Good news about Starlink and Tesla batteries in South Africa

Elon Musk left South Africa aged 17 to seek his fortune in North America. Thirty-five years and $468 billion in net-worth later, South African President Cyril Ramaphosa has come knocking for investments from Musk’s array of companies.

The two share a country of birth, but that’s not all. Musk has crossed into the political sphere as a leading adviser to President-elect Donald Trump, and he wants something from Ramaphosa: dilution of a local Black ownership requirement for his Starlink satellite network.

Ramaphosa and Musk have been in contact to discuss ways for the government to change the rules to allow Starlink’s high-speed Internet to operate legally in South Africa, according to people familiar with their communication.

In return, Musk’s companies would invest in areas such as battery production for Tesla Inc., the people said, asking not to be named since the discussions were private.

Those efforts to get a deal across the line are being stepped up now that Musk has taken on an even more prominent role at Trump’s side, they said.

The push and pull in South Africa is just one example of how the global wall of resistance to Musk’s satellite business is crumbling.

Even before Musk spent more than a quarter of a billion dollars to help Trump retake the US presidency, SpaceX’s Starlink was picking off swaths of the world country by country.

Now, worries that the world’s richest person would subvert sensitive state-run telecommunications channels around the globe are being replaced by attempts by government officials trying to tap economic incentives from Musk’s industrial complex of companies.

A representative for Ramaphosa told Bloomberg that the president and Musk had discussed Starlink as part of a process to review policies around satellite-based technologies. The spokesperson added that Ramaphosa is very interested in attracting Musk’s business for investment in South Africa.

Musk’s new role makes it harder for some governments to resist Starlink, yet it creates more tensions for others such as Taiwan that are resisting the service.

With the SpaceX chief executive officer already making his political presence felt alongside Trump on calls with foreign leaders, authorities everywhere are reckoning with how much further to open the doors to Starlink.

“Musk now has the ear of the most powerful office in the world, the US president,” said Alex Capri, senior lecturer at the National University of Singapore Business School and author of Techno-Nationalism: How It’s Reshaping Trade, Geopolitics and Society. For South Africa and other governments, he said, “the transactional value behind that — any kind of quid pro quo — becomes much more attractive.”

SpaceX didn’t respond to requests to comment.

Until recently, many governments had explicit bans or other policies that kept Starlink from operating legally in their markets.

In some cases like South Africa, rules requiring SpaceX to share equity with local partners got in the way. In others such as Indonesia, the problem was slow-moving bureaucracy.

Now many of the regulators and politicians who fought Starlink’s rise are removing those obstacles, cementing the company’s dominance and further extending Musk’s global influence.

This year alone, SpaceX has added more than 20 nations from Ghana to Argentina, and now serves more than 4 million people in 100-plus countries and territories, blanketing the globe with broadband services, pushing out legacy telecom operators and outpacing fresh challenges from Amazon.com Inc. and nation-state rivals such as China.

Starlink is conquering the global market thanks to a powerful mixture of technology leaps and shrewd business maneuvering, to which can now be added growing political clout.

Musk’s company has been hooking businesses and consumers on lightning-fast Internet — in some cases even before receiving government approval to operate.

Starlink has flooded markets with easy-to-use, often comparably priced technology, which has in turn pressured some regulators and government officials to bend or scrap long-held laws crafted to protect local Internet providers and address national security concerns, a person familiar with SpaceX’s strategy said.

There’s little doubting Starlink’s appeal: In South Africa, unauthorized use of the service soared so high that the telecommunications regulator Icasa warned in November 2023 of fines of as much as 5 million rand ($270,000) for unlawful use.

The sticking point is that SpaceX hasn’t been prepared to comply with a requirement for 30% Black ownership of companies, since what represents a totemic stance for a country that was riven by apartheid until 1991 would mean a dilution of control for Starlink.

Minister of Communications and Digital Technology Solly Malatsi is now talking to the regulator about a workaround that would allow foreign companies like Starlink access to the South African market in return for equity equivalents in terms of investments and jobs.

It remains unclear whether officials will be able to reach the consensus to strike such a deal with Starlink, the people familiar said.

“We need to unlock as many solutions as possible to bring broadband connectivity to rural and underserved areas,” the ministry said in an emailed statement to Bloomberg News. “We expect the removal of this regulatory obstacle to be welcomed, not only by Starlink but many investors in the ICT sector.”

Musk is meanwhile benefiting from missteps by SpaceX competitors who haven’t been able to keep pace with Starlink.

Starlink’s biggest rival for now is Eutelsat OneWeb, which has been comparatively slower in building out its low-Earth-orbit satellite network and gaining users.

Hughes Communications Inc. has lost about 35% of its subscribers since 2021, according to S&P Global Ratings. Amazon’s Project Kuiper and China’s Spacesail may one day be formidable rivals, but are just getting started launching their satellites.

By contrast, SpaceX has roughly 7,000 satellites in orbit with dozens more launched each month, SpaceX President Gwynne Shotwell told bankers in November, putting it far ahead of its competitors.

