Elon Musk’s Starlink proposes R2 billion investment to avoid BEE hurdles

Elon Musk’s satellite internet company Starlink plans to invest R2 billion in South Africa, potentially paving the way for its entry despite ongoing regulatory challenges related to Black Economic Empowerment (BEE) laws.

Reports say the investment will fund infrastructure development to serve South Africa and the Southern African Development Community (SADC), a regional bloc of 16 member countries.

To comply with local requirements without giving up equity, Starlink has proposed partnering with South African companies for infrastructure needs such as land leasing, fibre connectivity, power supply, security, and maintenance services.

Viewed as a workaround

Observers view the reported strategy as a way to bypass South Africa’s empowerment laws, which require foreign tech firms to partner with Black shareholders to gain operating licences. South Africa-born Elon Musk has publicly criticised these laws, calling them “openly racist” and stating he will not give up equity in Starlink. However, Communications and Digital Technologies Minister Solly Malatsi is considering revising the current policy.

His department has proposed alternatives to equity partnerships for satellite providers – such as investment in Black-owned businesses and infrastructure as qualifying criteria.

“We want to see tangible investment into the South African economy, especially in marginalised communities,” Malatsi noted in a previous statement.

The Independent Communications Authority of South Africa (ICASA) holds the final authority to grant Starlink an operating license, while Minister Malatsi’s department plays a crucial role in setting the licensing criteria.

Starlink aims to finalise a deal before South Africa hosts the G20 Summit in Johannesburg this November, using the event as a high-profile platform to showcase Musk’s return to his birthplace with a transformative digital project.

If approved, Starlink’s investment could greatly improve internet access and connectivity across the region, particularly in underserved rural areas.