Elon Musk’s Starlink has lined up about R2bn to invest in SA to build regional infrastructure to support the entire Southern African Development Community (Sadc) region.
The money will go towards building a network of earth stations with fibreoptic connections to data centres to bring the internet traffic in the region down to SA, and to buy capacity from local internet service providers, which would provide the internet back to the region.
Business Day has it on good authority that the company, which already has a presence in more than 20 African countries, has no intention of walking away from the SA market, with its top brass hoping a deal will be in place before the G20 summit set for November in Johannesburg.
SA was the only African country on Starlink’s top 20 markets worldwide that it sought to penetrate when it began its global expansion. The company, the satellite internet division of Musk’s SpaceX aerospace group, is attracted to SA mainly because of the country’s localisation of internet content.
Starlink has told the SA government that it will hire local companies to build its infrastructure and lease out land, fibre, energy, security and maintenance support.
The company has also committed to rent out space at data centres and buy capacity from domestic internet service providers, according to a source with first-hand knowledge of negotiations between Starlink and the SA authorities.
Starlink expects to be in more than 30 African countries by year-end. Lesotho recently granted a licence to Starlink to operate a satellite network and provide a satellite internet service in the country.
However, SA’s BEE requirements, which demand that Starlink gives 30% of its local ownership to the previously disadvantaged, has been an impediment to the company investing in SA.
Starlink’s proposed equity equivalent investment is likely to see its technology deployed to far-flung hospitals and police stations in rural areas countrywide, in addition to up to 5,000 rural schools the company has already told the government it will connect to the internet as part of its package to contribute to the development of SA.
The company has already begun conversations with local police stations, medical facilities and job promotion agencies to provide connectivity, with a source saying there is “no other technology available in the world that can bring the quality of service to remote regions as Starlink”.
Last month communications minister Solly Malatsi gazetted a policy directive on the role of equity equivalent investment programmes in the information and communication technology (ICT) sector “as a mechanism to accelerate broadband access”.
As it stands, network infrastructure operators and communications service providers require 30% ownership by historically disadvantaged groups to acquire a licence to operate in SA — a regulation that has made it unattractive for Starlink and many other foreign companies to invest in the country.
Equity equivalent structures are already used in the pharmaceutical, banking, manufacturing and automotive sectors, allowing multinationals to commit the equivalent of the 30% BEE investment in alternatives such as job creation, supplier development and economic upliftment projects.
Public comment on Malatsi’s directive closes on Friday. After reviewing the public comments the minister will map the way forward. This can be done by issuing a formal directive to the industry regulator, the Independent Communications Authority of SA, to review its regulations to align with the directive.
Last week President Cyril Ramaphosa defended Malatsi’s directive, saying equity equivalent plans were “innovative” and “unique”.
“What [Malatsi] has announced is in line with our laws — there’s no violation with regard to our laws and it is not specifically aimed at one or any company,” Ramaphosa told the National Council of Provinces.
“It [the directive] is aimed at ensuring that companies from any other country who would want to participate in this process may find greater ease to do so and it is aimed at synchronising the communications law with many others.”
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