Even as SpaceX adds to the network, Starlink’s popularity is putting strain on the system. According to the company’s website, Starlink is “sold out” in Nairobi, Lagos and some other parts of Africa as well as in cities like London, San Diego and Mexico City.

On Monday, Ukraine’s largest mobile operator signed a deal with Starlink in a bid to place telecom infrastructure beyond the reach of Russian attacks in the war-torn country.

“The Musk space juggernaut has proven itself in a very big way,” said Gabriel Elefteriu, founding partner of AstroAnalytica, a consultancy in London. That, plus the lack of viable alternatives currently, gives him “a strong argument” in Starlink negotiations, he said.

There are still some significant holdouts.

Taiwan is one territory that’s had doubts about SpaceX and Musk, who told the Financial Times in 2022 that the self-governed island should become a “special administrative zone” of China, akin to Hong Kong.

Musk derives much of his wealth from Tesla, and China last year made up a fifth of the carmaker’s sales. Trump has since questioned whether the US would come to Taiwan’s assistance in the event of conflict with China.

Taiwan’s chosen operator is OneWeb, but Defense Minister Wellington Koo told lawmakers in October that Taipei’s current satellite Internet options are insufficient for the military.

“As of now, if we look at our combat needs, we can’t rely on OneWeb,” he said. Taiwan’s government said Dec. 17 it’s in talks with Amazon’s Kuiper and other operators, without mentioning Starlink.

The Philippines last year became Starlink’s first country in Southeast Asia after the government eliminated local ownership rules for telecom operators — but not without opposition amid an increasingly heated territorial dispute with China.

A Manila Times editorial in October labelled Musk a threat to national security because of his ties to Beijing, warning of “the risk of having key parts of the Philippine military and vital government and financial institutions connected to a network known to collect user data, and controlled by an open supporter of the Chinese government.”

The service is still very much in demand on the Indonesian island of Bali.

The village of Bungbungan is a world away from Bali’s famed luxury resorts: The clinic is a barebones place where a midwife and a nurse work in a spartan room equipped with a desk, a few chairs, a scale and not much else.

What it does have, though, is a receiver to connect to SpaceX’s communications satellites, after the government allowed Starlink to offer the service this year.

“Neighboring children use it for homework,” says midwife Putu Arini Julianti. “Why limit its use?”

After the successful conclusion of some three years of negotiations, Musk traveled to Bali in May and met with then-President Joko Widodo.

They discussed an Indonesian request that Tesla begin production of EV batteries in the country, according to government officials. The talks were part of a years-long effort by Widodo’s administration to encourage investment by Musk and expand use of the country’s reserves of nickel, a key battery ingredient.

The government is still waiting on Musk for the Tesla battery factories.

Similarly, Argentina pivoted in President Javier Milei’s first days in office last December to scrap regulations specifically so that Musk could offer Starlink.

Milei, who is a Trump ally, met with Musk on the sidelines of the UN General Assembly in New York in September, after which Musk posted on X that his companies were “actively looking for ways to invest in and support Argentina.”

Photo ops haven’t yet translated into the types of investments Milei needs to turn around Argentina’s crisis-prone economy, however.

While SpaceX’s ability to benefit from the appeal of other parts of the Musk empire may help ease regulatory hurdles, its tactics have sparked a backlash from rivals complaining it has an unfair advantage.

Vodacom-owned Safaricom lodged a formal complaint with the regulator, contending that SpaceX should have to comply with the same rules as local operators. It also warned of security risks, since Starlink doesn’t have a gateway that authorities can switch on and off.

Musk “hasn’t hesitated in using the power that he has through his companies to play a political role,’’ said Oona Caldeira Brant Monteiro de Castro, director for institutional development at Instituto Nupef, a Brazilian NGO focused on digital access and rights.

Ultimately, many who have endured years of subpar service from their local Internet providers seem more than willing to put aside any concerns about Musk if he can offer them world-class speeds at a reasonable price.

Murang’a, a mountainous rural county about 50 kilometers (30 miles) northeast of Nairobi, in August took advantage of a sale at a Kenyan supermarket chain to buy Starlink equipment for three dozen health centers.

In Kenya, SpaceX is slashing prices and boosting marketing. Consumers can now buy receivers while shopping for groceries at hypermarkets such as Carrefour.

“Installation is easy,” said Godfrey Gatacha, head of the county’s health products and technologies unit, adding that Murang’a pays about 8,000 Kenyan shillings ($62) for Starlink, about 27% less than for mobile operator Safaricom, and gets speeds ten times faster.

Yes, there are reasons to focus on Starlink’s potential threats to privacy and data security, said Grace Githaiga, chief executive officer of Kenya ICT Action Network, a think tank in Nairobi. “But the immediate need is to be online,” she said.

By Bruce Einhorn and Loni Prinsloo

With assistance from David Herbling, Norman Harsono, Patrick Gillespie, and Cindy Wang