5,000 schools, R500m, 2.4m learners: Elon Musk's Starlink offer stalled by ownership rules

A Starlink offer to connect 5,000 mainly rural South African schools, which would reach more than 2.4 million learners a year, is still on hold because of local ownership rules. Instead of giving 30% of its local operation to historically disadvantaged groups, the company proposed a R500 million equity equivalent investment. Microsoft, IBM and AWS already use this kind of arrangement. Communications minister Solly Malatsi supported the change, but ICASA says it won’t act until the Electronic Communications Act is amended. US ambassador Leo Bozell blames government demands for the standoff, though he got the details of the offer wrong. Rural schools and farming communities are still waiting for reliable connectivity..By Luis Monzon.U.S. Ambassador to South Africa Leo Brent Bozell III said that SpaceX CEO Elon Musk offered to pay for high-speed Internet at schools across South Africa in perpetuity.Musk made the offer as part of Starlink’s Equity Equivalent Investment Programme (EEIP) pitch to licence and launch the satellite connectivity service locally in May 2025.However, Bozell said the government’s insistence that Musk give away 30% ownership of his company to South Africans classified as historically disadvantaged sank the potential deal.“Starlink is committed to providing reliable, high-speed Internet access across South Africa,” the American company said last year.“Especially in rural and underserved areas where traditional connectivity falls short.”Starlink said it was unable to apply for licences to operate in South Africa due to ownership regulations, but hoped these would change soon.The Independent Communications Authority of South Africa (ICASA) requires a licensed operator in the country to have 30% ownership by historically disadvantaged groups (HDGs).HDGs include people who are classified as Black, women, youth, and people with disabilities. In this context, Black refers to black Africans, Indians, Coloured (mixed-race), and sometimes Chinese.Communications minister Solly Malatsi recently drafted a policy directive to ICASA which sought to allow operators to meet local ownership requirements through EEIPs instead.“This model is already used in other industries and allows multinational companies to invest meaningfully in South Africa’s transformation goals without requiring local equity ownership,” Starlink explained.However, ICASA said in May that it would not consider changing regulations around HDG ownership requirements for telecoms licences until the Electronic Communications Act was amended.This was despite a previous amendment to the Act, which had already altered the wording around HDG ownership for telecommunications. It currently states:“…equity ownership to be held by persons from historically disadvantaged groups, which must not be less than 30%, or such other conditions or higher percentage as may be prescribed…”ICASA has sided with those who interpret that clause of the Act to mean that it may prescribe stricter ownership requirements, but may not reduce the percentage or make it more permissive.Starlink has used alternatives to local equity ownership in countries around the world, but has never entered into an arrangement equivalent to a South African BEE deal.Several countries, including South Africa, have regulations that restrict access to equity equivalents for foreign companies if they have entered into equity ownership arrangements elsewhere.ICASA’s 30% ownership requirement is “ridiculously silly”.In an interview with The Common Sense, Bozell said that it was preposterous that Musk was required to “give away” 30% ownership of Starlink to receive network operating licences in South Africa.It should be noted that “give away” is an oversimplification. South African equity ownership deals often involve a BEE partner purchasing their stake, albeit at a discount..Read more:.ANC hits back at Malatsi over Starlink and ICT ownership shake-up.Regardless, Bozell said that personal issues stood in the way of Starlink launching locally, and that it was a great technology for South Africa.“Think about the rural crime issue: again, the farmers are saying if we had Starlink, we could call the cops, and we would be protected,” Bozell said.“That Starlink could do so much for us — that’s just one example. Think about education. Think about all the ways that Starlink helps you.”The ambassador said that Musk offered the South African government free Internet access through Starlink for 500 schools, and that he would pay for it in perpetuity. However, this was incorrect.Starlink said it would connect 10 times that many. Last year, it offered to connect 5,000 mainly rural schools, a plan that could benefit more than 2.4 million learners each year.The total planned investment to connect these schools to the Internet would have been R500 million. Starlink said that it shared the plan with government leaders.“Not a bad deal to make,” said Bozell, “But Musk said, ‘I’m not going to give you my company.’ The government said, ‘No, we want 30% of your company.'”So he said, ‘Go pound sand, I’ll go in every other planned country on planet Earth with the exception maybe of China and Russia.'”.Read more:.Starlink aims to beam free internet to 5,000 SA schools with R500m deal.Prior to Malatsi’s policy directive being rejected by ICASA, Starlink said it supported South Africa’s racial and economic transformation objectives.It said that it was willing to support these objectives through EEIPs, which were recognised in the country’s ICT Sector Code.“For more than 20 years, EEIPs have enabled companies such as Microsoft, IBM, and AWS to make substantial empowerment investments,” Starlink said.“However, the ICASA licensing regulations are anomalous and do not recognise EEIPs.”.This article was first published by MyBroadband and is republished with permission..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

5,000 schools, R500m, 2.4m learners: Elon Musk's Starlink offer stalled by ownership rules

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