(e.g., fibre backhaul, metro links, transmission systems), and/or provides connectivity beyond the premises (including interconnection to third parties), then an NFP license is required.

Hyperscale operators may in practice require NFP Tier 2 (regional) or even Tier 1 (national)

depending on network scope.

(ii) Application Service Provider (ASP) License

Where a data centre operator provides colocation services (space, racks, power, cooling); cloud,

hosting, or managed services, and no external/public communications network infrastructure, then an ASP license is typically sufficient. This lighter-touch pathway is well suited to colocation providers and managed services operators.

Overall, the licensing regime is best understood as modular rather than prescriptive:

“A data centre operator may require one or multiple licenses, depending on whether it is

providing infrastructure, connectivity, applications, or content”

This reflects the CA’s long-standing technology-neutral licensing philosophy.

The Investment Case: Kenya’s Structural Advantages

Kenya enters this newly clarified regulatory phase with several compelling advantages:

• Infrastructure Ambition: the Government’s National Digital Superhighway Programme

  commits to deploying 100,000 km of fibre, installing 25,000 public Wi-Fi hotspots, and

  establishing multiple national data centres. This creates strong backbone demand for private data centre capacity;

• AI Infrastructure Opportunity: Kenya currently lags more mature markets such as South Africa in AI-ready data centre capacity. With AI adoption accelerating across fintech, healthcare, and public services, this gap presents a first-mover advantage for hyperscale and GPU-intensive deployments;

  
  

•  Regional Connectivity Hub: Nairobi is strategically positioned as an East African connectivity hub, supported by multiple submarine cable landings along the Kenyan coast. This enables low-latency international connectivity, and efficient regional traffic aggregation;

• Maturing Regulatory Environment: the convergence of liberalised ownership rules, fiscal

  incentives, and a clarified licensing framework, creates the predictability and stability required by institutional and hyperscale investors.

Our View

The formal recognition of data centres within Kenya’s licensing framework is a material regulatory milestone. While the framework still relies on existing license categories rather than a bespoke data centre license, the CA has now eliminated a key area of uncertainty, and confirmed that data centres are a core component of the communications ecosystem.

For investors, the implication is clear - the regulatory question has shifted from “whether and how data centres are licensed” to “which combination of licenses best fits a given business model.”

Combined with Kenya’s broader policy direction and infrastructure trajectory, the market is now

more clearly defined than at any point in its history.

This article is for informational purposes only and does not constitute legal advice. For tailored advice, please reach out to us directly at sarinke@mckayadvocates.com.