Starlink says South Africa will be a top 10 country for its service

According to McDonald’s South Africa CEO Greg Solomon, SpaceX’s Starlink considers South Africa a major potential market for its satellite Internet service.

Solomon made this remark during a Q&A session at the University of Pretoria’s Hendrick van der Bijl Memorial Lecture earlier in October.

The comment came as part of the McDonald’s veteran’s insights on expanding the fast food giant and its app into rural South Africa.

Solomon explained that although many South Africans in these areas were poor, the country, in general, was very digitally savvy, particularly when it came to using mobile devices.

This skill could be of significant benefit to improving the lives and financial standing of rural communities if they are given access to broadband.

Solomon implied that Starlink was keenly aware of the untapped potential to provide broadband in South Africa’s unconnected rural areas.

“Starlink is really trying to come into this country,” he said.

“I was quizzing the country lead… they reckon South Africa is going to be a top 10 market in the world for Starlink,” Solomon said.

Several businesses in rural areas, including farms, guest houses, game lodges, schools, and mines, are already unofficially using Starlink’s roaming subscriptions.

One unofficial former importer of the service also told MyBroadband that KFC and Toyota franchisees were among their customers.

Starlink’s direct-to-cell roaming service, which will not require a dedicated dish, could also radically reshape the connectivity landscape in rural areas.

Several mobile networks — including MTN — are in talks with Starlink about providing coverage in remote areas where building towers is not economically or operationally attractive.

Starlink is just one of several low-earth orbit (LEO) satellite providers targeting the cellular market.

Another significant player in direct-to-cell is AST SpaceMobile, in which Vodacom’s parent company, Vodafone, holds a 5% stake.

In partnership with Vodacom, it has already successfully tested direct-to-cell services in some African countries.

Starlink’s regulatory hurdles

While sceptics argue that South Africa does not need Starlink as urgently as in other African countries with more limited broadband coverage, the service has been in high demand despite not being officially available.

In addition to businesses, Starlink’s roaming service has been used by thousands of residential customers in South Africa since early 2023.

However, the company recently started implementing a maximum 60-day continuous roaming use rule that has made it far more difficult to access the service over the long term.

The Independent Communications Authority of South Africa (Icasa) regards Starlink’s operation in the country as illegal.

Starlink does not have the required electronic communications services (ECS) or electronic communications network services (ECNS) licences to offer Internet services in South Africa.

According to the Electronic Communications Act, it will need to be 30% owned by historically disadvantaged groups (HDG) to acquire these licences.

Alternatively, Starlink would have to partner with a local company with the requisite licences or BEE credentials.

Icasa has also gazetted a new rule that will replace the HDG requirement with telecoms licensees needing to be 30% black-owned.

While the new rule has been suspended until an undefined date, it has caused great upset in the telecoms industry.

Experts have argued the new BEE rule would favour large incumbent companies rather than small operators, including those owned by up-and-coming black entrepreneurs.

In addition, Icasa has not issued an invitation to apply for ECS or ECNS licences for well over a decade.

However, there have been several positive developments in recent weeks that could help Starlink get over its South African regulatory hurdles.

Firstly, President Cyril Ramaphosa met with SpaceX CEO Elon Musk for high-level discussions about potential investments in the country in late September 2024.

Communications minister Solly Malatsi also met with Starlink representatives several weeks earlier.

Malatsi subsequently announced a plan to issue a policy direction to Icasa regarding equity equivalent programmes, for urgent consideration.

These programmes are used in other industries to provide international companies with alternative means of contributing to South Africa’s economy rather than having a certain ownership make-up.

“After consultation with Icasa, the proposed policy direction will be published for comment as per the Electronic Communications Act,” Malatsi explained,

“This is in line with the Codes of Good Practice which recognise that the global nature of their operations may constrain multinationals in their ability to comply with equity ownership requirements,” he said.

“Equity equivalents, recognised in other sectors, provide an avenue for factoring in alternative ways for companies to make an impact on South Africa’s socioeconomic development.”

Malatsi said that ICT industry players had long sought recognition for equity equivalence.

“This will provide the certainty necessary to attract increased investment in ICT and accelerate universal Internet access,” the minister said.